Friday, January 20, 2012

The Gold Price Utterly Blasted my Expectations Today, Closing Up 2 Percent for the Week at $1,663.70

Gold Price Close Today : 1,663.70
Gold Price Close 13-Jan : 1,630.60
Change : 33.10 or 2.0%

Silver Price Close Today : 3164.7
Silver Price Close 13-Jan : 2949.3
Change : 215.40 or 7.3%

Gold Silver Ratio Today : 52.571
Gold Silver Ratio 13-Jan : 55.288
Change : -2.72 or -4.9%

Silver Gold Ratio : 0.01902
Silver Gold Ratio 13-Jan : 0.01809
Change : 0.00093 or 5.2%

Dow in Gold Dollars : $ 158.05
Dow in Gold Dollars 13-Jan : $ 157.48
Change : $ 0.57 or 0.4%

Dow in Gold Ounces : 7.646
Dow in Gold Ounces 13-Jan : 7.618
Change : 0.03 or 0.4%

Dow in Silver Ounces : 401.95
Dow in Silver Ounces 13-Jan : 421.19
Change : -19.24 or -4.6%

Dow Industrial : 12,720.48
Dow Industrial 13-Jan : 12,422.21
Change : 298.27 or 2.4%

S&P 500 : 1,315.38
S&P 500 13-Jan : 1,289.10
Change : 26.28 or 2.0%

US Dollar Index : 80.155
US Dollar Index 13-Jan : 81.531
Change : -1.376 or -1.7%

Platinum Price Close Today : 1,530.50
Platinum Price Close 13-Jan : 1,485.80
Change : 44.70 or 3.0%

Palladium Price Close Today : 673.85
Palladium Price Close 13-Jan : 636.70
Change : 37.15 or 5.8%

The GOLD PRICE and SILVER PRICE utterly blasted my expectations today, and crushed underfoot any suspicion of a key reversal from yesterday. Yet here, too, lurk two different stories, subtle, but not quite agreeing.

Let's take the SILVER PRICE first. It vaulted 116.5c (3.8%) today to close Comex at 3164.7c. It brushed that 3060c resistance aside like the Terminator flinging cops right and left, and climbed straight up. Never sank lower than 3029c today, and at its apogee reached 3191c. Notice, too, that it closed near the top of that range.

Internally more was going on than just that. SILVER jumped over the hurdle of its 50 DMA (3103c) and o'erleapt and internal resistance line. Let's just say silver's shirt is full of starch.

Gives me a headache to think about it, looking at the weekly chart: have I missed the low in silver? Wait, wait, there's also such a thing as a false breakout, and toward the end of metals' rallies silver always tends to outrun gold.

Either way, Silver's next stubborn resistance hangs in the sky overhead at 3400c. It could make that leap next week. However, if Monday comes a cropper and silver loses 200c or so, you'll know it was a false breakout. Otherwise, buy it at the market.

But listen as the GOLD PRICE speaks out of both sides of its mouth. It closed today up $9.60, higher than yesterday, at $1,663.7, new high close for the move, but did not today post a new intraday high. High reached only $1,666. Why didn't gold punch through $1,670 when silver was so manic?

I don't know. Maybe it means nothing, maybe it only means that resistance there is very strong and gold will play catch-up next week, maybe the NGM take offense and react when gold reaches $1,670. But look here: if gold pierces that $1,680 next week, and then works through $1,705, stop waiting and buy. The bottom has passed, a new rally has started.

Dear friends, listen and ponder: the GOLD and SILVER bull market is yet young. The public has not yet climbed aboard, and only a few investment professionals. What we have seen so far is pasty, bland cottage cheese compared to what is coming. Don't be caught standing around trying to make your mind up, only to watch silver and gold run away.

Within the markets are planted automatic circuit breakers, set to explode Humility Bombs whenever you begin to believe that you have things figured out. I stepped on those mines today.

What a week! SILVER gained -- look! --- 7.3%, while GOLD moved up only 2%. Dow gained more than gold, 2.4%, platinum augmented 3% (a word for you engineers out there), and palladium added 5.8%. Dollar index dropped 1.7%, and probably broke its rally's back.

I love kids, but mine were always easy to catch whenever they were doing something wrong. If I got one alone and asked him what he had been doing, he said one thing. When another said something else, I knew I wasn't getting the story whole.

