Wednesday, September 28, 2011

From whatever Low Silver and Gold Prices Eventually Make, they Will Rocket Back to Double, Triple, or Quadruple that Low

Gold Price Close Today : 1,650.60
Change : 58.10 or 3.5%

Silver Price Close Today : 31.49
Change : 1.57 or 5.0%

Platinum Price Close Today : 1,574.00
Change : 27.10 or 1.7%

Palladium Price Close Today : 649.00
Change : 22.55 or 3.5%

Gold Silver Ratio Today : 52.42
Change : -0.81 or 0.98%

Dow Industrial : 11,043.86
Change : 272.38 or 2.5%

US Dollar Index : 78.12
Change : -0.14 or -0.2%

Think of a waterfall. The water flows over the edge of a cliff, plummets to a pool below, splashes high up from the pool, then falls again to a lower pool.

That pretty well describes and forecasts waterfall declines in markets, such as what y'all saw in SILVER and GOLD PRICES the last four days. When anything falls that far that straight down, it is bound to bounce. The bounce may last quite a while, the bounce may look stronger than a garlic milkshake, but it fails at last.

I confess I am no more than a natural born fool from Tennessee, and fools -- the better fools, anyhow -- know enough to doubt themselves. Thus I might be wrong and there may be no lower prices in the futures than those already observed, but fool that I am, I still expect to see them.

And bad as I got whipped by swapping out of SILVER into GOLD too soon, I am willing to risk waiting too long now by shooting for a higher target (57.5:1) than today's 51.638. May be wrong, but at least I won't be whipping myself for being rash.

In a bounce worthy of Superman, the GOLD PRICE today shot up $57.90 (3.6%) to $1,650.60 at Comex close. High was $1,676.65, low $1,630.89.

Hard for me to judge the 5 day chart and say whether the rise has ended or not, but plain enough is mighty resistance beginning at $1,700 and rising above like the Great Wall of China. This can go on for weeks with great frustration, trading sideways, rallying, fading, rallying again. Y'all need great patience, and 'twill pay off.

The SILVER PRICE out-did GOLD by rising 5.25% (157c) to close Comex at 3149.7c. High, however, was 3347c, so SILVER gave back about half its gains. Stiffest resistance awaits silver at 3400c, then 3600c.

One complication of waiting for lower SILVER PRICES is what happened in 2008. While the paper price dropped to 880c, the price for physicals never dropped below 1200c. Shortages emerged, and people just asked higher and higher premiums for whatever silver they had. Still, I have to wait for lower prices. I understand this will win me no bonus points with the silver and gold cheerleaders, but the chart says what it says.

Do not misunderstand anything I have written above. You are watching a major correction in silver and gold, but not by any means the end of the bull market. From whatever low they eventually make, they will rocket back to double, triple, or quadruple that low. That's why this correction offers you such a rare opportunity to shoot fish in a rain barrel.

About palladium: it broke about $700 then fell to $605. Today it closed at $648. Platinum broke about $1750, and yesterday's low was $1,475.30. Today it recovered to $1,558. None of this is helpful to silver and gold.

Stocks staged a love fest around the globe yesterday and today, which only demonstrates that the public is even brain-deader and brain-washeder than ever I suspected. Looking for that story that affected the market last night, I went home and got on the internet. Y'all know what the cause of all this stock-buying euphoria was?

A bucket.

Yep, a bucket. The bucket is a dodge the banks and central banks and government -- working together in one vast, loving, and larcenous partnership -- use to solve the crisis after the banks blow up a bubble, and to shuck the loss off on taxpayers.

Think of the early 1990s. Savings and Loans went on a lending spree, bubbled the real estate market, then it crashed and what on earth can we do with all these rotten loans?

A bucket. The Resolution Trust Corporation.

The government/banks create a bucket (a.k.a. Special Purpose Vehicle, Sublime Lending "Facility", or other hogwash) into which they can throw all the bubble's rotting offal, the toxic assets worth 10c on the dollar that the banks must carry on their balance sheets. They throw all the toxic assets into the bucket to buy time, then work them off little by little, usually picking the taxpayers' pockets in the process. Presto! The banks can sell their offal at 75c or 100c on the dollar to the bucket and clean up their balance sheets and the Taxpayers can pay. Normally this is done with such pompous sleight of hand, propaganda, and posturing that even the people being cheated -- the entire commonwealth -- think the banks are doing 'em a favor.

So last night I was surprised to learn that all the hoo-hoo in stocks apparently had been built on limp rumors of a bucket for the European sovereign debt crisis. Friends, this is thin gruel, because this mess has become too big for that bucket. Besides, it's full of holes.

I reckon they'll find out in a few days, and when the news of the bucket (as opposed to the rumor) hits the electrons, stocks will suddenly, rapidly, bloodily re-align themselves with reality.

Dow today rose 1.33% or 146.83 points to close at 11,190.69. S&P500 added 12.43 points (1.07%) to close 1,175.38. Considering the high came at 11,369, the Dow's grip wasn't too tight. Lots of resistance at 11,300-11,400.

Stocks -- the e. coli in your Investment Shopping Basket.

On 27 September 1964 the Warren Commission issued its report on John F. Kennedy's assassination a year earlier. The report concluded that Lee Harvey Oswald had acted alone, then sealed all the documents for 50 years. Right. The Tooth Fairy had intended to join him, but she backed out at the last minute

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.