Monday, June 27, 2011

The Gold Price Has Sunk from $1,549 to $1,496, $53 in Three Days

Gold Price Close Today : 1496.00
Change : (4.50) or -0.3%

Silver Price Close Today : 33.585
Change : (1.053) cents or -3.0%

Gold Silver Ratio Today : 44.54
Change : 1.224 or 2.8%

Silver Gold Ratio Today : 0.02245
Change : -0.000634 or -2.7%

Platinum Price Close Today : 1677.80
Change : -8.20 or -0.5%

Palladium Price Close Today : 729.00
Change : -5.00 or -0.7%

S&P 500 : 1,280.10
Change : 11.65 or 0.9%

Dow In GOLD$ : $166.42
Change : $ 2.02 or 1.2%

Dow in GOLD oz : 8.051
Change : 0.098 or 1.2%

Dow in SILVER oz : 358.60
Change : 14.05 or 4.1%

Dow Industrial : 12,043.56
Change : 108.98 or 0.9%

US Dollar Index : 75.31
Change : -0.278 or -0.4%

After losing so much last week and flashing all those signals, the GOLD PRICE followed through today, falling 4.50 to close Comex at $1,496, nominally falling through $1,500 round number/psychological support. Yet gold's friends do not yet believe lower prices, so gold traded in a tight range between $1,490.30 and $1,505.22, but mostly BELOW $1,500.

Support stands all around $1,490 clean down to $1,486. The break, however, targets more than $1,486. It should reach $1,460 at least, then fall further toward the 200 DMA (now $1,411). It could catch anywhere on that journey, in the $1,430s, at $1,418, or overshoot to $1,395.

The GOLD PRICE has sunk from $1,549 to $1,496, $53 in three days. Might get a rally before it resumes falling, say up to $1,510 intraday, maybe with a close above $1,500 barely, then falling off sharply after that.

Y'all do understand that these are my opinions only? And I could be plumb wrong and gold might not fall lower than $1,490.

The SILVER PRICE took a 105.3 cent beating today, falling to 3358.5c at Comex close. That takes it slap to the trading range's bottom, and nearer the 200 day moving average at 3143c. Beginning to wonder, after watching that long consolidation trading range, if it won't now fall further (300 DMA at 2709c).

I may have confused y'all with my notation for silver prices in cents, abbreviated "c". I do it that way because Comex quotes it in "cents per ounce." f that bothers y'all, just move the decimal point left two places. Sorry.

GOLD/SILVER RATIO has now risen to a new high for the move at 44.54. That signals that silver will accelerate its down move.

The SILVER PRICE today remained MOSTLY above 3340c, with one excursion to 3315. Any break of that 3340c will take silver another big step lower. Expect, however, at any time a rally lasting a day or two, then resuming the fall.

Square your shoulders. It's a CORRECTION in an unbroken primary uptrend (bull market) offering you a chance to add to your position at lower prices. Ignore those folks who tell you silver's bull market is over. They don't know a bull from . . . Never mind. They don't know a bull market from Adam's off ox.

TODAY made clear that I have misjudged the Dow in Gold Dollars (DiG$). Stocks have rallied against gold, and instead of following through with their breakdown merely faked me out, and in the last three days have rallied through their 20 DMA nearly to the 50 DMA. Today's close at G$166.62 (8.051 oz) climbs back into the trading range and will probably sentence us to several weeks of misery watching stocks gain on gold while we twiddle our thumbs and await the inevitable collapse. Probably the DiG$ will rally to the 200 DMA, now G$172.82 (8.36 oz).

Tea leaf readers who have become used to stocks moving along with gold and silver and opposite the dollar automatically will have trouble explaining how today the dollar index fell, along with silver and gold, while stocks rose. Don't expect me to explain it, certainly not in a season when stocks ought to be fainting, not rallying. Still, this is no settled issue, since the whole area between 11,900 and 12,100 has been fought over like the Western Front in France in 1918, and might plunge anew.

Dow's 20 DMA stands now at 12,092, and in spite of a 108.98 point (0.91%) rise to 12,043.56 today, the Dow hasn't climbed above that 20 DMA, first hurdle of a rally. Otherwise, it will turn and crash through the 200 DMA (11,785) and let gravity take its course. S&P today rose 11.65 points (0.92%) and closed at 1,280.10.

Whether rally or failure, y'all ought to have sold your stocks for silver or gold years ago, and ought to sell them still. Stocks have fallen 80% against gold since 1999 and nearly 90% against silver since 2001. They will lose again 80% of those values before the metals bull market ends.

So, explain to me once more exactly why I would want to own stocks? They are the amanita phalloides in the Mushroom Hunt Through The Investment Forest.

US DOLLAR INDEX has backed off 27.8 basis points from this time Friday and stands now at 75.309. Plainly the dollar is rallying and will keep rallying as long as it falls not below 75. Only catch there is that the momentum indicators are looking overbought.

Euro rose today 0.68% to 1.4285 which changes nothing and doesn't even fill the gap above. I didn't see details but heard that French banks and France had agreed to a 30 year extension of Greek bonds. This is a default that saves everyone face because they call it an "extension" instead of a "default." and because it's not a "default" no US banks have to pay off on credit default swaps. Pretty neat, huh? You eat grubs and they eat caviar and pretend to be World Savers. Man, that Big Banking is the business I need to get into, if I didn't mind people's faces bleeding when you step on them.

Yen dropped a little today, but it's so obviously managed it's no fun to talk about. About as subtle as sauerkraut with Tilsiter.

Just to prove to y'all that this depression-caused-by- banks stuff isn't new, on 27 June 1893 the New York stock market crashed, and by year end 600 banks and 74 railroads (the mortgage-backed-securities and dot com stocks of the day). It works this way: banks expand credit, credit fuels boom, easy money flows into unprofitable investments, unprofitability surfaces all at once, market crashes, government bails out banks. Yea, buddy, that sounds like a great system to me!

Been thinking about sugar. Once you get away from it, processed foods and a lot of restaurant food taste so sweet you can't eat them. Susan and I seldom eat sugar, but once in a while the craving sneaks up on us. I drank a Coke a couple of days ago and spent the rest of the afternoon slapping myself trying to stay awake -- sugar high, sugar crash. Susan did herself in even worse: chocolate milkshake. Took her two days to get it out of her system. When you get away from all that sugar and high fructose corn syrup, your body just can't take it.

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.