Wednesday, September 07, 2011

If the Gold Price Closes Below $1,792.50, it Will Drop Much Lower

Gold Price Close Today : 1814.20
Change : (55.70) or -3.0%

Silver Price Close Today : 41.572
Change : (0.246) or -0.6%

Gold Silver Ratio Today : 43.64
Change : -1.075 or -2.4%

Silver Gold Ratio Today : 0.02291
Change : 0.000551 or 2.5%

Platinum Price Close Today : 1821.80
Change : -62.40 or -3.3%

Palladium Price Close Today : 753.45
Change : -25.60 or -3.3%

S&P 500 : 1,165.24
Change : 33.38 or 2.9%

Dow In GOLD$ : $130.07
Change : $ 6.93 or 5.6%

Dow in GOLD oz : 6.292
Change : 0.335 or 5.6%

Dow in SILVER oz : 274.58
Change : 8.20 or 3.1%

Dow Industrial : 11,414.86
Change : 275.56 or 2.5%

US Dollar Index : 75.43
Change : -0.518 or -0.7%

The SILVER PRICE didn't fall nearly as much as gold today, and that took the gold/silver ratio BELOW the 20 dma. Isn't signaling any huge fall in SILVER and GOLD.

GOLD, however, confirmed and completed yesterday's Key Reversal by closing down $55.70 at $1,814.20. Low came at $1,792.50, high at $1,874.40. Bottom line for me? Gold dipped below $1,800 and $1,810 then closed above $1,810. today landed gold smack on its 20 dma, which in the past year has limited most retracement --- generally if not utterly.

Today's action resembleth not a market in a rout. Too many people waiting under the price to buy gold at a bargain.

Never mind my opinion, here's a line in the sand: Gold should not close below $1,800. If it closes below $1,792.50, it will drop much lower. Above it must conquer $1,840 to turn up.

Silver's low reached 4041.7c, then spiked back sharply. Didn't want to stay below 4100c, and closed Comex at 4157.2c. By its stingy drop today, silver refused to confirm gold's big drop. Maybe that means nothing, but it catches my eye because it just doesn't fit. BICBW.

Tomorrow the silver price must hang on above 4040c, and I'd be happier if it stayed above 4120c.

Bottom line: I don't think this will unfold into anything more than a fairly routine and shallow correction. Deep losses tomorrow would gainsay that outlook.

This "risk-on/risk-off" schizophrenia is sending money slamming from one market to the other, and only displays how utterly confused, frightened, and diffident markets are.

Stocks benefitted from the "risk-on" fit, gaining 275.56 (2.47%) for a Dow close at 11,414.86. S&P500 closed up 33.38 (4.2%) at 1,198.62. Nuts. Looney. Cuckoo.

Stocks jumped straight up about the same level they plunged straight down to 10,900+ yesterday. Now 11,300 has been conquered and 11,500 waves the next challenge.

Dow has climbed above its 20 dma (11,251) so might be headed up. I'll have to see it climb above 11,717 (the last intraday high) before I believe that it is doing anything but readying itself to jump off the cliff. Needs to confirm today's reversal with a higher close.

Stocks -- they put the stink in Limburger cheese without ever leaving Wall Street.

US Dollar bounced off 76 resistance,. It dropped 51.8 basis points (0.67%) to 75.434. 'Twill be adequate for it to hold above 75.20. Remember that 75.40 is the top of that range that has so long imprisoned the dollar, so today may be simply a final kiss good-bye.

Dollar's drop helped not the Franken-currency. Euro rose 0.72% to 1.4099, but chart remains a mess and will post much lower prices. Much lower. Yen gained 0.56% but still heads down. Closed 129.51c/Y100 (Y77.2/$).

Bernard O'Bama is supposed to address congress tomorrow with a plan to spend $300 billion to create jobs' while at the same time cutting government expenditures. Lessee -- mmmmm. He plans to make us rich by taking money out of one pocket and putting it in the other. Sounds like a government deal to me.

And 'create jobs'? Government create jobs? With what production? What money? Government is a consumer. All they money they get they must tax or borrow, which takes money from those who really create jobs and gives to those who eat donuts and pretend to work. How did I fall into this lunatic world?

Please remember that I will be vacationing from 9 September through 16 September, and so will not be sending out these daily commentaries. God willing, I will return on 19 September, rested. will be sending daily closing prices.

I had no more written about silver dollars last night than the silver market dropped enough to raise their premium. They tend to be sticky to the downside, and not to fall with silver. Thus when I looked at them three days ago and silver was $43 an ounce and the silver dollars were $34 each, they were a good buy. But silver fell and they didn't, running up their premium. So let them be for a while. We'll get another change above $43 spot silver.

Whoa! Y'all really don't understand the various forms of silver, judging from the questions I got from my comments yesterday about silver dollars. Here's what's in the market: A. One troy oz content, .999 fine silver rounds (coins) or bars,

privately minted. $43.95/oz or 5.6% premium. B. 0.999 troy oz content, .999 fine silver American Eagles

minted by US Mint. $45.81/oz or 10.1% premium C. 0.765 troy oz content each, 90% fine silver dollars,

minted by US Mint from 1792 - 1935; Morgan dollars

minted 1878-1904 and 1921; Peace minted 1921 - 1935.

Peace dollars, $34.10 ea/$44.79 oz or 7.1% premium D. 0.715 troy oz content per dollar face value, 90% fine silver

silver dimes, quarters, and halves minted by US Mint

from 1853 - 1965. $30.129 per dollar = $42.14/oz or 1.3%.

When I say silver American Eagles are a rotten buy, just look at the price, $3.67 more per ounce than US 90% silver coin. Remember, OVER TIME PREMIUM ALWAYS DISAPPEARS, so you will NOT, repeat NOT, recover that premium when you sell at market peak. Then all ounces will be equal, so buying Eagles gains you nothing and makes the Yankee mint rich -- not my goal.

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.