Wednesday, December 22, 2010

Gold Price Floated Between $1,382.65 and $1,386.80, Must Not Close Below $1,380

Gold Price Close Today : 1386.80
Change : (1.40) or -0.1%

Silver Price Close Today : 29.367
Change : (0.009) cents or 0.0%

Gold Silver Ratio Today : 47.22
Change : -0.033 or -0.1%

Silver Gold Ratio Today : 0.02118
Change : 0.000015 or 0.1%

Platinum Price Close Today : 1723.65
Change : 12.75 or 0.7%

Palladium Price Close Today : 750.20
Change : 8.20 or 1.1%

S&P 500 : 1,258.84
Change : 4.24 or 0.3%

Dow In GOLD$ : $172.31
Change : $ 0.58 or 0.3%

Dow in GOLD oz : 8.335
Change : 0.028 or 0.3%

Dow in SILVER oz : 393.62
Change : 0.90 or 0.2%

Dow Industrial : 11,559.49
Change : 26.33 or 0.2%

US Dollar Index : 80.63
Change : -0.088 or -0.1%

The GOLD PRICE kept on treading water today, yea, with less bobbing than yesterday. Floated between $1,382.65 and $1,386.80. This narrowing range only promises that the eventual breakout will be violent. Gold must not close now below $1,380. Overhead $1,392 blocks the way.

The SILVER PRICE didn't feel up to pioneering leadership today, so merely plodded along behind in gold's row, bounded by 2916c and 2945.3c. Comex closed down a laughable 9/10 of a cent at 2936.7. Nothing happening there.

Accident vs. Substance. Folks keep on hounding me about the Internet campaign to break JP Morgan -- supposedly short tons of silver -- by buying silver. Theory is that buying will so press the market that JPM will go belly up, just punishment for shorting silver and suppressing the price, and silver will skyrocket.

Now whether JP Morgan is as short as these folks claim I am not informed enough to judge. I doubt not that the US government beginning about 1995 acted through intermediary bullion banks to suppress gold and so lower the long term interest rate and attempt to create -- yawn! -- perpetual prosperity, like numerous other megalomanics in history. Of course, the veriest parvenu knows that gold cannot be suppressed without suppressing silver also, because a declining gold price against rising silver (a falling gold/ silver ratio) would give away their game. Thus I doubt not that the same bullion banks acted to suppress silver. Who was involved other than the Nice Government Men I leave to those more knowledgeable than I.

It goes without saying (but of course I will say by apophasis) that after 2001 the price suppression scheme has been as notoriously incompetent as any other government scheme, suppressing gold from $252 to $1,400 and silver from 400c to 3000c. The "suppression" has only served to raise the price a little faster, it seems.

Yet the true-believing fervor around this JPM business prompts me to point out the difference between accidents and substance, or, as the Germans might say, Schein und Sein, appearance and reality.

Accidents are all those chance characteristics surrounding substance. In the 1970s silver bull market "the world was running out of silver" and "the Indian silver hoard was about to come onto the market/the Indians would soak up the excess." Today it's JPM. Every bull or bear market spawns dozens of meretricious reasons to explain why the market is trending up or down, but most of these are just the accidents of the day, the trappings that shroud the market. They never are the motor that drives it: that is the substance.

What is the substance of a bull market in silver and gold, the motor that powers it? Monetary demand, arising from fear of fiat currencies.

Why am I soaking up your valuable time with this discussion? Simply because every one of us who wants to think clearly must learn to distinguish between Schein and Sein, between accident and substance. Otherwise we will become the ready victims of every enthusiasm, fanaticism, and hysteria that comes along.

It is enough to identify the primary trend, and to identify its motor. Regardless of accidents -- and there are always plenty of accidents, persuasive and urgent -- that bull or bear market will unfold in pretty much the same way, with its own peculiarities ("accidents") of course, as most other markets. It doesn't pay to let accidents distract your attention from the big picture. In other words, keep your eye on the motor, not what brand of oil filter is installed on it.

Now, before you write me a steaming e-mail about how I am aiding and abetting the enemy and how stupid I am, go back and read what I wrote. I did not deny the price suppression, I only question its effectiveness, and deny that is the motive power of this bull market. Is it a crime? Sure, but a hilariously incompetent one. Evil is merely silly, never grand, never omnipotent, but it can kill you, like measles.

TODAY nothing much happened at all.

The US DOLLAR INDEX danced sideways again, between 80.281 and 80.781. Clearly, 80.80 blocks its road, but the stall probably arises from the looming Christmas holiday. Who wants to take a big position before a 3-day weekend, over which anything at all might happen?

The DOW today scratched together 26.33 points and rose to 11,559.49. S&P picked up 4.24 and toted up the day at 1,258.84. No change here, no improvement: outlook grim, but "there are people who don't know and you can't tell 'em."

MARKETS are sleeping ahead of the Christmas holiday. Expect no big action before St. John's Day, maybe Holy Innocents (28 Dec.).

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

- Franklin Sanders, The Moneychanger
Phone: (888) 218-9226 or (931) 766-6066

© 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.