Monday, July 18, 2011

They Cannot, Dare Not Stop Inflating, and that Will Keep Driving Silver and Gold Prices to the Stars

Gold Price Close Today : 1,602.10
Gold Price Close 8-Jul : 1,541.20
Change : 60.90 or 4.0%

Silver Price Close Today : 4033.3
Silver Price Close 8-Jul : 3653.6
Change : 379.70 or 10.4%

Gold Silver Ratio Today : 39.722
Gold Silver Ratio 8-Jul : 42.183
Change : -2.46 or -5.8%

Silver Gold Ratio : 0.02518
Silver Gold Ratio 8-Jul : 0.02371
Change : 0.00147 or 6.2%

Dow in Gold Dollars : $ 159.81
Dow in Gold Dollars 8-Jul : $ 169.77
Change : $ (9.96) or -5.9%

Dow in Gold Ounces : 7.731
Dow in Gold Ounces 8-Jul : 8.213
Change : -0.48 or -5.9%

Dow in Silver Ounces : 307.07
Dow in Silver Ounces 8-Jul : 346.43
Change : -39.36 or -11.4%

Dow Industrial : 12,385.16
Dow Industrial 8-Jul : 12,657.20
Change : -272.04 or -2.1%

S&P 500 : 1,305.44
S&P 500 8-Jul : 1,343.80
Change : -38.36 or -2.9%

US Dollar Index : 75.378
US Dollar Index 8-Jul : 75.082
Change : 0.296 or 0.4%

Platinum Price Close Today : 1,775.20
Platinum Price Close 8-Jul : 1,730.50
Change : 44.70 or 2.6%

Palladium Price Close Today : 795.75
Palladium Price Close 8-Jul : 775.05
Change : 20.70 or 2.7%

Every morning I drive down Suck Stem Branch Road and just before I drive into the Green Cathedral there lives a groundhog. I bear no animus to any groundhog, but for some crazed reason, the groundhog sits in the ditch and waits until my car gets within about 35 feet and at that precise moment races across the road in a suicidal game of chicken with my 3,500 lb. Isuzu Trooper. I have observed that rabbits and squirrels, too, will abandon a perfectly secure refuge to rush to their own destruction awaiting in midroad. Yet this suicidal behavior can't hold a candle to human beings. We have central banks.

I missed sending a commentary last Friday, so will sum up last week from Friday a week ago to today, Monday.

Certain numbers will leap out at you from the scoreboard: the SILVER PRICE up 10,.4% the GOLD PRICE up 4%, Dow in Silver ounces down 11.4%, Dow in Gold Dollars down 5.9%. Not a good week for stocks or dollar denominated assets.

The GOLD PRICE today reached 103% of its last high. It's over $1,600, with Comex closing today at $1,602.10, up $12.30. On the weekly chart 'twill hit the upper trading channel boundary about $1,650, but $1,625 remains another ancient target. I noticed Steve Saville commented yesterday that GOLD had been moving up 9 days straight, an awfully long unbroken stretch. Well, today it made that ten days, yet surely some pause, some correction must strike soon.

The SILVER PRICE returned to center stage today, gaining 127c to shutter down Comex at 4033.3c, after a high of 4071c. That took the gold/silver ratio down to 39.722. Silver above 4100c means the Dogs of Rally are racing again. Stand not in the path of this juggernaut, but bear always in your mind that it might turn at any time. Clearly silver is following gold, actually, outrunning it, but both are being driven by institutional stupidity, government misfeasance, central bank malfeasance, and the need to feed the banks. Can that last forever?

Ooooo. I should have said that some other way.

Every time the SILVER PRICE approaches its last high, the shorts flee and the bulls take the field, pushing to the next level: 3940c yields, then shoots to 4050c. I'm not opposed to buying here if you have a calm and equitable mind that recognizes the risk of all those institutional players suddenly coming to their senses -- or, more precisely, APPEARING to come to their senses.

In the long run it makes no difference what they do, they cannot, dare not stop inflating, and that will keep driving SILVER and GOLD PRICES to the stars. I fear, I truly fear, that silver and gold are accelerating into that state that panicked buyers will not look at charts or even ask prices, they will simply buy, buy, buy in their desperate need to flee fiat currencies.

Stocks today reached G$159.81 (7.731 ounces), a new low for this move and a tiny breakdown thru the bottom support line. The DiG$ frequently makes that breakdown without following through, but if it does then look for a speedy plunge to G$145 (7.014 oz). Dow in Silver Ounces is verging on a breakdown through 300 oz. of silver buying the whole Dow.

Stocks spent the last four trading days steadily digging lower and lower. Now that they have reached 12,300, they might catch on that stouter support. On the other hand, they tried to pierce their 20 and 50 day moving averages today (12,346 and 12,359) but didn't close beneath them.

Stocks remain the Typhoid Mary of Investment Healthcare Professionals.

By the way, the new low for the Dow in Gold Dollars whispers that either stocks are about to plunge or gold is about to skyrocket.

The US DOLLAR INDEX rose 14.8 basis points today (0.19%) to its present 75.378. Mark, simply, that the dollar remains in an uptrend from last Wednesday's 74.65 low and from its May 72.70 low: higher highs, lower lows makes an uptrend. As long as the Dollar Index remains above 74.75, the trend remains in force, targetting 78.

Euro struggleth still. Today closed at 1.4110, down 0.34%. Hard to look at this chart, a jagged descent as bad as the face of Mt. Everest, and imagine that it will turn and climb. Close below 1.395 and 1.3913 (200 DMA) kicks the euro into the abyss. Yen has made a classic pennant which in a sane world where central banks and governments don't manipulate markets, points to Y76.27/$ (131.12c/Y100). Don't look for that, however, because the Japanese Nice Government Men will be zeroing in on that rate to make it sink.

Footnote from last week's trip: if y'all are ever in Chattanooga, do not miss eating at the Boathouse restaurant on the Tennessee River. It is superb. The grilled squid with arugula and garlic will make you tongue slap your jaws.

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.

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.