Wednesday, October 05, 2011

Silver and Gold Prices are Much More Attractively Priced Now than Two Weeks Ago, So if You Want to Buy, Go Ahead

Gold Price Close Today : 1640.80
Change : 25.60 or 1.6%

Silver Price Close Today : 30.317
Change : 0.522 or 1.8%

Gold Silver Ratio Today : 54.12
Change : -0.089 or -0.2%

Silver Gold Ratio Today : 0.01848
Change : 0.000030 or 0.2%

Platinum Price Close Today : 1496.00
Change : 16.00 or 1.1%

Palladium Price Close Today : 577.00
Change : 11.00 or 1.9%

S&P 500 : 1,144.03
Change : 20.08 or 1.8%

Dow In GOLD$ : $137.83
Change : $ (0.49) or -0.4%

Dow in GOLD oz : 6.667
Change : -0.024 or -0.4%

Dow in SILVER oz : 360.85
Change : -1.92 or -0.5%

Dow Industrial : 10,939.95
Change : 131.24 or 1.2%

US Dollar Index : 78.86
Change : -0.733 or -0.9%

Turned out that late in the day rally yesterday did foretell higher prices today for SILVER and GOLD. Stocks didn't work out quite the same. Dollar took a lick on the jaw.

The Dow lumbered, stumbled, but ended up rising today, ending near the high. Still, somebody was selling all the way up.

Dow closed up 131.24 (1.21%) at 10,939.95. Five day chart -- bad as I hate to admit it -- shows a double bottom yesterday, and a rise through 10,700 support/resistance. S&P500 rose 20.08 (1.79%) to 1,144.03.

Since August the Dow has traced a sort if declining wedge, which presages a rally of some kind. Nothing to get excited about until the Dow at least climbs over its 20 day moving average at 11090. But the 200 dma is a high above the current Dow as the heavens are above the earth, at at 11,974.

I'd as soon take a cold rattlesnake into my bosom to warm him up as to buy stocks. I'd probably have a better chance of profit with the rattlesnake.

After five up-days the US dollar index paid its dues today and fell 0.94% or 73.3 basis points to 78.864.

This altereth nothing. Dollar might travel all the way back to the top of the trading channel it broke out of, today about 77.25, and remain in its uptrend. Y'all might as well get used to a stronger dollar for a while. After all, what's its competition? The euro or yen? Gold and silver are the only real alternatives, but most investors are still labouring under CBIM, or Central-Bank-Induced-Moronism, a condition that results from listening to too much propaganda from central bank heads, politicians, Keynesian economics professors, and newspapers. CBIM sufferers manifest impaired rationality and numerous delusions, such as believing they are "safe" in paper currencies, or that US government debt is "safe," or that banks really have the money they claim to have, or worst of all, that banks can be trusted. CBIM victims cling ferociously to these delusions, and may become violent if you mention the S- or G-words to them. Only cure for CBIM is a double dose of Reality Salts, which often comes as losing copious sums of money.

But I digress.

Euro today closed up 0.18% at 1.3368, a meaningless change in a meaningless market. Yen remains locked in fierce ambivalence, refusing to fall or rise. Closed today up 0.13% at 130.34c/Y100 (Y76.72/$1).

With yesterday's GOLD PRICE low about $1,595 and today's at $1,598 (before New York opened), gold appears to have made at least a temporary bottom. That gives it a platform for a (probably short) rally.

Standing above like the Great Wall of China warding off barbarian invasions is that $1,675 resistance where the GOLD PRICE has twice failed.

I said within the last few days that gold's three month chart appears to have traced out a flag, and flags always fly at half staff. That implies more downside for GOLD, but for the next few days expect a rally once again to $1,675 - $1,680.

Silver's 3 month chart also looks like a pennant or flag, but how do you differentiate between a pennant and a bullish falling wedge? You wait to see which way it breaks out. Both SILVER and GOLD PRICES are plenty oversold enough to rally for a while.

Why doubt I so stubbornly? I don't think the last shoe has fallen in Europe. I can't shake the notion we are watching Phase II (2011 edition) of the Great Credit and Banking Debacle of the 21st century. The mistakes, malinvestment, corruption, cronyism, vulturism, and unsalvageable investments run so deep and wide -- all of it enabled and facilitated by the banking system, who gets the real blame -- that only a colossal shift can get the world's economy back up on the tracks. BICBW, since after all, I am only a natural born fool from Tennessee, and not a wise central banker or New York investment banker. Shucks, I don't even wear shoes except when it snows, and they sure ain't no Guccis.

I'm not pitting my judgement against yours. Silver and gold are much more attractively priced now than two weeks ago, so if you want to buy, go ahead. I surely can be too doubtful at the wrong time, but . . .

READ THIS AND WEEP: One great barrier to rebuilding the nation and the economy is the hardened ignorance of public and politicians, and the politicians truckling to the banks. 'Twas not always so. 173 years ago our Southern leaders knew where unrestrained banking would lead, and warned of it. Read it and weep.

“If no check is put to the progress of events, no one will attain to wealth and honor, who does not receive them at the hands of the bank aristocracy….And yet the paper system is applauded to the skies, as the wing upon which England has soared to her present prosperous height…but I have thought, and still think, that we owe all these things to the enterprise and industry of our citizens, and the abundant resources with which it has pleased Heaven to bless our country.

"And this brings me to the consideration of another evil of the paper [money] system, and that is, its tendency to call men off from the most productive employments to those which are less so, or not so at all; drawing them off from the cultivation of the soil to become speculators, bank officers, shopkeepers, and livers upon their wits.

"All values are created by the spontaneous production of the earth, by human labor, by animal procreation, or by some or all of these united. The spontaneous production of the earth is, of course, the most profitable to him who can avail himself of it of any other; and the production of the earth, combined with human labor, furnishes at last the basis of all wealth.

" Every thing, therefore, which has a tendency to divert a considerable portion of a nation from agricultural pursuits, by turning them to speculation, professions, merchandise…where that nation possesses a suitable field for agricultural pursuits, has, as a general rule, the effect of diminishing the wealth of that nation. I conclude that Congress has not the right, and if it had, it would not be expedient for it to undertake the creation and regulation of a common paper medium through banks…

"Sir, I have little hope that the paper system will soon be arrested…Its swiftly moving car may roll on; but let it not drag after it every thing dear to the earthly hopes of man. Let the inflated balloon ascend if it will; but let it not, in its ascent, wrench from their foundations the institutions of our country.

(Speech of Robert Strange of North Carolina on the Independent Treasury Bill in the US Senate, 6 March 1838, Congressional Globe, 25th Congress, 2d session, Appendix, 145-54)

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.

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.