It's the same way with markets. When markets that SHOULD confirm don't, some monkey business is afoot behind the scenes.

So today I ask myself, how could the Dow rise 96.5 points (0.76%) while the broader S&P500 rose only 0.88 (0.07%)? And when the Dow rose 3/4%, why did the Nasdaq and Nasdaq-100 DROP? Somebody's story doesn't match here, and when that happens with markets, the larceny of Nice Government Men pops instantly to mind. I don't want to become one of those imagination-challenged boors who blames everything on government intervention, but that doesn't mean they don't intervene. And we KNOW they have a special group, the President's Working Group on Markets, set up in the Reagan reign to manipulate the stock market. I suspect they treat the Dow, the most widely watched stock index, as a kind of Potemkin village for the economy, a number they try to keep perky so we mushrooms will feel good and not panic.

Anyhow, the Dow (if not the S&P500 or Nasdaq), has penetrated overhead resistance. If the move is real, then stocks ought to advance smartly, not dragging feet. We'll see. None of this, lest you conclude otherwise, changes my long term view of stocks, which are locked in a bear market (primary downtrend). If it's a rally, this, too, shall pass, and more diving shall follow.

Dow today ended at 12,720.48, up 96.50 or 0.76%. S&P 500 closed 1,315.38, up 0.88 (0.07%).

I bet y'all wonder why I waste good electrons talking about the scrofulous US dollar index and scabby euro and scurvy yen. Easy: they are the chief competitors to silver and gold. Their course offers guidance where the metals are headed, and chronicles the metals' ongoing war of annihilation against all the phony fiat currencies in the world.

Dollar ended the day down only 6.1 basis points (0.08%) at 80.155, thus capping a week of disaster. Dollar index smashed through its uptrend line today. That does not guarantee twill proceed lower, as it did the same for several days early this month and again in December, but whenever a market breaks a trend line or resistance, the presumption states it will continue in that direction.

Anyway, think about the backdrop. The world's states are engaged in a very polite war of competitive devaluation, trying to build their own economies at their neighbor's expense. Everyone smiles and bows and says they're working together, but back in the office they are figuring out how to lower their currency's value. Truth is, neither the Bernancubus nor the White House Toad want an appreciating dollar. Worse, they've had a fight on their hands as scared money poured out of the euro all summer, headed for refuge in US treasuries and driving up the dollar.

For what technical analysis is worth under these manipulated circumstances, today the dollar index fell through both its uptrend line AND the 20 day moving average (80.51). That targets a fall at least to the 50 DMA (79.39), although some support lingers around 79.70 - 79.85.

Euro today closed lower as traders took profits out of their week, 1.2931, down 0.23%. Yen changed nothing, up 0.11% at 129.83c/Y100 (Y77.03/US$1).

Also, I have learned that altogether y'all know almost everything in the world, so I have a question. Anybody know where I can find a slightly used 10 - 20 kilowatt PROPANE generator, a good brand like Kohler? Drop me an email if you do, please.

Again I must confess, I just don't get it. I heard a lady from South Carolina on National Proletarian Radio (voice of Socialism Worldwide). They are voting in the meaningless Republican primary for president this weekend, you know, the one with the Invisible Candidate (R*n P**l). This lady lives in a county with 12% unemployed, and she said they needed to elect somebody who could help them. I gasped for air.

Doesn't she understand that the government is the REASON we suffer economic turmoil and instability? Rotten money?

With all due respect, when did anybody from any government ever help anybody? Of the three greatest lies in the world, the first on the list is, "Hi! I'm from the government, and I'm here to help you." All government money comes with a sock in the jaw. All government help comes with ropes, chains, and shackles.

I don't get it. Why can I see this, and somebody from South Carolina (of all places!) not see it? When are folks going to wake up grasp that the government cavalry is NOT coming, and you don't want 'em to? If anybody is going to help us, it will have to be US, and we have to start by re-building our own local economies, working to restore our neighbor's prosperity as well as our own, building on a sound foundation of clean local food grown by local people. That's just for starters.

I just don't get it. We're standing on acres of diamonds, and people still want to call in the government to screw everything up even more than they already have.

Y'all enjoy your weekend!

Argentum et aurum comparenda sunt -- -- Gold and silver must be bought.

- Franklin Sanders, The Moneychanger

© 2012, 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.