Tuesday, September 06, 2011

Long as the GOLD PRICE Holds $1840 its Mind is Still Set on Higher Things

Gold Price Close Today : 1869.90
Change : (3.80) or -0.2%

Silver Price Close Today : 41.818
Change : (1.202) or -2.8%

Gold Silver Ratio Today : 44.72
Change : 1.161 or 2.7%

Silver Gold Ratio Today : 0.02236
Change : -0.000596 or -2.6%

Platinum Price Close Today : 1854.80
Change : -29.40 or -1.6%

Palladium Price Close Today : 752.20
Change : -26.85 or -3.4%

S&P 500 : 1,165.24
Change : -8.73 or -0.7%

Dow In GOLD$ : $123.15
Change : $ (0.85) or -0.7%

Dow in GOLD oz : 5.957
Change : -0.041 or -0.7%

Dow in SILVER oz : 266.38
Change : 5.10 or 2.0%

Dow Industrial : 11,139.30
Change : -100.96 or -0.9%

US Dollar Index : 75.91
Change : 0.797 or 1.1%

Here is one reason I don't trade currencies: I don't like puking in wastebaskets. No matter how carefully you scope out the market, in the end all currencies are wholly manipulated, and when any government finds its currency with its toe in the wringer, it will throw a "Surprise Party." Surprise parties are often thrown after the close on Fridays, to catch as many incapable to act as possible. And when they throw a surprise party, you might be trapped, and watched your carefully planned trade turn into a massive loss that threatens to take not only all your money but also some of your internal organs.

Witness the Swiss Franc today. Switzerland's economy exports heavily to Europe, but the Swiss Franc has been (until recent years) far better managed than any other currency, so all the Eurolanders fleeing the Euro have been swapping Euros for Swiss Francs, driving the Franc up against the Euro, raising the price of all Swiss exports, and sending Swiss industry into a non-competitive swoon.

Thus the Swiss National Bank announced today that it would henceforth sell as many francs as necessary to keep the franc at 1.20 euros. Swiss franc dropped 7% on that news. That's a puke in the wastebasket fall, which for the owners of futures contracts on Swiss francs would pretty much clean out their bank accounts and theirlife expectations for the next couple of centuries.

Now let us ponder what the Swiss did to the rest of the currencies.

First the Franken-currency, the euro. Been warning y'all to watch those gaps, because they're just like rattlesnakes, they travel in pairs. Friday the euro gapped down below its 50 and 20 day moving averages, traded lower today, then gapped down AGAIN today. Closed at 1.3995, down a gargantuan 1.4% today.

Nor was the sky clear on the other side of the globe. Japanese yen closed down 0.72% at 128.79c/Y100 (Y77.645/$). Now has the look of a rounding top that had done rounded, and needs only a close below 128.73 and the 50 dma (now 127.90) to launch into free-fall.

The US DOLLAR profited largely from the Swiss Franc's demise. Yesterday and Friday the US dollar index had pushed to the top of the narrow short term range (74.75), and today simply exploded to 76, slicing clean through resistance at 75.40 that has imprisoned it since mid July. Dollar has now left far behind its 20 and 50 dmas (74.27 and 74.52) and nearly reached its 200 dma (76.29). I've been warning y'all a dollar rally is coming. Dollar needs only close above that 200dma and then thru the last (July) intraday high at 76.72 to scatter the minions of Dollar-doubt and rally a long while. Dollar index today closed 75.909, up 120 bps from Friday.

STOCKS are now bare tiny points from breaking out downside from their uptrend line established since 8 August. Against the backdrop of trading since July, that promises to unfold as a very strong and painful plunge, with weeping, wailing, and gnashing of teeth.

Dow hit a low today at 10,932.53, but recovered enough to close at 11,139.30, down only 100.96 points (0.9%). S&P500 lost 8.73 (0.74% to close 1,165.24. Mercy, if any of y'all are standing in the way of this steamroller by virtue of owning stocks, you might ought to sell them.

