Tuesday, February 04, 2014

Gold Price Might Cut Through Down Trend this Week

Gold Price Close Today : 1251.70
Change : -8.70 or -0.69%

Silver Price Close Today : 19.402
Change : 0.013 or 0.07%

Gold Silver Ratio Today : 64.514
Change : -0.492 or -0.76%

Silver Gold Ratio Today : 0.01550
Change : 0.000117 or 0.76%

Platinum Price Close Today : 1371.80
Change : -13.20 or -0.95%

Palladium Price Close Today : 699.90
Change : -2.60 or -0.37%

S&P 500 : 1,755.20
Change : 13.31 or 0.76%

Dow In GOLD$ : $255.08
Change : $ 2.95 or 1.17%

Dow in GOLD oz : 12.339
Change : 0.143 or 1.17%

Dow in SILVER oz : 796.06
Change : 3.20 or 0.40%

Dow Industrial : 15,445.24
Change : 72.44 or 0.47%

US Dollar Index : 81.240
Change : 0.100 or 0.12%

The GOLD PRICE dropped as low as $1,246.80 and the 20 DMA ($1,247.44) but came right back to close Comex at $1,251.70. Then it gained $3.20 in the aftermarket. Silver gained an infinitesimal 1.3 cents to 1940.2c.

The GOLD PRICE is trading out into the nose of a triangle formed by its rising uptrend line and the downtrend from its April high.

This is an even sided triangle so could break either way, but the gold price remains above its 20 and 50 DMAs and has been steadily advancing, recovering every time it is knocked back. Reasonable to expect it might cut through that post-April downtrend this week, barring a close below $1237.50.

Since December began the SILVER PRICE has traded sideways between 2050c and 1889c, with one intraday low at 1872c. It has just bounced off that roughly 1890 support again, and now needs to cross 1950c and get past 2050c.

Other reasons to look for the gold price rally to continue: the GOLD/SILVER RATIO appears to have peaked and begun dropping. The Gold/Philadelphia Bank Index, which reflects investor confidence and risk appetite, has been falling since December ended.
Think about it: when investors buy bank stocks, which are mostly the Too Big To Fail/Too Big To Jail banks, they MUST have confidence in the financial system and its outlook. On the other hand, buying gold shows a lack of confidence in those same stocks, and turning away from risk toward safety. The chart divides the gold price by the bank stock index so when it rises bank stocks (the denominator) are gaining on gold (the numerator), and vice versa when it falls.

Every once in a while I check the numbers just to see if things are as bad as I suspect they are. In the last eight days the Japanese Nikkei 225 stock index has lost 10.8%. Reckon that Abe-nomix has hit a little hiccup.

Since 21 January when the present waterslide began, the Dow has lost 969.2 points or 5.9%.

Today the Dow bounced up 72.44 (0.47%) to 15,445.24. S&P500 clawed back 13.31 (0.76%) to 1,755.20.

Where does that leave stocks? Launched off a cliff, lifted on a tiny updraft, with no ledge in sight. Dow cut through its 200 DMA yesterday, bounced back to it today, but has little reason to stop here. More likely place is 14,760. But of course I could be fooled, and if the Dow turns, climbs, and crosses 16,000 y'all will know I was. Otherwise, bet on gravity.

The gold price fell $8.70 at Comex close today and stocks rose, but by the end of the day the Dow in Gold had risen only 0.7% to 12.32 oz (G$254.68 gold dollars). Dow in silver fell 0.51% to 792.47 oz, and is trying to break down. In case y'all have forgotten: Dow in Metals down, good for metals; Dow in Metals up, bad for metals. These indicators show the value of stocks in metals, whether metals are gaining or losing value against stocks.

Since mid-September the US dollar index has been jailed between 81.50 and 79.70, with one spike to 79.06 in October. It rises, it falls, it makes neither progress nor regress. Today it gained 10 basis points to 81.24. Unless it can jump over 81.60 or falls below 79.50, it's just jawing.

The euro, however, declineth in earnest. Down another 0.1% today to $1.3515. If the euro's chart were your EKG, you'd be scrambling for the phone to make sure your burial insurance was up to date. Hard to see why it won't sink to $1.3300 at least.

The radioactive Yen, on the other hand, is rallying in earnest, from a 94.83 c/Y100 low in January to 98.31 today, down 0.54% for the day but aiming for the 200 DMA at 100.1.

Argentum et aurum comparenda sunt -- -- Gold and silver must be bought.

- Franklin Sanders, The Moneychanger

© 2014, The Moneychanger. May not be republished in any form, including electronically, without our express permission. To avoid confusion, please remember that the comments above have a very short time horizon. Always invest with the primary trend. Gold's primary trend is up, targeting at least $3,130.00; silver's primary is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold or 18 ounces of silver. or 18 ounces of silver. US $ and US$-denominated assets, primary trend down; real estate bubble has burst, primary trend down.

WARNING AND DISCLAIMER. Be advised and warned:

Do NOT use these commentaries to trade futures contracts. I don't intend them for that or write them with that short term trading outlook. I write them for long-term investors in physical metals. Take them as entertainment, but not as a timing service for futures.

NOR do I recommend investing in gold or silver Exchange Trade Funds (ETFs). Those are NOT physical metal and I fear one day one or another may go up in smoke. Unless you can breathe smoke, stay away. Call me paranoid, but the surviving rabbit is wary of traps.

NOR do I recommend trading futures options or other leveraged paper gold and silver products. These are not for the inexperienced.

NOR do I recommend buying gold and silver on margin or with debt.

What DO I recommend? Physical gold and silver coins and bars in your own hands.

One final warning: NEVER insert a 747 Jumbo Jet up your nose.