Thursday, February 09, 2012

The Gold Price Rose $9.70 to $1,739 Gold Must Trade Through $1,750 Tomorrow and Close Above that Mark

Gold Price Close Today : 1739.00
Change : (9.70) or -0.55%

Silver Price Close Today : 3388.40
Change : 21.10 cents or 0.63%

Gold Silver Ratio Today : 51.322
Change : -0.610 or -1.17%

Silver Gold Ratio Today : 0.01948
Change : 0.000229 or 1.19%

Platinum Price Close Today : 1659.20
Change : -4.30 or -0.26%

Palladium Price Close Today : 709.40
Change : -4.35 or -0.61%

S&P 500 : 1,351.95
Change : 1.99 or 0.15%

Dow In GOLD$ : $153.23
Change : $ 0.94 or 0.62%

Dow in GOLD oz : 7.413
Change : 0.046 or 0.62%

Dow in SILVER oz : 380.43
Change : -2.19 or -0.57%

Dow Industrial : 12,890.46
Change : 6.51 or 0.05%

US Dollar Index : 78.61
Change : 0.037 or 0.05%

With the pressure off the euro, the silver and GOLD PRICE rose when one might expect that, fears removed, they would fall. They didn't.

The GOLD PRICE rose 9.70 to $1,739.00 and silver rose 21.1c to 3388.4c.

Although gold reached up and touched $1,750.96, it couldn't even hold on above $1,740. Oddly, too, in the aftermarket it slipped back to $1,730.80, and yesterday's aftermarket (when I checked it) was $1,730.60. For gold that score is "$1750 - two, Gold - zero." Two failures at the same level points to lower prices. To gainsay that gold must trade through $1,750 tomorrow and close above that mark.

Yet if the GOLD PRICE cannot beat the top of its range, the bottom of the range cannot beat gold, either. Once again today gold's low came at nearly the self-same spot in the $1,725.80s. If that level gives way, gold will seek $1,680, perhaps $1,650.

SILVER PRICE rose to 3388.4c -- good, but still range-bound, so no questions answered. Strong, yes, but not strong enough to break through 3450c resistance and make good its escape from the range. All I can see on the 5-day chart is a lower high today than yesterday's and a trap door at 3360 that silver had better not step through.

What makes all this so riddlesome is that silver and gold keep falling off without following through on the downside, but at the same time refuse to push on upwards. All this has the feel of burning up gas, spinning wheels, and lost momentum.

Oh, the long term outlook hasn't changed. Silver and gold remain in a bull market fueled by monetary demand, thanks to their best friends, the inflating central banks and deficit-spawning governments of the world. But for right now metals can't decide whether to swim or go boating.

Be patient.

On Friday, 24 February 2012 I will be speaking for the Fayette County (Tennessee) Tea Party, probably at the county courthouse in Somerville. I'll send y'all more details about time and exact place as soon as I get them. This is your chance to see a natural born fool from Tennessee in the flesh before they become extinct.

One thing y'all can always bet on: whenever the banks make a deal, it's to their advantage and the borrowers' disadvantage. Take today's much applauded deal between big banks and 25 state attorneys general over bank wrongdoing in foreclosures.

At the end of the day, it costs the banks nothing and secures their otherwise unsecured loans. Here's how: banks have no clear title to mortgages because when they securitized them and sold them, they were in too big a hurry to preserve a chain of clear title. Thus they sue to foreclose, and can't prove any mortgage, foreclosure thrown out.

So how does the deal help banks? Oh, they put up a paltry $1.5 billion for 750,000 illegally foreclosed homeowners to split amongst themselves, about $2,000 a head, peanuts.

Next the banks agreed to re-finance or "modify" $20 bn or so in existing mortgages "to prevent foreclosure." Now, let's see. #1, the banks create the whole $25 billion out of thin air. Cost to banks? Nothing. #2, banks now hold bad paper that offers no legal basis or claim for a mortgage, but banks generously -- be still, my beating heart! -- re-finance said mortgages, creating new paperwork that PERFECTS their bad title.

Yeah, buddy, that sounds like the banks gave up a truckload of goodies, swapping unclear title for perfect title they can now foreclose on legally, and all under the cover of a government-sanctioned deal. "Oh, puh-leez, B'rer Gummint, don't t'row me in dat old mortgage refinancing briarpatch! Puh-leez!"

I'm not even going to talk about the Great Greek Debt Deal. My Stupid Meter just blew a fuse and my Hogwash Detector is SMOKING. I can't take any more.

Whole investing world's been waiting on that Greek Debt Deal, but what happens when it arrives? Anticlimax. Stocks sputtered, euro spluttered, and silver and gold rose. Mmmmm. Welcome to the world of investor irrationality!

Five day stock charts offer neither charm nor enthusiasm. Dow is stuck, blocked, stymied by 12,900. Oh, it rose a MASSIVE 6.51 points (0.05%) today to close at 12,890.46, but I will be tactless and tacky enough to ask the sore question: "With the Greek debt-threat removed, why didn't stocks soar?" Maybe because their wings have been clipped? S&P acquitted itself a little better, closing 1,351.95, up 1.99 points or 0.15%.

If they do this in the green tree, what will they do in the dry? They won't bud and blossom, I can promise you that.

The US dollar index moved very little, dropping 5.4 basis points (0.07%) to 78.587, still hovering above that deathful 78.50 support. Don't get the idea it was a manic day, either with a high at 78.78 and a low at 78.36, it was a bore-fest.

With a 0.07% trading range from high to low, the euro wasn't where the action was today, either. Closed up 0.2% at 1.3285. You would have thought the scared shorts running away would have driven it up, but not at all. That implies -- if I were a guessing man -- that there weren't many shorts in the euro and that all the positions were longs expecting the Greek Deal. Now that they've shot that round, who's left to buy euros?

Meanwhile the yen gapped down again today, following through on yesterday's close below the 20 day moving average, and for good measure plunging clean through its 50 DMA as well. Closed near the bottom of the 3- month range. Close was 128.77c/Y100 (Y77.66/US$1), a hefty 0.82% fall. Yen is on the run.

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.