Monday, December 05, 2011

The Gold Price Closed 0.9% Lower, Will The Supports Continue to Hold?

Gold Price Close Today : 1730.70
Change : (16.30) or -0.9%

Silver Price Close Today : 3230.6
Change : (31.5) cents or -1.0%

Gold Silver Ratio Today : 53.572
Change : 0.018 or 0.0%

Silver Gold Ratio Today : 0.01867
Change : -0.000006 or 0.0%

Platinum Price Close Today : 1520.70
Change : -27.00 or -1.7%

Palladium Price Close Today : 631.85
Change : -10.65 or -1.7%

S&P 500 : 1,257.08
Change : 12.80 or 1.0%

Dow In GOLD$ : $144.50
Change : $ 2.29 or 1.6%

Dow in GOLD oz : 6.990
Change : 0.111 or 1.6%

Dow in SILVER oz : 374.48
Change : 6.02 or 1.6%

Dow Industrial : 12,097.83
Change : 78.41 or 0.7%

US Dollar Index : 78.61
Change : 0.038 or 0.0%

The GOLD PRICE and SILVER PRICE took the biggest hit on the European news. Gold dropped $16.30 (0.9%) to $1,730.70 on Comex, while silver dropped 31.5c (1%) to close 3230.6c.

All right, I'm going to crawl out on that limb. I think today's drop in GOLD and SILVER was a mere reaction to the last few days' highs, and that the bottom boundary of the triangle for silver (3150c) and of the trading channel for gold ($1,690 - $1,700) will hold. Plainly, if they break those supports, they will tank, but I think they will hold. At least, they did today, with silver posting a low at 3185c and gold at 1,717.67 (protecting that $1,720 support).

But up or down, I have run my nose slam up against that wall again: what else can I trust but silver and gold? Government promises? The stock market, locked in a bear trend? Banks??! Banks, who'd as soon throw you out of the lifeboat into a swarm of chummed sharks as I would step on a bug?

Mercy! I reckon I'll take my chances with the GOLD and SILVER, and even if they drop 20 or 40%, I'll still have 'em where I can rub on 'em to console myself.

Y'all do what seemeth good to you, but I smell a trap, and I'm not going to wait around to make sure I've identified the right stench.

To my chagrin I have neglected a subject, I just discovered last night. Oh, I knew it was going on, and always suspected that your wonderful government would pull it on y'all's pension funds and IRAs, etc., but today it has drawn one step fearfully closer.

I'm talking about government confiscating pension funds -- y'all's pension funds -- to dig out of their debt swamp. Argentina did it a few years ago, Hungary last year, and Ireland is eyeing 24 bn euros in their National Pension Reserve fund right now.

US government debt = $15 trillion. US pension fund assets = $16 trillion. Y'all see any similarity there? Anything click in your mind?

Add to other precedents Portugal today, which transferred 5.6 bn euros of private pension funds to itself to meet its budget deficit.

And somebody explain to me, in the face of all this precedents, how the US government (ever trustworthy) would not do the same? All that time folks have wasted worrying about gold being seized as it was in 1934 have been watching the front door of the house while the burglars were unloading the furniture through the back door.

Y'all know I am no alarmist, and I reserve my most lip-curling contempt for all those Internet Chicken Littles who every day see the sky falling.

This warning is nothing new with me. The government seized gold in 1934 for the same reason that Willie Sutton robbed banks: that's where the money was. In 2011 the money isn't there, it's in pension assets,

IRAs, 401(k)s, pensions, all the rest.

For years when people have asked me what they should do with their IRAs, my threshold remark has been, "First, you have to decide if you want to continue in a partnership with the US government. Ownership has two parts, title and control. With your IRA or 401(k), you have title, but they have control. Yes, you will pay a penalty and tax to withdraw it, but how much is control, in your own hands, worth to you?"

From long experience I know that not 1 out of 80 will choose to cash out his IRA, so powerful is the APPEARANCE that all the money is yours. ME, I don't want any part of any partnership with the yankee government. I'll take my licks AND my money, thank you very much.

But I am nothing but a paranoid natural born fool from Tennessee. I will not, however, stand in the middle of the railroad tracks when an express train is barrelling down on me, driven by a maniac.

Now y'all can put that IRA into silver and gold, but it is still in an IRA, and a trustee holds it, not you. If you simply MUST keep your IRA, then put it into physical silver or gold. But you ought to consider most earnestly, together with your spouse, which is more important, mere title to the IRA, or control.

Sarcophagus of France and Ferkel of Germany met today and after lunch announced a list of recommendations for changes to the euro treaty, namely, automatic sanctions against deficit violating countries, debt limits written into member constitutions, and no more haircuts for creditors (save those holding Greek paper).

Look deeply into it: this will established centralized budget oversight in Brussels. This is the nightmare turn, and most of all IT CONTAINS NO SOLUTION TO THE ALREADY UNPAYABLE DEBT. No solution, that is, except inflating it away, but thru the ECB rather than individual nations. Don't let all those German protestations about not making the ECB lender of last resort. If they are going to pay all that unpayable Himalaya of debt, they can only inflate it away. All other explanations are mere carpeting for the barnyard.

The European announcement shaved 79 basis points off the spread between Italian and German debt almost immediately. That indicates that a lot of investors took the bait. I remind you that even if all power is centralized in Brussels, the debt remains still too large to be paid. Investors have been suckered.

Dow today gained 78.14 points (0.65%) to close at 12,097.83. Maybe that's a case of buy the rumor, sell the news. S&P 500 closed up 12.8 (1.03%) at 1,257.08.

My upper limit on the Dow is about 12,200. It's at that wall now. I doubt it will climb it, but if y'all can't accept that, then keep on trying to draw to that inside strait and keep holding those stocks.

US Dollar index today went sideways, up 3.8 basis points, but important thing is that it remained above 78.50. Currency traders weren't buying good news out of Europe. Euro gained 0.4% to 1.399, while the Yen closed up 0.19% at 128.54c/Y100 (Y77.8/$1).

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.