Wednesday, December 28, 2011

The Gold Price Fell After Breaking Support, New Support at $1,535 - $1,500

Gold Price Close Today : 1562.90
Change : (31.30) or -2.0%

Silver Price Close Today : 2719.20
Change : 150.5 cents or -5.2%

Gold Silver Ratio Today : 57.476
Change : 1.924 or 3.5%

Silver Gold Ratio Today : 0.01740
Change : -0.000602 or -3.3%

Platinum Price Close Today : 1384.00
Change : -53.10 or -3.7%

Palladium Price Close Today : 632.45
Change : -31.05 or -4.7%

S&P 500 : 1,249.64
Change : -15.79 or -1.2%

Dow In GOLD$ : $160.72
Change : $ 1.36 or 0.9%

Dow in GOLD oz : 7.775
Change : 0.066 or 0.9%

Dow in SILVER oz : 446.87
Change : 18.56 or 4.3%

Dow Industrial : 12,151.41
Change : -139.94 or -1.1%

US Dollar Index : 80.50
Change : 0.702 or 0.9%

The GOLD PRICE fell 2% ($31.30) on Comex to $1,562.90. If it had only stopped there, it wouldn't have been so bad, but it lost another ten bucks in the aftermarket.

Meanwhile the SILVER PRICE lost 5.2% (150.5c) to close at 2719.2c. Low came at 2689c. Low for gold at $1,549.66.

No surprise here, since we all knew that if SILVER and GOLD broke support, they would fall a good piece. Silver must now reckon with 2615c and gold with $1,535 - $1,500, maybe even $1,475.

The break today for the GOLD PRICE came around $1,582. For silver it was 2850c, whence it fell a dollar and a half.

SILVER's condition is more precarious. Below that 2615c shelf lies very little support to catch silver. Oh, there's a little bit at 2500c, and another little bit at 2250c, but below that it's 2000c or lower.

Here's a little straw in the wind. The premium on US 90% silver coin, a reliable indicator, has risen. Generally that means silver is nearing some bottom or getting ready to rise, since it implies that sellers are becoming much more reluctant to part with their silver.

Silver's RSI is also very low and oversold, but of course oversold can always get more oversold..

Big success story is the GOLD/SILVER RATIO, which reinforces for us the wisdom of trading the gold/silver swapping strategy. Our customers who this time last year swapped out of silver into gold, even though later events showed that we swapped too early, can now swap that gold back into silver and realize gains of more than 25% in silver ounces. You think they're crying? Not much.

Market played with our 57.50:1 ratio target today, but never really climbed above that. Comex closed at 57.476. Unless silver gives a dead cat bounce tomorrow, we ought to see our ratio target met at 57.5:1. If you do not have an open order with us, I can only say, "Please take a place in line." We were swamped today, and I apologize for the delays, but if we had 200 people working here it wouldn't suffice at times like these. Leave a message, be patient, we will get to you.

Adding to the frenzy were people who have been waiting for silver and gold to hit these levels to BUY. I can't argue with them, because I've been here so many times before. Surest way to lose is to keep holding out for just another dime lower. You never get it, because greed is never satisfied. Best to pick a number you can live with, and buy when the market hits that number, sucking in your gut and outraging your fears. Remember the proverb, "Bulls get rich, and bears get rich, but pigs get slaughtered."

FEAR took over the wheel again today. News reports claim that investors are worried about Italy's sale of long term debt tomorrow. News reports do not say why they weren't worried about it yesterday, when it was every bit as big a problem. If Diogenes thought he had a tough time finding an honest man 2,500 years ago, that couldn't compare to the difficulty of finding a rational man today.

Stocks bounced off the fatal 12,300 level by 139.94 points (1.14%) to close at 12,151.41. S&P500 ricocheted also, down 15.79 (1.25%) to 1,249.64, and "in negative territory for the year" as the current prating and prattling mantra expresses it.

Fear is fatal to stocks, and fear won't go away. The specter of Europe is haunting stocks. The new year will not exorcise the demon.

US dollar index today rose 0.9%, 70.2 basis points, to the top of its recent range at 80.499. Once it cleared that 79.80 mark, it shot up like a bottle rocket. Fear will also drive the dollar higher, even though that's like fleeing a lion and finding safety in a bear's den.

Euro dropped 0.98% today and hit a 15 month low at 1.2941. 1.2000 doesn't look so far away now, does it?

Japanese Yen climbed today as if it meant to gain ground, but at day's end was lower than yesterday by 0.12% at 128.28c/Y100 (Y77.95-$1). Dollar is king in the land of scrofulous, scurvy, scruffy, and scary fiat currencies.

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.