Wednesday, August 24, 2011

Silver and Gold Prices are Correcting, but will Come Back

Gold Price Close Today : 1754.10
Change : (104.20) or -5.6%

Silver Price Close Today : 39.157
Change : (3.124) or -7.4%

Gold Silver Ratio Today : 44.80
Change : 0.845 or 1.9%

Silver Gold Ratio Today : 0.02232
Change : -0.000429 or -1.9%

Platinum Price Close Today : 1803.50
Change : -59.20 or -3.2%

Palladium Price Close Today : 744.50
Change : -18.45 or -2.4%

S&P 500 : 1,177.60
Change : 15.25 or 1.3%

Dow In GOLD$ : $133.41
Change : $ 9.10 or 7.3%

Dow in GOLD oz : 6.454
Change : 0.440 or 7.3%

Dow in SILVER oz : 289.11
Change : 24.77 or 9.4%

Dow Industrial : 11,320.71
Change : 143.95 or 1.3%

US Dollar Index : 74.02
Change : 0.130 or 0.2%

Sometimes markets speak with fork├ęd tongue. Sometimes they speak loud and clear. Today was one of those days.

The GOLD PRICE put in that second part of a Key Reversal, loud and clear. It lost $104.20 today (5.6%) and closed Comex at $1,754.10. That's what happens when tinhorns and newcomers flock to a market because it's rising. When the heat turns up, they all stampede and yell, "Fire!" Okay by me, they only create buying opportunities.

Gold's fall brought it to $1,750 support, BUT it still hasn't touched its 20 DMA ($1,740.74), first tripwire of a decline. Oh, it will, tomorrow probably, but our big question is answered, namely, has a correction begun. Looks like it hath. However, the GOLD PRICE must break support at $1,725, then there's a tiny gap about $1,675, so there's another target. 50 dma, a frequent correction target, awaits at $1,627.93. Above that is $1,650 support. If all else fails, GOLD can catch hold at $1,600.

Be patient. The GOLD PRICE has a ways to fall, ASSUMING it confirms tomorrow by breaking that $1,750 support. Frankly, these volatile tergiversations in every market have left me punchdrunk. The way they're flopping from side to side, I want PROOF that GOLD will carry through to the downside.

Y'all better be watching this correction like a hawk for a chance to buy more gold. Why? Because the turmoil of the last two months has given you a foretaste of trading to come. The GOLD PRICE will come ROARING back, whether this correction lasts a week or six months. If the whole world were a desktop, not all the politics of the last two months would have moved a pencil.

The SILVER PRICE made one of its largest moves in a long time. It dropped 7.4% today, 312.4c, to 3915.7c. High was 4219c, low 3905c. SILVER, too, unequivocally confirmed a Key Reversal today. It WAS a lower close. And the SILVER PRICE broke thru its 20 dma (now 4008c).

The SILVER PRICE will fall further, but 3900c caught it today. Weak support appears at 3850c, but 3800c is stronger. 50 DMA meets silver at 3821c, 200 at 3468c. Lots of lateral support at 3800c.

Another little thing. Sometimes when a market traces out an equilateral triangle, then breaks out, after a long time it returns to the triangle's apex. Apex from the triangle SILVER formed May to mid-July falls just under 36.

Gold/silver ratio jumped from 43.951 yesterday to 44.805 today, top of the range and on its second try to break out upside. That's not helpful for silver.

Be patient, and lash yourself to the mast and stop your ears like Odysseus did to the Sirens whenever you hear parvenus and the hopelessly stock-addicted talk about the metals' "bubble" having ended. They're the same geniuses who told you to buy and hold stocks in 2001. Silver and gold are correcting, but will come back. Bull market has 3 - 10 years to run. It's just getting interesting.

Stocks traded up and down raggedly today, but managed to add 143.95 (1.29%) to the Dow by day's end, taking the average to 11,320.71. S&P rose 1.31% (15.25 points) to 1,177.60.

Dow turned up from the dreaded Death Cross today as the 50 day moving average (11,975) did not cross below the 200 DMA (11,989). Turns out it's not significant anyway in past historical performance, but as Prince Potemkin said to Catherine the Great, "Appearances are everything in the stock market"

Stocks -- your intergenerational pipeline to poverty.

Who could trade the US dollar index? One day up, next down, all in a tight range. Today it rose 13 basis points (0.17%), climbing over 74 to 74.024. Still locked in that 75.5 -73.4 range. Ben Bernancubus and the rest of the dolts managing the dollar couldn't manage a good-sized gas station successfully. A day's work would kill 'em.

The Euro, only fiat currency in the world WORSE than the US Dollar (no, no, wait -- the yen might be worse, too) fell today to 1.4414, down 0.16% as the "water wings" the Nice Government Men are putting under it fail to inflate. Stinker. Smell of death is all over it.

In the land of the blind the one-eyed man is king, and in a financial panic anything that even looks like it can see will attract money. Hence the yen's present exalted height. It fell a little today, 1/3% to 129.93c/Y100 (Y76.96/$).

On Saturday, 3 September we will celebrate our annual Bodacious Hoedown again at the Top of the World farm. Starts at 1:00 p.m. with an afternoon of games like raw egg toss, dunking booth which my children have set up for me, and lots of others. Or you can sit bring a stringed instrument and sit under the trees jamming with others (do NOT bring a grand piano. It has strings, but won't fit in.) After that come supper with barbecued pork raised on our own farm, slaw, beans, tomatoes, and dessert. Then comes the fun: an Old Time Band and dance caller. This year we are not charging admission, as a thank-you to all our customers. If you're interested, email me with "Hoedown Directions" in the subject line and I'll send you directions and a list of local motels -- or you can camp out, if you like rustic camping.

WARNING AND DISCLAIMER. 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 short term trading outlook. I write them for long-term investors in physical metals. Take them as entertainment, but not as a timing service for futures.

NOR do I recommend investing in gold or silver Exchange Trade Funds (ETFs). Those are NOT physical metal & I fear one day one or another may go up in smoke. Unless you can breathe smoke, stay away. Call me paranoid, but the surviving rabbit is wary of traps.

NOR do I recommend trading futures options or other leveraged paper gold and silver products. These are not for the inexperienced.

NOR do I recommend buying gold & silver on margin or with debt.

What DO I recommend? Physical gold and silver coins & bars in your own hands.

One final warning: NEVER insert a 747 Jumbo Jet up your nose.

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.