Monday, June 21, 2010

Today's Fall Leaves All Gold Owners Uncomfortable, it Really Hasn't Hurt Much Yet

Gold Price Close Today : 1239.70
Change: -17.50 or -1.4%

Silver Price Close Today : 18.802
Change -37.3 cents or -1.9%

Platinum Price Close Today: 1589.40
Change: -0.65 or -0.0%

Palladium Price Close Today: 493.45
Change: 3.70 or 0.8%

Gold Silver Ratio Today: 65.93
Change: 0.370 or 0.6%

Dow Industrial: 10,442.41
Change: -8.23 or -0.1%

US Dollar Index: 85.58
Change: -0.11 or -0.1%

Ahhh! Foolish Moneychanger! You should have reckoned with the needs of the poor destitute options writers before the looming options expiry on 24 June! And did you also forget the Nice Government Men & their need to control the world through manipulating currency rates, silver, gold, and the price of bubble gum? Was that what made you let your optimism run wild last Friday?

Oh, never mind making excuses. Caution never goes out of style. Yet there is little damage done to silver and gold.

The US DOLLAR INDEX rallied 58.8 basis points today, a nice jump, but it only reached the window sill of resistance around 86. Now trading at 85.95, the dollar will have to crash its way through 86 & move sharply higher to prove a turnaround. A close over 86.50 is needed to convince me that the Dollar has finished its time in the basement.

Did the Chinese announcement on Saturday send gold down? I see people asking that and wonder what they are thinking. First off, the Chinese central banks announcement was an oriental puzzle, saying precisely nothing. It implies they will allow the yuan to appreciate within their peg to the US Dollar, but it implies that only because it is a meaningless statement otherwise. The statement asserts that for now the "floating bands" remain unchanged.

But ponder that question again. The Chinese are a major buyer of US governemnt debt. Suppose they intend to let their own currency rise against the dollar. A little mosquito bite from that would be lowering the value of all the US debt they already own. A more threatining wound is a higher yuan's impact on exports. But in any event, how on earth would a small change help the dollar? It can't, even over the long term. Does anybody think that a little fiddling with the exchange rate will curtail Chinese exports to the US, or help the US balance of payments materially? Nope, the Chinese aren't going to kill the American goose that keeps laying golden eggs and keeps their gigantic work force (now drawn off the farm) working by drastically raising their exchange rate. So whatever the Chinese announcement means, it will NOT be bearish for gold.

Go read the last two statements at, & see what you can glean out of them. But markets often misinterpret events when they first hit. That's the "propaganda effect."

STOCKS today trod water. Dow fell 8.23 to 10,442.41 while S&P500 dropped 4.31 to 1,113.20. Nothing wrong with treading water, until you do it for six or eight hours in the middle of the ocean, at which point it becomes less than an ideal strategy. Stocks could still go either way, staging one more rally or falling over into the pit. Save yourself tears, heartache, and money, and stay out of stocks.

From the open gold came under fire but gave up little ground until about 12:30 EDT when -- I assume -- large sellers came in driving gold through $1,250 straight down to $1,235. Comex closed lower by 17.50 at $1,239.7, and a trembling aftermarket is trading $1,235.20. While today's fall leaves all gold owners uncomfortable, it really hasn't hurt much yet. Today's low came at $1,229.40 after Comex closed. This level shouldn't surprise, since strong support lurks around $1,228.70.

Plainly, this week gold will be dodging bullets until options expire on 24 June. Options writers and whoever else wants to hitch a ride along with a manipulation always try -- try, I said -- to run down gold before the options they have sold expire. Selling them is a lot more profitable when you never have to pay off. I'm guessing a lot of call options have been sold with $1,225 strikes, so watch that price.

Gold's 20 day moving average stands at $1,224.22, and that is a tripwire for lower prices.

SILVER made its low today at 18.63, but that must have been fast since I never saw it that low. Comex close was 18.802, down 37.3c, but aftermarket is trading at 18.77.

As with gold, the big silver break began around noon EDT, then had dropped 50c in a half hour. You have to expect this sort of volatility now. This area around 18.80 is silver's first support. Ahh, look at that! Silver's drop only brought it to the rising trend line of it upmove that began 4 June. 20 DMA today is 18.31. Plenty of support near there.

Bottom line on the day is that traders and options writers saw low-hanging fruit (market overextended from Friday) and shook it down. This does not alter my conclusion that silver and gold are about to rally more, but I will put my hand over my mouth and let the market tell me.

Over the years I have investigated a lot of alternative cancer therapies, largely because the mainstream or orthodox ones mostly don't work. In the early 1990s I first interviewed Dr. Nicholas Gonzalez of New York who employs a therapy including pancreatic enzymes to break down the tumor, diets tailored to metabolic type, and cleansing regimes. He had learned this technique from the genius who developed it, Dr. William Kelly, a Texas orthodontist. Kelly discovered it by curing himself he was a medical student, and went to study his work. He was astounded to find that Kelly was curing all sorts of cancer. Gonzalez own experience shows the therapy effective in nearly 70% of those he treats. You can read that interview at

Yet for some reason (?) the medical establishment persecuted Kelly mercilessly. After six year's work, Dr. Gonzalez couldn't find anyone anywhere to publish his study. Only recently has he published it himself through New Spring Press,, as One Man Alone. He has also published a more techincal (but very clear and readable) explanation of the therapy in The Trophoblast and the Origins of Cancer.

Understandably many people panic when they hear the cancer diagnosis. Some seem to try to atone for themselves by slavishly following whatever orthodox medicine prescribes for them. Few, very few, will research and study and choose alternative therapy. I can't speak for other people, but if I had cancer, I'd get on a plane to Nick Gonzalez in New York so fast my slipstream would tear leaves off the trees. I don't believe anybody could talk me into radiation or chemotherapy.

But you decide for yourself. Go read my interview with Dr. Gonzalez, and better yet, buy his books. If you can read those without suspecting that this is the most promising and effective cancer therapy available, then you can call me up and personally horse-laugh in my ear.

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

- Franklin Sanders, The Moneychanger

© 2010, 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 $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or US$-denominated assets, primary trend down; real estate in a bubble, primary trend way down. Whenever I write "Stay out of stocks" readers inevitably ask, "Do you mean precious metals mining stocks, too?" No, I don't.