Friday, June 17, 2011

Expect to See Lower Gold and Silver Prices Before this Correction Ends

Gold Price Close Today : 1,538.60
Gold Price Close 10-Jun : 1,528.60
Change : 10.00 or 0.7%

Silver Price Close Today : 3573.9
Silver Price Close 10-Jun : 3632.6
Change : -58.70 cents or -1.6%

Gold Silver Ratio Today : 43.051
Gold Silver Ratio 10-Jun : 42.080
Change : 0.97 or 2.3%

Silver Gold Ratio : 0.02323
Silver Gold Ratio 10-Jun : 0.02376
Change : -0.00054 or -2.3%

Dow in Gold Dollars : $ 161.28
Dow in Gold Dollars 10-Jun : $ 161.63
Change : $ (0.35) or -0.2%

Dow in Gold Ounces : 7.802
Dow in Gold Ounces 10-Jun : 7.819
Change : -0.02 or -0.2%

Dow in Silver Ounces : 335.89
Dow in Silver Ounces 10-Jun : 329.02
Change : 6.87 or 2.1%

Dow Industrial : 12,004.36
Dow Industrial 10-Jun : 11,951.91
Change : 52.45 or 0.4%

S&P 500 : 1,271.50
S&P 500 10-Jun : 1,270.98
Change : 0.52 or 0.0%

US Dollar Index : 75.034
US Dollar Index 10-Jun : 75.600
Change : -0.566 or -0.7%

Platinum Price Close Today : 1,757.00
Platinum Price Close 10-Jun : 1,832.20
Change : -75.20 or -4.1%

Palladium Price Close Today : 744.50
Palladium Price Close 10-Jun : 815.70
Change : -71.20 or -8.7%

Spunky GOLD today clambered over that $1,535 barrier to close on Comex at $1,538.60, up $9.30. Technically that's a breakout, and we might even see gold reach its last intraday high at $1,575. However, since Monday is options expiry day, don't expect to see it then.

But even if the GOLD PRICE does reach the old high, it will look like a double top. I reckon until I see it close above $1,575 I will keep on expecting that one last leg down. Since gold is now above its 20 DMA ($1,531) odds favor higher prices next week.

Gold in euros today at E1,076 stands E7.00 off its all time high. Any hitch in papering over the Greek default would send gold higher in euros.

Today the SILVER PRICE dipped briefly below 3500c to 3489, but that happened about 4:30 a.m. NY time. after the NY Open silver shot up, then maintained itself all day with an upward bias.

I know this excites everybody, but the chart shows a downtrend since the end-May high and only a close above 3650c would change that. Comex today rose 18.6c, a little lethargic, to close at 3573.9c.

I still expect to see both GOLD and SILVER at lower prices before this correction ends. 200 DMA, now 3096c, is a fine target for silver. May be wrong and get my head handed to me on a platter, but having made a mountain of mistakes, I am learning to exercise patience. Except, of course, when patience is a mistake.

Gold/silver ratio has established resistance at about 44. If it clears that area it will speedily reach 46, then 49.

Whoa, whoa, whoa! Rumors of settling the Greek government's financial crisis are way overblown. The argument is not whether Greek will default or not, but how to handle the inevitable default. Do they outright stop paying on their bonds? Or "roll them over" for later payment? Or call in the bonds and issue new ones with longer maturities? Germans are insisting that at least a third of the bailout fall on private creditors. Anyway you cut it, (1) it ain't been settled yet and Greece will run out of money in 8 weeks, and (2) Greece will default.

Right, Greek government is in debt up to its ears, more than $42,888 per person, not solvent like the US with a government debt of $44,900 per capita.

Now y'all explain to me, because I want to know, how the US is in better shape. I'm waiting.

WEEKLY SCOREBOARD shows stocks flat, gold up, but silver, platinum, and palladium down, along with the dollar. Let's unravel that.

US DOLLAR INDEX Wednesday shot skyward and hit 76 on the Greek crisis. Be realistic: as sorry as the scrofulous dollar is, the United States is not about to blow apart and take the currency down with it. The euro blowing up might crack up the European Union.

Dollar has since backed off and is trading today down a weighty 71.8 basis points (0.92%) at 75.034. Requires no clairvoyant genius to guess that all the Nice Government Men and central banks are burning lots of nighttime electricity manipulating their currencies against the euro, whence we conclude that currencies are even more a Potemkin market than usual.

Technically -- if that has meaning in a market so fundamentally crooked -- the dollar index needs to hold on above 74.80, preferably 75. Today it threatened to run away sure enough, having climbed above the last high yesterday, but "something" (wink! Wink!) stopped it and it fell instead. Quick as those NGM turn their backs that dollar will pop back up like a basketball held underwater, and soar for 78, then 81. Dollar has already signalled its intentions by closing above the 20 week moving average.

I loathe to report the euro, Frankenstein currency, rose today 0.64% to 1.4301, just under the 20 DMA, loathe because I don't believe it any more than I believe in the lone assassin who before he assassinates a president, etc., starts keeping a diary where he writes again and again, "I am a lone assassin. I am a lone assassin."

Japanese yen just refuses to lie down and stay down. Trading now at Y79.99/$ (125.02c/Y100). Must clear 125.50 to confirm an upside breakout.

STOCKS spent a whole week trying to repair last Friday's damage, but ultimately did little. Oh, in fairness (What? Me be fair to stocks? What am I saying?) they did climb back into the No Man's Land marginally above 12,000 (thanks and a tip o' the hat to the NGM behind the curtains) at a starved out 12,004.36, nominally above 12,000 but not above resistance at 12,100. Tis okay -- any close that begins with a "12" will keep the sheep quietly chewing their cud.

Lot's of folks I respect keep saying the Dow ought to rally from here, the reaction's about over, etc. All I can see, being merely a natural born fool from Tennessee, is that the Dow has violated the trend line stretching back to March 2009 and generally that means much lower prices to follow. BICBW.

I also cannot shed the old-fashioned idea that stocks ought to follow the economy, not the other way round. Since I am fairly sure the banks are sitting on massive compost heaps of rotten assets, that unemployment is over 20%, and that the whole shaky machine is held together only with bubble gum, baling wire, government spending, and borrowing, I can't see much of a future for stocks for the next 10 years or so. Plus they are technically in a bear market. But if you all really trust Bernard O'Bama and Ben Bernancubus when they soothingly croon that things are getting better, why, who am I to stand in your way? Y'all just run right ahead and buy those stocks. After all, Wall Street has to eat, too, and they might as well eat you.

Yes, I do know I have said that twice, but it bears saying several times.

Musing out loud, perhaps the most eloquent chart I study is the Dow in Gold Dollars. It has pushed out further and further on a limb, flirted with breaking down, and when it falls stocks will plunge while gold soars. That chart screams, "Gold will be much higher at year end!"

Y'all enjoy your weekend.

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

- Franklin Sanders, The Moneychanger

© 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.