Monday, July 11, 2011

For the Nonce, and Probably for the Duration of this Financial Panic, Silver and Gold Seem to Have Parted Ways.

Gold Price Close Today : 1548.80
Change : 7.60 or 0.5%

Silver Price Close Today : 35.689
Change : (0.847) or -2.3%

Gold Silver Ratio Today : 43.40
Change : 1.214 or 2.9%

Silver Gold Ratio Today : 0.02304
Change : -0.000663 or -2.8%

Platinum Price Close Today : 1727.50
Change : -3.00 or -0.2%

Palladium Price Close Today : 767.60
Change : -20.05 or -2.5%

S&P 500 : 1,319.49
Change : -24.31 or -1.8%

Dow In GOLD$ : $166.91
Change : $ (2.84) or -1.7%

Dow in GOLD oz : 8.074
Change : -0.137 or -1.7%

Dow in SILVER oz : 350.41
Change : 3.98 or 1.1%

Dow Industrial : 12,505.76
Change : -151.44 or -1.2%

US Dollar Index : 75.97
Change : 0.644 or 0.9%

Be advised and warned: Do NOT use these commentaries to trade futures contracts. I don't intend them for that or write them with that outlook. I write them for long-term investors in physical metals. Take them as entertainment, but not as a timing service for futures.

Friday the GOLD PRICE had bumped up against the ceiling at $1,545, and kept bumping along over the weekend In European trading early today it began battering the hatch, then burst through about 7:00 a.m. NY time. By NY open the climb had already reached $1,550, and accelerated, but stalled at $1,556. Oddly, oddly -- in the view of those who know not the Nice Government Men who shepherd the markets -- about 10:30 some massive selling took the market in 15 minutes from $1,556 to $1,542. Means, motive, opportunity: We know the NGM have the means to manipulate silver and gold prices, we know their motive is to keep gold from running away while the euro is sinking out of sight, and of course they had opportunity and occasion today. Did them no good, though, because the gold price swiftly recovered to 1848, then climbed steadily through the day, ending Comex up 7.60 at $1,548.80. In the aftermarket it's trading $1,552 - $1,555.50.

Take the main chance: the GOLD PRICE will rise higher. It has now reached that $1,560 resistance, and if trading even HINTS it intends to pierce that level, gold will race toward $1,575. Remember meanwhile that panic is driving this, and as quick as the NGM cobble together Humpty-Dumpty again, that driver will disappear. All in, it appears that the GOLD PRICE has now forged a bottom off its May high. Trading range is from $1,480 to $1,560. Wherever this rally takes gold, it's not likely to trade below $1,510 again.

How is it, you may ask, that GOLD, which has been paralleling stocks and moving with them contrary to the US dollar, would suddenly rise with the dollar while stocks stumble? I reckon the financial crisis brewing in Italy grips so many hearts with panic that they are fleeing to liquidity, i.e., dollars and gold, and out of stocks. Unfortunately, that applies to silver also, which moves against gold as stocks move. When stocks wax strong, so silver waxes strong against gold, and vice versa. In times of panic, silver follows stocks.

Five day SILVER PRICE chart shows a turnaround. SILVER made peaks Friday and today around 3685. Silver misplaced 84.7c on Comex today, closing at 3568.9c. That fall took the gold silver ratio up from Friday's 42.183 to 43.397, a 2.9% rise. Whew. Remember that's temporary.

By 8:30 a.m. this morning silver was touching 3685c, but then wavered, lost 40c in the next two hours, and found a cliff to fall off at 3640c. In 15 minutes it dropped 90% to 3550c, but recovered a little and flatlined the day away.

Stand back from the chart and ask what that means? It means that silver has twice been turned back from 3675-3650c, and it bent silver away from the 50 DMA (3642c) nearly to its 20 DMA (3534c). None of that settles the issue positively, but it whispers that silver has been turned back for more penance at lower prices. A close above 3650c would gainsay that.

For the nonce, and probably for the duration of this financial panic, silver and gold seem to have parted ways.

Schizophrenia savaged markets today: stocks tanked, dollar rose, gold rose, silver fell. But mayhap it makes some sense.

Stocks woke up in a bad mood and moved on to a migraine. Dow dropped a meaty 151.44 points (down 1.2%) to 12,505.76. S&P500 surpassed it with a 24.31 (1.81%) drop to 1,319.49 (maybe that should be "underpassed").

The chart leads to one of two conclusions: either stocks have made a double top and will keep sinking from here, or they will recover from the present fall and reach a new high slightly higher than the last at Dow 12,875, and THEN keep sinking. Either way, lower, much lower prices await them, for their primary downtrend (bear market) runneth still.

Stocks -- they are the can of anchovies in your Investment Survival Pack.

Seems the specter of big Italian banks being found udders up in the pasture is panicking folks out of euros and into the dollar and gold -- not so much silver.

Dollar index shot up today, breaking down the door at 75.40 and rushing all the way to 76.156. Never mind the occasion, technically this sets up the dollar to break down that 76 door, too. Trading now up 64.4 basis points (0.83%) at 75.971. As I have been warning, dollar moved higher.

Of course, that means the Frankenstein currency, the euro, moved lower. While the dollar is closing in on its 200 day moving average (77.01) from below, the euro today gapped down toward its 200 Dma (now 1.3899). Looks like somebody dropping a 3 inch bolt out a 3rd story window on a still day. Jumped clean over 1.4200 to 1.4100, and closed at 1.4032, down 1.63%. Could easily hit 1.2000 or lower before this settles out. Bear in mind that all the European mega banks are wallowing as deep in rotten sovereign debt as American banks were wallowing in rotten mortgage debt in 2008 (well, more accurately, the American banks also have weighty exposure to euro sovereign debt). Point is that a financial panic such as gripped the US in fall 2008 might now seize Europe. Watch: that will send the dollar skyward, the euro earthward, gold skyward, and silver earthward. And ALL stock markets toward the earth's core.

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.