Tuesday, December 13, 2011

Gold Price Closed at $1,727.90, I'm Waiting a Day or Two to Take Advantage of Lower Prices

Gold Price Close Today : 1727.90
Change : (2.80) or -0.2%

Silver Price Close Today : 3119.50
Change : 26.00 cents or 0.8%

Gold Silver Ratio Today : 55.390
Change : -0.556 or -1.0%

Silver Gold Ratio Today : 0.01805
Change : 0.000179 or 1.0%

Platinum Price Close Today : 1474.80
Change : 0.00 or 0.0%

Palladium Price Close Today : 643.10
Change : -16.80 or -2.5%

S&P 500 : 1,225.73
Change : -10.74 or -0.9%

Dow In GOLD$ : $143.02
Change : $ (0.57) or -0.4%

Dow in GOLD oz : 6.919
Change : -0.028 or -0.4%

Dow in SILVER oz : 383.23
Change : -5.43 or -1.4%

Dow Industrial : 11,954.94
Change : -68.45 or -0.6%

US Dollar Index : 80.27
Change : 0.733 or 0.9%

The GOLD PRICE and SILVER PRICE blew hot and cold out of both sides of their mouths today, and then the Dufuss-effect took hold.

GOLD dropped $4.30 to close Comex at $1,659.90. SILVER rose -- probably on short-covering -- 26c to 3119.5c.

Ahh, but post-Dufusses they broke down. Silver lost 45c to 3074.5c and the GOLD PRICE gave up another $28.40 in the aftermarket to $1,631.50.

Gold has now sliced through its 150 DMA ($1,665) and set its sights on the 200 DMA (now $1,614). Support at $1,600 might catch gold and stop it, but the deflation scare could also drive it further. If it can't hold at $1,600 then $1,535 becomes likely.

I have the same problem y'all do. If I shoot all my cash ammunition here, I won't have anything left to take advantage of lower prices. I feel safer watching it a day or two.

The SILVER PRICE's next support down below lies around 3050c. Low today was 3038.7. Last low (November) was 3065.

Look the worst square in the eye: silver could easily drop to 2615. Below that lies not much to stop its fall before it reaches 2000c.

Yet there is also reason to suspect silver might catch a hand hold at 2900c. We just have to be patient here and let the market tell us what it intends. Right now it's keeping its cards too close to its breast to divine its ultimate intentions.

Then there are those surprise parties to consider. You never know when or what governments will do next. I've been talking to metals dealers about the MF Global debacle, because many of them are hedgers and had accounts with MFG. My guess is they'll be a lot less likely in the future to leave money with any broker. Then, too, if they can't hedge, they must sell what they buy instead of holding it hedged. That can put downward pressure on prices, but more likely it could widen out the spread between buy and sell.

We are seeing come to pass what I have long anticipated. Paper markets are unraveling. Now the very structure of the market itself must be questioned. In the bull market that peaked in 1980, paper (futures) prices drove silver and gold market. This time around, I think it will be more important to have actual physical possession, and that will means the physical price would be driving the market as the "real price", not the futures. We already saw that happen in the 2008 panic, when paper silver prices were 33% or more below physicals prices (physical silver carried a 50% premium over the paper price). Now, if some big entity that claims to have beaucoup silver stored suddenly goes belly up like John Corzine sent MFG belly up, well, who'll want "stored" silver then?

If yesterday saw another Euro-bobble, today saw another Fed-bobble.

The dufusses in charge, who are apparently kept incommunicado in the basement of the Fed Building, announced that things were "jes' fine!" and they didn't need to turn a peg for the economy. Now while I will vehemently defend the proposition that they are correct in not doing a blessed thing, and would be even correcter if they shut down the whole operation forever and went fishing, inaction was NOT what markets wanted to hear.

Is concluding that markets dropped because of the Fed's announcement the post hoc ergo propter hoc logical error? Are y'all kidding me? Markets have been trained to believe that their salvation comes only from the Fed, and if the Fed won't act, then who will save them?

Sure won't be me, any more than it will be the Fed, in point of fact.

But enough of this fun. I can always count on some official lamebrain somewhere in the world to furnish more fodder for my ridicule machine than I can possibly process in a single commentary. Can't help it, they make themselves ridiculous.

Let's look at stocks first. In a word, they're sunk. Sinking below 12,000 today broke the back of more investors' morale. Tomorrow the Dow will break that 11,950, and its 200 day moving average (11,943) and tomorrow or the next day will slam to 11,600, then 11,400, then 11,200, and below that, 10,400. Ohh, it hurts to think about it.

Dow today dropped 68.45 (0.55%) to close at 11,954.94. S&P 500 trotted right along beside it dropping 10.74 (0.87%) to 1,225.73.

The Fed has created an addict. Together with the yankee government, it has created a market that is as addicted to inflation, Quantitative Easing, and all the other nicey-nice names for printing money as a meth-head is to meth. You tell a meth-head you aren't giving him any meth and to put down that two liter soft-drink bottle and stop shaking it, and he won't thank you.

A nation, no, a world of meth-heads. That's what central banks have created.

Y'all don't even want to think about currencies today. Dollar burst through that 79.80 resistance left by the last two tops and jumped 73.3 basis points, a perfervid 0.94%, to 80.267. And that leap took place? Right, about the time the Dufusses opened their mouths.

Dollar's moving higher. Dollar now targets the late 2010 low at 81.44, no stretch at all from here. Above that is 83.50, and then 88.71. At that level the entire universe will be writhing, screaming, and begging for a lower dollar.

Y'all know what this is? Not only financial panic out of Europe, THIS IS THE DEFLATION SCARE. Now the gurus will gurate, the mavens will mavinate, and the pundits will pander, all about how deflation is here and it's the bogeyman who will eat you up!

Looking at the institutions built over the last 80 years with no purpose save to inflate, there's about as much chance of deflation as there is of my winning the Miss America swimsuit competition in my red long johns. But you will hear the media bloviate about it, and at last the Fed and its cronies will ride their printing presses to the rescue.

I'm sorry. They're lamebrains are so active today that I feel like a dung beetle at a bull sale. There's just so much material, I don't know where to start or stop.

The Euro broke down significantly, shattering that 1.3200 support and closed down a jumbo 1.13% at 1.3034. Now in sight is 1.2500. Thanks, Dufusses.

Japanese yen closed down, too, a tee-tiny 0.06% to 128.25c/Y100 (Y77.97/$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.