Friday, December 16, 2011

Gold Price Rose $21 Today, Lost 6.8% This Week, Silver and Gold Remain in a Primary Uptrend With 3 to 10 Years to Run

Gold Price Close Today : 1,595.60
Gold Price Close 9-Dec : 1,712.80
Change : -117.20 or -6.8%

Silver Price Close Today : 2961.5
Silver Price Close 9-Dec : 3217.3
Change : -255.80 or -8.0%

Gold Silver Ratio Today : 53.878
Gold Silver Ratio 9-Dec : 53.237
Change : 0.64 or 1.2%

Silver Gold Ratio : 0.01856
Silver Gold Ratio 9-Dec : 0.01878
Change : -0.00022 or -1.2%

Dow in Gold Dollars : $ 153.66
Dow in Gold Dollars 9-Dec : $ 147.05
Change : $ 6.61 or 4.5%

Dow in Gold Ounces : 7.434
Dow in Gold Ounces 9-Dec : 7.114
Change : 0.32 or 4.5%

Dow in Silver Ounces : 400.50
Dow in Silver Ounces 9-Dec : 378.71
Change : 21.79 or 5.8%

Dow Industrial : 11,860.94
Dow Industrial 9-Dec : 12,184.26
Change : -323.32 or -2.7%

S&P 500 : 1,219.26
S&P 500 9-Dec : 1,255.19
Change : -35.93 or -2.9%

US Dollar Index : 80.177
US Dollar Index 9-Dec : 78.632
Change : 1.545 or 2.0%

Platinum Price Close Today : 1,417.10
Platinum Price Close 9-Dec : 1,516.30
Change : -99.20 or -6.5%

Palladium Price Close Today : 622.30
Palladium Price Close 9-Dec : 683.20
Change : -60.90 or -8.9%

It was as painful a week as the GOLD PRICE and the SILVER PRICE have seen in a long stretch. Silver lost 8%, gold lost 6.8%, and lots of folks who were thinking they were going to retire on their silver and gold profits have trimmed their plans back to working an hour less every day.

Today the GOLD PRICE gold rose $21 to close Comex at $1,595.60. SILVER gained 39c to close at 2961.5c. These are not significant gains, just dead cat bounces at the end of the week where people pull out profits so they can go home to Long Island and drink martinis all weekend with a clear conscience, unworried about what markets will do on Monday.

Gold's low this week came yesterday at $1,563.90, etching the chart with what appears to be a bottom at $1,560 -- well, better "support" than "bottom," and overhead resistance at $1,600.

'Tis always important to fade the crowd's enthusiasm. Right now nobody can see anything but silver and gold falling forever, extrapolating present conditions out into the future forever, world without end.

Don't make sense. After this hard a fall, metals will at least stage a little rise in correction. And I've been cogitating most earnestly where they might go. Searching thereafter, I came across the moving averages, and staring at those leaves me thinking that bottoms will come sooner rather than later, although this whole correction might torture us all the way to June 2012. It all depends on the European crisis, whether it explodes or not, and I don't know. If it doesn't, you won't see gold drop below $1,535. Otherwise, it could drop to $1,250, even $950 where the long term trend line comes in.

Y'all want promises, don't you? Sorry, life doesn't work that way. It breaks my heart, but you marry and then your wife dies. You have children and lose them. The only alternative to such terrifying risks is, never to love, never to try, never to risk, and take your bones to the grave in perfectly safe boredom. Yes, you might lose, but I'd rather throw the dice once and lose than die wondering what they would have come up.

One last detail: silver has posted at bottom at 2809.8 yesterday. Above is resistance at 3000c. If it breaks 2800c 'twill drop to 2700c. Possible is 2000c, maybe lower.

Listen! Silver and gold remain in a primary uptrend (bull market) with another 3 to 10 years to run. Don't be sucked in by Talking Heads promising the gold bull market has ended. They're wrong. Stick with your silver and gold, buy more.

Scoreboard for the week stores up pain for everyone: stocks down, silver and gold down blisteringly, US dollar index up, up, up. All the gurus are guruing that it's the end for silver and gold, but I reckon that's a MITE previous.

Really only one question remains: whether the 2011 European bank solvency crisis will explode into a crisis as bad as the 2008 American bank solvency crisis. Everything else is like a killdeer flying up in front of your face. She's NOT the action, she's just flying away from her nest to distract you from the real action, the nest.

Any time I mention the GOLD/SILVER RATIO, I get a flurry of emails asking me what I am talking about. I think it's simple, but then I've been thinking about it for 30 years.

The gold/silver ratio is gold divided by silver. That's a fraction, and when the fraction's numerator (the top number) increases, the fraction's value increases. When the fraction's bottom number (the denominator) increases, the fraction decreases. 4/4 is greater than 2/4. 1/2 is greater than 1/4. That means that the more gold rises (increases) against silver, the higher the ratio rises. The more silver outperforms gold, the lower the ratio sinks (decreases). At high ratios we swap gold for silver, because then silver is cheap relative to gold. At low ratios we swap silver for gold, because then gold is cheap relative to silver. Right now the ratio is relatively -- high compared to where it's been in the last six months -- but I expect it will go higher still. Why? Because silver is more volatile than gold, so when both metals are swinging up, silver rises faster. When both metals are dropping, silver drops faster. Whichever direction the metals are moving, gold plods and silver jumps in seven league boots. (Remember, though, that they don't move this way every single day, and that silver usually waits until a rally has been running some time before it begins outpacing gold.) Put that way, I guess it is pretty complicated. Y'all will find the swapping strategy explained at

Stocks sank nearly 3% this week. Today the Dow closed at 11,860.94, down a tee-tiny 3.51 or 0.29%. S&P 500 rose 5.21 (0.73%) to 1,219.26.

Dow is hovering above its 50 day moving average (now 11,808), having already dropped through its 200 day moving average and turned its momentum unarguably down, down, down. Falling through that 50 dma will be like stepping off a cliff into the dark, toward the rocks below -- WAY below.

Maybe a lot of y'all don't really catch why I am so much more negative on stocks than I am on silver and gold. Aren't both dropping? Didn't silver and gold drop even more than stocks this week?

Yes, but you are missing the most important consideration: AGAINST WHAT BACKDROP? Stocks are in a primary bear market, a downtrend that will last 15 - 20 years from when it began in 2000, while silver and gold are in a primary Uptrend that will last 15 - 20 years from its 2001 beginning.

Y'all get it now?

No matter how good stocks look for the nonce, no matter how sorry gold and silver, makes no difference cause the PRIMARY TREND will determine the ultimate outcome.

US DOLLAR INDEX rose two percent this week. Here's a guess, only a guess: the Nice Government Men have been working day and night round the clock since last summer to suppress the dollar. Had they not, the flight out of the euro would have driven the dollar to 92 by now.

Don't make no difference. Dollar today closed down 14.4 basis points (0.19%) on its way to 83 and higher. Count on it.

Euro closed 1.3035, up 0.17%, on its way to 1.2000. Japanese Yen closed up 0.1% at 128.56c/Y100 (Y77.78/$1), on its way nowhere.

Y'all enjoy your weekend!

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.