Friday, March 11, 2011

Will The Gold Price Post Lower Prices Next Week? A Monday Close Above $1,430 Would Ensure Gold Continue Higher

Gold Price Close Today : 1,421.60
Gold Price Close 4-Mar : 1,428.20
Change : -6.60 or -0.5%

Silver Price Close Today : 3593.3
Silver Price Close 4-Mar : 3531.7
Change : 61.60 or 1.7%

Gold Silver Ratio Today : 39.56
Gold Silver Ratio 4-Mar : 40.44
Change : -0.88 or -2.2%

Silver Gold Ratio : 0.02528
Silver Gold Ratio 4-Mar : 0.02473
Change : 0.00055 or 2.2%

Dow in Gold Dollars : $ 175.14
Dow in Gold Dollars 4-Mar : $ 176.10
Change : $ (0.96) or -0.5%

Dow in Gold Ounces : 8.472
Dow in Gold Ounces 4-Mar : 8.519
Change : -0.05 or -0.5%

Dow in Silver Ounces : 335.19
Dow in Silver Ounces 4-Mar : 344.49
Change : -9.30 or -2.7%

Dow Industrial : 12,044.40
Dow Industrial 4-Mar : 12,166.40
Change : -122.00 or -1.0%

S&P 500 : 1,304.28
S&P 500 4-Mar : 1,320.95
Change : -16.67 or -1.3%

US Dollar Index : 76.706
US Dollar Index 4-Mar : 77.234
Change : -0.53 or -0.7%

Platinum Price Close Today : 1,781.00
Platinum Price Close 4-Mar : 1,835.10
Change : -54.10 or -2.9%

Palladium Price Close Today : 762.50
Palladium Price Close 4-Mar : 809.65
Change : -47.15 or -5.8%

Things are seldom clear, take the GOLD PRICE today, for instance. Overnight it double bottomed with yesterdays $1,403.00 low. Then it climbed as high as $1,423.90. That settles it, huh? Gold turned around. Well, no, because it closed at $1,421.50, up $9.30 but $1.10 below the 3 January close. In other words, not quite above milestone resistance. Gold's blowing hot and cold out of both sides of its mouth. Some crisis buying might have arisen from the Japanese earthquake, but that buying always melts like hoarfrost in the sunshine. Just as much support might have been born from today's Friday-ness, that is, folks closing out positions before the weekend. But gold couldn't clear that old high, or pierce $1,425 resistance.

I suspect, not very dogmatically, the GOLD PRICE will post lower prices next week. A brisk beginning Monday above $1,425 - $1,430 would gainsay that and bear gold higher upon beating angel wings.

SILVER PRICE five day chart looks like a long-necked ostrich. Today silver promised early on to wreck yesterday's poor record, and fell as low as 3406c. That came before New York opened, around 7:00 a.m. New York opened about 3450c, then stubbornly rose at a sharp angle all day. High came at 3614c, but by Comex close silver had backed off to 3593.3, up 86.9c. In the aftermarket it again traded over 3600c, but again backed off.

Like gold, silver refuses to make itself plain. Today it closed strong, and came back handsomely, and even closed 61.6c higher than last Friday. As I wrote yesterday, until silver travels more, we can't puzzle out whether this is merely a short term correction, or something calling for heavy-duty painkillers.

Yet all is not mystery. Clear boundaries are 3600c and 3400c. If the SILVER PRICE falls through 3400c, I will lean more to a larger correction. If it bests 3600c, silver is resuming its rally and buying a ticket for 4000c - 4400c.

Just to confuse your mind completely, the GOLD/SILVER RATIO made a new low today at 39.560. But wait, don't new lows in the ratio usually coincide with new price highs? Well, yes, but, there 'tis.

Just about the time you think you might have markets scoped out so that you understand just a little something, an 8.8 earthquake hits Japan.

Not long after that earthquake hit the Japanese Nice Government Men made their presence felt in the currency market. The yen was tanking, so they bought a bundle to jack it up. Naturally that whacked the US dollar index, but maybe we can cut the buck some slack, a little at least, for an exogenous event.

By day's end today the dollar index was trading at 76.706, down 57 basis points (0.73%). Yet this sufficieth not to annihilate the dollar's progress this week. It held above the 77.65 support, so today appears nothing more than a touchback to breakout. Monday will answer decisively. If the dollar can beat back its foes and hold the 76.60 line, then its embryonic uptrend remains in force, with all that implies for stocks, silver and gold. (Headwind, that's what it implies.)

STOCKS, sayeth the oracle at Dogwood Mudhole, will fly like the dove over a baited field full of eager hunters with pockets full of 12 gauge shells. (Oracles are always so obscure). My interpretation of the oracle's message is this:

The Dow broke must-hold support yesterday for the DEFINITIVE move. Today the dead cat bouncy-bounced merely to yesterday's high (12,087). Sure, that climbed over 12,000, but not enough to bind the wound of yesterday's plunge. Therefore, 'twill drop further next week. In fact, 'twill drop a LOT next week.

Dow rose today 59.79 points to roost at 12,044.40. SAP flew up 9.17 points to perch at 1,304.28.

I missed pointing out to y'all yesterday (how did I do that?) the Dow's falling through its 50 day moving average (11,997.31). It did.

Stocks remain the Yugo in the Great Market of Investment Vehicles. The USED Yugo.

Y'all may remember that early American paper currencies often carried the warning, "Tis Death To Counterfeit." Would that we had a like warning today to all politicians and, especially "activists," a word growing daily more unwelcome, even loathsome in my mind.

My mind dwelleth particularly on these state legislature bills to make silver and gold "alternative" money. I speak not as a parvenu, but as one who for 40 years has studied monetary science and history. Again and again I recall Pope's adage, "A little learning is a dangerous thing -- drink deep, or taste not the Pierian spring."

Nothing with the possible exception of sex brings out weird, froward ideas like the money issue. The field resembles one of those filbert plantations in Oregon at harvest time, just full of nuts. There are state bank people, and social crediters, and assorted friends of paper money, and monometallic gold freaks, and US noters, and community currencies and tally-money people, and most have an abundance of apocryphal quotations and historical anecdotes to back up their bogus theories.

Making it worse are newly spawned "activists" armed with a half-quart of knowledge who leap into legislatures at tall bounds and cook up half-baked legislation that fails by miles to reach the goal, or, worse yet and usual, mucks up everything worse than it was.

Listen: change is a dangerous thing. Change can kill you, and lots of bystanders, too. Whoever goeth about to change, had best beware lest he leave a deeper, bloodier mess than he promised to clean up.

So as bad as the Federal Reserve and its fractional reserve banking is, goofy, cranky monetary ideas could be worse. So with all humility, here's a check list of what genuine restoration of silver and gold money would include:

** NO "backed" currencies. We don't want "backed" anything, we want gold and silver money. Circulating

** A practicable and merciful transition from Fed notes to silver and gold.

** Both gold and silver must be included, reciprocally valuing each other (preferably not at a fixed rate), or the system is a lie from the start. No gold only standard, or silver only.

** Most of all, a firm resolve by the state and legislature that no matter how much hatred, heat, and blarney Washington and their running dog media and all the friends of paper money and other parasites throw at them, THEY WILL ESTABLISH SOUND MONEY.

Anything that includeth not these things is a counterfeit, no matter how many "activists" come wrapped around it.

On this day in 1901 JP Morgan purchased Carnegie Steel Corp and formed the US Steel cartel. It made Andrew Carnegie the world's richest man. Today these cartels are formed by the government under the heading of "anti-trust regulation.

Y'all enjoy your weekend.

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

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

© 2011, 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.