Stocks must now fall enough to terrorize Ben Bernancubus, which won't be much farther. The Philadelphia bank stock index, BKX, gapped down the last two days and is fixin to make a new low. So is the Dow in Gold Dollars, today closing at G$123.15 (5.957 oz).

Once the Bernancubus gets scared, he'll start pumping out the money till the banks burst.

Stocks -- they are the giant suction hose sucking money out of Main Street and depositing it on Wall Street. Reckon that makes them the suckers and us the suckees, or is that th'other way round?

The US dollar rally did not hurt the GOLD PRICE as badly as one might expect. Overnight in Europe it hit $1,920 and dropped all that gain to close today on Comex at $1,869.90, down $3.80 from Friday's close. Still, that looks like first half of a key reversal, breaking into new high territory then closing lower. Needs a lower close tomorrow to confirm that. Forming a floor and support under gold are the 20 and 50 dmas ($1,811.72 and $1,675.80).

Gold's overnight high sufficed to form a double top with the August high, but time has to make that clear. Stands to reason gold would have to hit that $1,920 ceiling twice to break through, and back off a little on the 2nd try. Long as the GOLD PRICE holds $1840 its mind is still set on higher things.

My suspicious mind, which remembers that the heads of the big central banks or their lackeys all meet once a month at the Bank for International Settlements in Basel for supper, suspects that the Swiss National Bank did nothing before informing the rest of its criminal network of central bankers. Methinks the Bernancubus would welcome such a move, since it might be calculated to wound gold and momentarily (at least) boost the dollar.

Remember, the time horizon of central bankers and Nice Government Men is -- five o'clock. They only have to keep the system from blowing up TODAY. If they reach 5:00 without a blowup, they've succeeded.

Schizophrenic SILVER took a much bigger hit today than gold. The SILVER PRICE yesterday climbed over 4300c, and remember Friday rose 153.8c. High today was 4323c, but when the Swiss wound their watch, bottom dropped out of silver all the way to 4150c. Comex closed near the bottom at 4181.8c, down 120.2c.

That's the first half of a key reversal, but don't open a vein just yet. 20 DMA, first tripwire of a decline, stands at 4086c. 200 dma lies at 3528c. However, the uptrend from the May low remains intact;, whole, and unbroken. Twill stay that way as long as the SILVER PRICE floats above 4000c. Watch tomorrow to see if the SILVER PRICE will post the second half of that key reversal. Watch 4100c as well.

Today's drop scared GOLD and SILVER dealers so much they raced to sell US 90% and the buy side premium dropped to 170c below spot. Never been a better buy.

Also, I have neglected to notice that as SILVER has climbed, US pre-1936 silver dollars have lost their premium, and fallen to about 3% over melt at retail. Rather than buy those rotten, overpriced silver American Eagles, buy US silver dollars. They are sticky to the downside, that is, if the bottom drops out of silver, they tend to stay about the same place, so there's a little less risk buying them. And I'd rather have silver dollars than silver American Eagles any day.

Something happened last week I can't quite make up my mind to tell y'all about yet, but it leaves me thinking that the time may be drawing nigh -- or may have arrived -- when you want to trim down all bank deposits to an absolute minimum and keep unused cash balances in silver or gold. Banking system is UTTERLY corrupt, and will steal from you before you can say, "Deposit slip." For them a "deposit slip" happens when they slip up and let you get your money out of their bank.

Listen: I try hard to look on the sunny side and look for the best outcome, but there just ain't one with banks, any more than there is with fever blisters. It's about time for y'all to take the money and run, before they take it from you.

Our Bodacious Hoedown was an unqualified success on Saturday. We had an old time band and a dance caller named Tee Claw with a magnificent neckbeard, first I've ever seen. Nobody turned up his nose at the food and everybody danced till their feet like to have fallen off. On the grass. Under the stars. Thanks to y'all who honored us with your attendance.

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.