Thursday, November 03, 2011

The Gold Price Today Traded To $1,767.27, and Closed Up $35.50 Near The Top At $1,764.20

Gold Price Close Today : 1764.20
Change : 35.50 or 2.1%

Silver Price Close Today : 3448.8
Change : 55.9 cents or 1.6%

Gold Silver Ratio Today : 51.154
Change : 0.204 or 0.4%

Silver Gold Ratio Today : 0.01955
Change : -0.000078 or -0.4%

Platinum Price Close Today : 1639.00
Change : 37.80 or 2.4%

Palladium Price Close Today : 656.60
Change : 8.55 or 1.3%

S&P 500 : 1,261.15
Change : 23.25 or 1.9%

Dow In GOLD$ : $141.13
Change : $ (0.39) or -0.3%

Dow in GOLD oz : 6.827
Change : -0.019 or -0.3%

Dow in SILVER oz : 349.24
Change : 0.39 or 0.1%

Dow Industrial : 12,044.47
Change : 208.43 or 1.8%

US Dollar Index : 76.74
Change : -0.280 or -0.4%

My plans changed because a dear friend of mine, Jim Hollingsworth, went to dance with the angels and I have to attend his funeral tomorrow. I have a day here at home, so am sending y'all this commentary. I should return Wednesday, 9 November. Besides, I want to share with y'all some observations on the last few days' events.

The GOLD PRICE today traded from $1,723.37 to $1,767.27, and closed up $35.50 near the top of the range at $1,764.20.

The SILVER PRICE ranged from 3322c to 3482c. It closed on Comex up 55.9c at 3448.8c.

Y'all get mad if you have to, but the market is slowly changing my mind on SILVER and the GOLD PRICE. Short term -- on the 5-day chart) gold has made another upside-down head and shoulders, with a neckline about $1,725 and the bottom of the head at $1,680, Tuesday's low. If so (and you'll know it is NOT so if gold closes below $1,740), it will rise about $50 from the breakout at $1,740, or up to $1,790, call it $1,800.

Little sister SILVER has likewise sketched an upside-down head and shoulders, with a neckline at 3460c and head/bottom at 3214c. Head depth points to a target of 3700c. Should silver fall below 3350c - 3325c, twould gainsay that outlook.

Market begins to persuade me that the bottoms in SILVER and GOLD have already occurred. Not dogmatic about that yet, but am humbly trying to let the market talk instead of my own natural born fool mouth.

The shadow of a divergence falls across the market as silver might very well be arguing with gold about direction. The GOLD PRICE broke out of that putative upside down head and shoulders today, while silver did not. Also the ratio rose today to 51.154, up 0.4%. Not much, but worth noticing.

What would y'all think about a man who got into all sorts of trouble because he got drunk and couldn't control himself, and then woke up one morning and said to himself, "Hey, I know how to straighten everything out! I'll go down to the liquor store and buy a couple of bottles of whiskey."

That's Europe with its sovereign debt (read: "bank solvency") crisis, and the whole world with its financial system.

Just about the time the eurocrats thought they had enough cards to win the game, Greece's Papandreou pulled out the biggest trump in the deck, a plebiscite to approve the whole deal. They deal fell apart, but after sufficient arm-twisting, the deal MIGHT be put together again, if Papandreou backs off the plebiscite.

To this, add the bankruptcy of MF Global, led by former Goldman Sachs VP, former New Jersey governor, John Corzine. Corzine turned up his nose at the paltry profits made by the brokerage business, and opted instead for the proprietary trading model of Goldman Sachs. Whoops, although he is a Master of the Universe, as are all Goldman Sachsites, he could not see that the Universe has changed since 2006. He got rid of those stodgy old businesses and bought up all the PIIGS' debt he could, to wit, $6 billion. Along the way the firm went bankrupt, and it seems that zero, $600 billion, or $1.2 billion of the customer's money was mislaid, depending on who's counting. We know something rank was cooking, because the CME closed off all trading for MF Global accounts, except liquidations. When Refco failed a few years ago, whatever company bought out their book just transferred the accounts to their own books and life went on without a hiccup. Not so this time.

MF Global's crash raises other question: What other landmines are out there waiting for bankruptcy?

So think. Now, not just the market's course is in doubt, but the integrity of the market itself, the rule of law and that minimal stability that promises that when you buy an investment your broker won't steal your money, and when you get ready to sell the investment, your broker -- or SOME broker and SOME market -- will still be alive and trading.

All of which shines a spotlight on the value of government market regulation: it's not necessary when there's not a problem, and its no good when there is one. When people's word no longer counts for anything, when honesty dies and all hearts lean to lawyering and larceny, financial markets cannot survive. The rule of law and markets are disappearing before predators like Corzine and Goldman Sachs. But y'all don't worry, the US government -- and governments around the world -- will backstop the financial system, and the banks. Shucks, that'll do it! Look what a good job they've already done with, er, uh, mmmm, I'll come back to that.

Folks, I hope y'all have a hoe, some flowerbeds, a bunch of seeds, and some gumption. Y'all are liable to need 'em.

Stocks gained 208.43 today (1.76%) after losing 2.5% two days ago. Dow closed at 12,044.47. S&P 500 rose 1.88% (23.25) to 1,261.15. This puts the Dow above its 200 day moving average (11,974) once again, but this still paints a losing picture. Dow may reach 12,400 again, but these are death throes. Stay away, it might be catching.

Saw some goof ("financial adviser") say in America's Comic Book Newspaper, USA Today, that the only solution for this wild market is a "diversified portfolio." Now there's a recipe for success, like guaranteeing a winner in Russian roulette by loading up all six cylinders. If anything at all might conceivably pull a profit out of today's stock market, it is utterly judicious stock-picking but it SURE ain't diversification.

The US DOLLAR INDEX tried to rally out over the top of its May - September trading channel again, but fell back today. Dropped 28 basis points today (0.36%) to 76.736. However, that's a LOOOONG ways from the 74.72 bottom a few days ago, and Dollar now stands above its 50 dma (76.71). Will move higher.

All this "It's fixed -- No it ain't" coming out of Europe is making the currency markets hotter than a rogue nuclear reactor, and almost as easy to trade. Euro definitively broke last week, gapped down twice, and has traded back barely above the 20 DMA (1.3810), closing today at 1.3816, up 0.51%. Clearly the eurocrats will shoot their mother in front of a cop to keep the euro afloat. This has become a criminal enterprise. What? Did I say that? Central banking, indeed, fractional reserve banking, has ALWAYS been a criminal enterprise.

Japanese Nice Government Men broke the yen last week, and so far it has stayed broken. Closed today 128.07c/Y100 (Y78.08/$1).

The European crisis is destabilizing all markets, and no statesman appears with the only solution, a debt jubilee and taming the banks. That gang of ditherers will do the world more harm than a blood soaked dictator.

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.