Tuesday, August 05, 2014

The Gold Price Could Drop to $1,260 Without Violating it's Reigning Uptrend

5-Aug-14PriceChange% Change
Gold Price, $/oz1,284.00-3.70-0.29%
Silver Price, $/oz19.79-0.40-1.98%
Gold/Silver Ratio64.8681.1021.73%
Silver/Gold Ratio0.0154-0.0003-1.70%
Platinum Price1,457.40-10.70-0.73%
Palladium Price849.25-6.80-0.79%
S&P 5001,920.21-18.78-0.97%
Dow in GOLD $s264.51-1.48-0.56%
Dow in GOLD oz12.80-0.07-0.56%
Dow in SILVER oz830.029.521.16%
US Dollar Index81.600.210.26%

3 Day Gold Price Chart
30 Day Gold Price Chart
3 Day Silver Price Chart
30 Day Silver Price Chart
The GOLD PRICE tripped $3.70 (0.3%) to $1,284 at Comex close. Silver choked up a massive 40 cents (2%) to 1,979.4c. In the aftermarket, gold's at $1,290.90.

The SILVER PRICE first, since it has now reached my downside target at 1975c (today's low was 1978c). Two or three pennies below silver will strike the downtrend line from the August 2013 high. It broke up through that trendline with a magnificent June rally, so this touchback to that line looks like the "final kiss good-bye." Also the 1975c area has been resistance and support for months. If silver breaks 1975, it might merely chisel its way to 1950, or it could fall to stronger support at 1925c. Today's fall chilled the blood, but that's what markets do, so you have to resist the urge to panic just when the market hits your buying target.

I have a gold chart with so many lines it looks like a Georgia roadmap. I wiped 'em all off and started over with one downtrend line from the October 2012 high and one uptrend line from the 31 December 2013 low at $1,181.40 to the 1 June low at $1,240,20. Those two (1) make an even-sided triangle) and (2) show the gold price trending upwards.

Today that uptrend line meets gold at about $1,260. English translation: The GOLD PRICE could drop to $1,260 without violating its reigning uptrend. Tis also an optimistic sign that gold has hung on above $1,280. A spike low followed by just as swift a jump up would elegantly finish the move.

I think I am going to write down a new Axiom: stuff that goes down, then goes down again, will go down some more. Witness stocks today.

The Dow (along with all other stock indices) plunged 139.81 (0.84%) to wind up at 16,429.47. Since the 16 July high the Dow has lost 4.2%. Its 200 day moving average awaits nearby at 16,333.

Volume riseth.

Reason the media grabbed for today's plunge was heightening tensions in Ukraine. If so, that was only the catalyst for a plunge already fated.

S&P500 tumbled 18.78 (0.97%) to 1,920.21, down since its 24 July high by 3.4%. For both the Dow and S&P there is one more big push down coming before it corrects.

Dow fell so sharply today that even with Gold declining the Dow in Gold dropped 0.87% to 12.74 oz (G$263.36 gold dollars). Crossing below its 200 DMA at 12.70 oz (G$262.53) would cinch the upward correction has ended.

Dow in silver telleth yet another tale, as silver tumbled, too. Dow in silver rose 1.11% to 830.1 oz (S$1,073.92 silver dollars). That punched up through the downtrending fanline and reached for the 50 DMA at 832.58 oz (S$1,76.47).

Clearly, silver and gold are out of synch here, but where will that take us? Implies silver may fall further than I expect. Still, gazing upon that Dow in Silver chart for the last six months, that June high followed by a steep fall certainly argues that stocks topped June 1 against silver, so the next move for the DiS ought to be dirtward.

Buoyed by lying government reports about services sector growth and increasing factory orders, the US dollar shot up 21 basis points to 81.60. Since that close is well above the 81.50 resistance, it whispers that another dollar rally leg may have begun. May.

Euro, stitched together scrofulous fiat currency for the European Union next door to Ukraine, was cold-cocked by news today. Fell 0.36% to $1.3374, on its way to $1.3200. Yen fell only 0.4% to 97.48.

My friend Daniel Freemon is still unconscious in ICU, improving very slowly. Please keep on praying for him.

Aurum et argentum 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.