Wednesday, November 30, 2011

The Gold Price Jumped 32.10 Today, Can It Break Through It's $1,800 Resistance?

Gold Price Close Today : 1745.50
Change : 32.10 or 1.9%

Silver Price Close Today : 3273.1
Change : 87.8 cents or 2.8%

Gold Silver Ratio Today : 53.329
Change : -0.462 or -0.9%

Silver Gold Ratio Today : 0.01875
Change : 0.000161 or 0.9%

Platinum Price Close Today : 1558.30
Change : 21.30 or 1.4%

Palladium Price Close Today : 614.10
Change : 25.35 or 4.3%

S&P 500 : 1,246.96
Change : 51.77 or 4.3%

Dow In GOLD$ : $142.66
Change : $ 3.25 or 2.3%

Dow in GOLD oz : 6.901
Change : 0.157 or 2.3%

Dow in SILVER oz : 368.02
Change : 5.24 or 1.4%

Dow Industrial : 12,045.68
Change : 490.05 or 4.2%

US Dollar Index : 78.35
Change : -0.653 or -0.8%

The GOLD PRICE jumped $32.10 today (1.9%), clearing at a single bound the troublesome $1,720 and $1,740 resistance. Alas, it couldn't get through $1,750, as the $1,749.56 high proved. Closed at $1,745.50

The GOLD PRICE showed a straight up single move with the coinciding with the central bank announcement but then it traded flat the rest of the day. Hmmmm.

GOLD has poked its head through its overhead trendline, but not by much. Odds say it will rise. Stoutest resistance remains at $1,775 and $1,800.

The SILVER PRICE also spurted up on Blarney, bursting thru 3220c resistance, and adding 87.8c (2.8%) to close at 3273.10. That was near the 3293c high.

The SILVER PRICE has now once again come to the 3300c barrier, where we have so often met before.

SILVER did not quite break through its 20 DMA (3330c), and remains in a large even-sided triangle that has been building since the high mid-August and the low end-September. It's traded all the way into the nose, so must resolve up or down soon.

If silver and gold continue to advance -- that is, if today's jumps were something more than a reaction to the central banks' Blarney -- then I will throw in the towel and start buying heavily. Silver will break out to the upside if it closes above 3300c then keeps on advancing. Gold still must clear $1,800 to convince me finally.

The really fun part of commenting about markets is the never-failing threat of a Government Surprise Party sprung overnight, changing the whole outlook and leaving you looking like a natural born fool.

Something stinks here like that wild-caught salmon your wife bought at the grocery store that then fell out of her grocery bag under your car seat just before you left town in July for three weeks in the other car.

Let's keep this as simple as possible. The Establishment, whose agents are central bankers and governments, has only two weapons against financial crisis: BLARNEY and LIQUIDITY. Blarney is trotting out Warren Buffett or some obscure economist with Coke-bottle bottom glasses or some president or politician to make a statement that the economy is really basically sound, so all you victims really don't need to flee out of the trap after all.

Liquidity is printing more money, since after all a "financial crisis" or "panic" is a panic for money. More money, less panic.

Both the Blarney and Liquidity cannons aim to win the same hill: TIME. Buy time to let the panic settle down.

This morning all the world's important central banks -- the US Federal Reserve, Bank of Canada, Bank of England, Bank of Japan, Swiss National Bank, and European central bank -- announced a big co-ordinated intervention to increase liquidity by lowering swap rates. (Swaps are central bank transactions where one bank swaps for another currency with a guaranty to swap back in the future.)

Since the European banks have been starved for liquidity and need dollars, the ECB needs to borrow them from the Fed. Today's action makes it 50 basis points cheaper (0.5%) to borrow dollars.

Get this much straight: This does not by any stretch of the imagination solve the euro crisis, it only mollifies the liquidity fever.

Now think further: long term, how will this act, increasing liquidity a.k.a. printing more money, affect (1) the value of currencies, (2) the value of stocks, and (3) the value of silver and gold?

(1) inflation will drive down currency values.

(2) inflation will increase economic uncertainty and management perplexity while it pounds capital down the rat-hole of mal-investment. Twill drive the value of stocks down, or at least, they will not gain value faster than the inflation can pilfer it.

(3) Inflation is the chief and only driver of silver and gold bull markets, so more inflation means higher silver and gold prices.

Short term, they throw these government surprise parties and send markets screaming in the opposite direction for a few days, then sobriety takes over again and the gains disappear.

I'm not sure where this leaves in the next 3 months with silver and gold. They may resume their correction for one more push down, or we may have seen the lows last week. I bought some today, just on the chance that tomorrow gold climbs over $1,750, calling everybody in the world to buy.

US DOLLAR INDEX today fell 65.3 basis points to 78.354 (down 0.84%). No surprise there, when the biggest central banks in the world announce they are going to cheapen the dollar. Euro rose 0.98% to 1.3441, yen rose 0.48% to 128.92c/Y100 (Y77.57/$1).

Surprise! This move didn't wreck the dollar. It brought it back to the uptrend line, but only poking thru it a little. Needs to hold 78.

STOCKS rose in a frenzy. Dow gained 490.05 (4.24%), a huge move, to close 12,045.68. S&P 500 rose 512.77 (4.33%) to 1,246.96.

That big jump took stocks thru their 50 and 200 day moving averages (11,553.37 and 11,949) and they closed near the high of the day. Lots of energy, expended, don't you think, only to bring them back to the established downtrend line?

Yep, that's right, I NEVER say anything "fair" about stocks, because I am persuaded that they are a trap, cocked and loaded to take away your money. If I am wrong, I am at least sincerely wrong.

I invite you not to ponder, as an idea too hideous for minds of good will, that this entire financial crisis, from 2006 until now, has been managed to force the tortured people of the world to beg for a cure, a supranational government that will end the economic pain. I'm not sure the Establishment would precipitate that, but they will surely turn such events to their centralizing advantage.

Now y'all know everything I know, but that ain't much. After all, I'm still just a natural born fool from Tennessee who believes that cornbread and greens with integrity tastes better than cake won as a tapeworm, and that borrowing money and blowing it is not as wise as producing something and creating wealth and

-- perish the thought -- living within your means. Clearly, I am destined for extinction. Well, either that, or the other side is, but without the Blarney and Liquidity cannons how can I win? I have only reason and common sense and the eternal truth to work with. What's that against Blarney, Liquidity, Central Banks, and USA Today?

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 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.