Friday, October 14, 2011

The Gold Price, Silver Price and Stocks All Rose While The Dollar Dropped. Gold Price Closed Today at 1,685.10

Gold Price Close Today : 1,685.10
Gold Price Close 7-Oct : 1,634.50
Change : 50.60 or 3.1%

Silver Price Close Today : 3214
Silver Price Close 7-Oct : 3095.8
Change : 118.20 or 3.8%

Gold Silver Ratio Today : 52.430
Gold Silver Ratio 7-Oct : 52.797
Change : -0.37 or -0.7%

Silver Gold Ratio : 0.01907
Silver Gold Ratio 7-Oct : 0.01894
Change : 0.00013 or 0.7%

Dow in Gold Dollars : $ 142.85
Dow in Gold Dollars 7-Oct : $ 140.42
Change : $ 2.42 or 1.7%

Dow in Gold Ounces : 6.910
Dow in Gold Ounces 7-Oct : 6.793
Change : 0.12 or 1.7%

Dow in Silver Ounces : 362.31
Dow in Silver Ounces 7-Oct : 358.65
Change : 3.65 or 1.0%

Dow Industrial : 11,644.49
Dow Industrial 7-Oct : 11,103.12
Change : 541.37 or 4.9%

S&P 500 : 1,224.58
S&P 500 7-Oct : 1,155.46
Change : 69.12 or 6.0%

US Dollar Index : 76.607
US Dollar Index 7-Oct : 78.792
Change : -2.185 or -2.8%

Platinum Price Close Today : 1,555.00
Platinum Price Close 7-Oct : 1,496.60
Change : 58.40 or 3.9%

Palladium Price Close Today : 626.00
Palladium Price Close 7-Oct : 590.70
Change : 35.30 or 6.0%

Turns out I was completely wrong last week when I expected the GOLD PRICE and the SILVER PRICE to drop. Dollar dropped instead, while GOLD, SILVER, and stocks all rose. PALLADIUM was the week's biggest gainer, up 6%. Stocks are marching along to retirement nirvana, hurrah, hurrah.

The GOLD PRICE bewilders me. Look at the weekly chart, and it has done no more than sketch out a range bounded by $1655 and $1685. Nothing plain about the longer term chart, either. Might be a flat topped rising triangle, which is bullish, but then again, might be a rising wedge, which is bearish. Add another complication: the bigg pattern from mid-August thru September forms a falling wedge, which is bullish.

Although GOLD is rallying, I expect it to hit the bottom of that peaking area from $1,725 to $1,800 and knock itself out. The two year weekly chart screams that gold will drop further.

But when gold hits the 150 dma again (now $1,596) I reckon I'll have to buy some. Waiting is making me awfully nervous.

The SILVER PRICE, O, the Silver Price! The weekly chart looks like a head and shoulders top. Monday's left shoulder topped at 3250c, Wednesday's head at 3300c, and today's right shoulder at 3250c. Neckline holds it all up at 3130c. Y'all don't start throwing rocks at me, I'm just reporting what I see. On the other hand, the long term (10 year) weekly chart teaches me that the decline was caught by the uptrend line from the 2008 bottom. How much lower, then, can you expect it to fall? Maybe not much.

Top of the range is 3300c, bottom 3130c. Break either way should run like a scalded dog. I will buy on any break below 3100c.

There's always a danger that you will "talk your position" and convince yourself you're right, all the while ignoring the reasons you're wrong. The 57.5 GOLD SILVER RATIO, which is my target fro swapping back into silver from gold, lies about at the 62% correction of the fall that began in February 2010. I think we can get it. I hope I haven't missed it already.

Stocks are cooking, reached their highest close today since late August. Dow rose 166.36 (1.45%) to 11,644.59 accompanied by the S&P500 up 1.95% (13.64) to 1,224.58.

Before you call your brother-in-law and rub it in how smart you are for staying in stocks, observe that stocks, although above their 20 day moving average (11,144) and 50 DMA (11,201), have not quite yet topped their August intraday high at 11,716.84. An optimist might look at the Dow's chart and say, "It's about to break through 11,700 resistance!" A realist might look at it and say, "Let the rejoicing await a close above 11,716 and the previous low at 11,863. Let the Dow prove this is not merely a consolidation, but really a rally. And don't forget that Dow Theory down turn signal a few weeks ago. Wait! And what about that MACD that's drawing so close to overbought?"

Let's wait till Monday and see how well the Dow handles this 11,600- 11,700 level.

Stocks -- they put the Boo! in boomerang.

US DOLLAR INDEX keeps ratcheting down, giving back the gains from the September rally. Today ended at 76.607, down 0.5% or 38.9 basis points. Before its correction ends, it might touch the 200 DMA at 75.94. Strange as it sounds coming from me, I still expect further rallying from the dollar.

Space aliens landed in Brussels today and pledged to bail out the European banks. On the strength of that promise the euro rose to 1.3877, up 0.73%, and has nearly reached its 50 DMA (1.3936 -- 20 dma at 1.3548). Could rally clean up to 1.42, where its sorrows commenced. But I wouldn't buy euros until I see the color of those space aliens' money.

(Don't bother telling me I'm not being serious. Mercy, I'm as serious as all those goofs out there buying euros when the banking system is as broke as the Ten Commandments. What are they counting on to bail them out if not space aliens or something equally likely?)

Japanese Yen closed today at 129.54c/Y100 (Y77.2/$1). Yen is sliding down the descending top boundary line of a triangle, but not enough that you could call it anything more than a trading range.

Here are a few Peace of Mind Steps y'all can take in the face of today's insane uncertainties.

** Get three months' living expenses out of the bank, in cash, smallish bills, and store them in a safe place with 24 hour access. Don't bother calling me crazy, I've been maligned by professionals, so it doesn't bother me. Banks and your government are the most lethal and ruthless combination running loose today. Remember 1985 when banks and SandLs closed in Maryland and Ohio? Government simply closed 'em, no warning, and if your kids went hunger, tough luck. They will do anything -- including shoot their mothers in front of a cop -- to save their system. Close banks, limit withdrawals ("Oh, sorry you can't live on $300 a week. Eat dirt."), anything. Just give yourself enough cushion to protect your family.

** You and your wife ask yourself: If the place we are living suddenly became Beirut, or Sirte, or Baghdad, where would we go? Remember, a refugee is somebody who is trudging someplace else to die.

** Ask yourselves, "If I couldn't shop at the grocery for a week, what would we eat?" Pick up a couple of 25 lb. bags of rice and dried beans. Ask also what water you would drink -- clean water.

** Inquire of the mirror, How would we defend ourselves if there were no police? If you've never taken a pistol combat course,do that. And buy some ammunition -- it seldom goes stale. Remember, a man with a full magazine sleeps more soundly.

Y'all enjoy your weekend!

Argentum et aurum comparanda sunt -- -- Silver and gold 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 bubble has burst, primary trend down.

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 and 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 and silver on margin or with debt.

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

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