Wednesday, November 03, 2010

The Gold Price, After all the Sharp Up and Down, Still Ended the Day Strong, Following Silver's Lead

Gold Price Close Today : 1337.10
Change : (19.10) or -1.4%

Silver Price Close Today : 24.432
Change : (0.400) cents or -1.6%

Gold Silver Ratio Today : 54.73
Change : 0.112 or 0.2%

Silver Gold Ratio Today : 0.01827
Change : -0.000038 or -0.2%

Platinum Price Close Today : 1697.00
Change : -11.10 or -0.6%

Palladium Price Close Today : 643.45
Change : -6.85 or -1.1%

S&P 500 : 1,196.06
Change : 2.49 or 0.2%

Dow In GOLD$ : $173.27
Change : $ 2.74 or 1.6%

Dow in GOLD oz : 8.382
Change : 0.133 or 1.6%

Dow in SILVER oz : 451.01
Change : -6.87 or -1.5%

Dow Industrial : 11,207.49
Change : 18.77 or 0.2%

US Dollar Index : 76.37
Change : -0.348 or -0.5%

The SILVER PRICE rode the wild seismograph, too, but with a marked variation. About 10:45 it plunged, I mean fell like a rock from the sky, from 2470c to 23.90 by 11:20. Then it stubbornly advanced on a 45 degree angle, fought off a terrorist strike about 2:30, and kept on climbing. The Terrorists, no doubt, were silver shorts served by a 40c lower Comex close at 2443.20. However, silver kept on climbing, yea, even unto 2495c. In plain words, silver lost a dollar this morning, then regained a dollar by the end of the day, Comex tape-painting notwithstanding. The looks like a key reversal, a close into new low ground followed by a higher close, and the next day a higher close still. I say, looks like a key reversal, only to give you a feeling for how strong that move was. I was ready to let silver go and wait for the lower prices of another leg down, but now I don't believe we'll get them.

Critical for silver to hold is 2460c, and bottom line must hold is today's low at 2390c. Above silver must crash through 2500c.

The GOLD PRICE, after all the sharp up and down, still ended the day strong, following SILVER's lead.

About 10:45 the GOLD PRICE plummeted to $1,327 by 11:20, then climbed until the Terrorists struck about 2:15. Gold shot up, then shot straight down to a lower low at $1,325.20, then after 2:30 shot skyward again. Comex closed down $19.10 at $1,237.10, but in the aftermarket is now trading at $1,349.10.

Okay, this performance doesn't quite match silver's athleticism, but it was strong nonetheless. I have to say gold ought to move higher tomorrow, but cut me some slack. In the midst of this sort of confusion, anything could happen.

Boundaries for gold are $1,325 on the low and $1,358 on the high side. Breakouts through those marks will carry further in the same direction.

It occurs to me that all this intervention combined with computerized trading may be accelerating markets so that today we DID get that C-leg down in gold and silver, and the beginning of the recovery from that. Nuts, it's all nuts.

The Federal Reserve announced today it will pump up to $900 billion (a nine with 11 zeros) into the economy by directly monetizing $600 billion in US government debt (buying "long-term Treasury debt") over the next 8 months. The Fed will also "re-invest" [I love that word] $250 to $300 billion into Treasuries with the proceeds of its earlier "investments."

Okay, okay, y'all stop laughing and rolling on the floor. We both know the words "Fed" and "investment" can't legitimately be used in any sentence other than "The Fed lowers the value of all investments by tinkering with the interest rate." Quantitative Easing 2 has arrived.

Now I am careful with the words I use. "Moron" and "idiot" are technical terms describing low IQs and I am fairly sure that on an IQ test Banzai Ben could at least score as high as his temperature, which rules out using those words. Yet my massive vocabulary and all my dictionary and thesaurus resources fade to wordless amazement before folly of this magnitude. Has ever a great nation made itself hostage to private interests so grotesquely stupid that they willingly destroy the currency and the economy? Has ever a fool acted so arrogantly?

Dear Readers, clear your decks. If Bernanke fails to depreciate the US dollar by 20%, 30%, pick your number, by this time next year, I'll be as surprised then as I am wordless now. Exactly this course did von Havenstein, governor of the Reichsbank, take in 1920, directly monetizing government debt.

Finally, how might we compound this folly? It won't work. Never has, never will. 'Twill only strangle the economy.

But 'twill be very good for silver and gold.

Markets were most wickedly confusing with today's tergiversations. The US Dollar Index daily chart looks like a seismograph during a California earthquake. It slammed up to 77, then fell straight down to a low of 76.223, and is now trading at 76.374, down 34.8 basis points (-0.45%). Dollar has broken through support and thus must do penance with a trip at least to 76.15, maybe 74.25. To gainsay that forecast the dollar index would have to close above 77.

STOCKS rode the same seismograph today. The spent most of the day below water, then came the Fed's announcement and they scratched and sawed back and forth, then plunged. Yet -- forsooth! -- came up off the lowest prices of the day at 2:30 and actually managed to close the day up 18.77 at 11,207.49. S&P500 closed up 2.49 at 1,196.06. Hogwash. Tape-painting.

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.