Wednesday, December 21, 2011

Gold Price Buy Signal Will Be a Slight Rise After Correcting Near $1,562.50, Will it Hold?

Gold Price Close Today : 1611.90
Change : (3.70) or -0.2%

Silver Price Close Today : 29.198
Change : (0.298) cents or -1.0%

Gold Silver Ratio Today : 55.206
Change : 0.432 or 0.8%

Silver Gold Ratio Today : 0.01811
Change : -0.000143 or -0.8%

Platinum Price Close Today : 1430.40
Change : -1.60 or -0.1%

Palladium Price Close Today : 633.60
Change : 8.15 or 1.3%

S&P 500 : 1,243.72
Change : 2.42 or 0.2%

Dow In GOLD$ : $155.28
Change : $ 0.42 or 0.3%

Dow in GOLD oz : 7.511
Change : 0.021 or 0.3%

Dow in SILVER oz : 414.68
Change : 4.33 or 1.1%

Dow Industrial : 12,107.74
Change : 4.16 or 0.0%

US Dollar Index : 80.01
Change : 0.127 or 0.2%

The GOLD PRICE backed off a bit, but sort of like a big monster with a two foot pistol at his belt backs off in a bar after he's stepped on your foot.

The GOLD PRICE lost 3.70 to close Comex at $1,611.90. The SILVER PRICE lost 29.8c to 2919.80. These prices lie on the lower side of today's range, since gold reached $1,641.23 today and silver 2962.6c. Lows came at $1,606.22 and 2911c.

I have just about flip-flopped from my bearish outlook on metals. The rise up of Monday's lows looks like an impulsive wave, and not corrective. That little robin doesn't by itself make a spring, but points strongly in that direction. The real test will come when metals correct after this rally and draws near the last lows at $1,562.50 and 2812c. If they can reach down there and not fall through, then rise just a leetle to confirm, we will have our buy signal. Of course, if they fall through those levels, we'll know to wait a while.

GOLD/SILVER RATIO today closed at 55.206. That's not reached my 57.5:1 target yet, but if you swapped silver for gold at ratios below 42:1, swapping gold back into silver would give you a roughly 30% profit in ounces. Better do that quickly.

Came out today that the European Central Bank (ECB), notwithstanding its loud protestations that it would NOT serve as lender of last resort, has doled out nearly half a trillion euros to 523 banks. in December. How has it passed out the money? Simply make loans to banks at bargain basement prices. But no, no, no, this isn't quantitative easing or Money Printing, just like it's not really stealing when you take stuff while nobody's looking.

I don't know, y'all tell me: is half a trillion new euros inflation?

Dollar index bounced back -- not a big bounce, just a tee-tiny bounce -- and that put the kabosh on stocks, silver, and gold. Readers keep on asking me why silver and gold seem to be moving together with stocks. In the short term, even for a year or more, they might move together, depending on market conditions-- investor fads. Over time, however, they do NOT trend together. Look at the chart of the Dow in Gold since 1999 or the Dow in Silver since 2001 and you'll see what I mean. Stocks have lost 85% against silver and gold since then.

Dow gained a phenomenal 4.16 points (0.03%) to close 12,107.74. S&P500 soared 2.42 points (0.19%). If the Dow cannot break through 12,200-ish, 'tis doomed to fail. In any event, they will severely lag gold and silver for the next 3-10 years.

Y'all need to go back and study the 1920-1923 German hyperinflation. Since stocks represent bricks and mortar, and since inflations generate speculation, German stocks rose hundreds of time but in the end they lost value. Silver and gold survived the hyperinflation with value intact.

Back to the scrofulous fiat currencies. The US dollar index rose 12.7 basis points (0.16%) not much but above the morale-boosting 80 level. Too early to state dogmatically, but so far looks like the dollar rally has survived this correction.

Euro sank 0.25% to 1.3047. Japanese yen lost a tad, 0.24%, to 128.08c/Y100 (Y78.04/$1). Yen isn't going to do much, but after this little correction, the euro will sink spectacularly.

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.