Wednesday, June 20, 2012

The Gold Price Fell $7.40 to Close at $1,614.80 I Expect the Uptrend Line to Hold

Gold Price Close Today : 1614.80
Change : -7.40 or -0.46%

Silver Price Close Today : 2838.3
Change : -2.1 or -0.07%

Gold Silver Ratio Today : 56.893
Change : -0.218 or -0.38%

Silver Gold Ratio Today : 0.01758
Change : 0.000067 or 0.38%

Platinum Price Close Today : 1479.00
Change : -13.70 or -0.92%

Palladium Price Close Today : 628.25
Change : -9.90 or -1.55%

S&P 500 : 1,355.69
Change : -2.29 or -0.17%

Dow In GOLD$ : $164.17
Change : $ 0.60 or 0.37%

Dow in GOLD oz : 7.942
Change : 0.029 or 0.37%

Dow in SILVER oz : 451.83
Change : -0.12 or -0.03%

Dow Industrial : 12,824.39
Change : -12.94 or -0.10%

US Dollar Index : 81.38
Change : -0.570 or -0.70%

Today proved me wrong and right. A sharp, sudden decline came, but the $1,610
GOLD PRICE didn't hold, sort of, and it sort of did.

The GOLD PRICE closed at $1,614.80, down $7.40, but intraday it reached $1,591.50. Gold's chart today mirrors all the other bizarre charts today, including the dollar and stocks. It declined into 12:30, waiting for the FOMC's announcement, shot up on the announcement, wallowed in indecision, then gave up about $7 of a $30 climb. Central banks simply wreak havoc on markets.

The GOLD PRICE hit its 20 DMA ($1,598.83) but closed above that and above its 50 DMA ($1,613.8). Today gold nearly touched its uptrend line from the May low. Maybe that's the limit of the move, maybe it goes lower. I expect that uptrend line to hold, but my crystal ball is broken, so I will roll when it punches me. More I think about that euro and those European banks, the more I think about 2008. The more I think about 2008, the more I remember that although paper silver and gold dropped sharply, you couldn't get physical metal except at premiums 50% or more above market.

The more I think about all paper money and banks and central banks, the more gold and silver I want to own.

The SILVER PRICE dropped as low as 2775 cents but closed down only 2.1c at 2838.3c. Which way next?

Since its May trough, silver has formed an even-sided triangle and today touched the bottom boundary. Even- sided triangles don't tell you which way they will break out, up or down, only that they will break out soon. Upside that boundary stands about 2875c, below at 2775c. MACD wants to roll over downward, not an encouraging sign. Today's comeback, though was strong.

This sort of frustration and meaningless back and forth is liable to continue through July. However, I don't believe the downside risk is great here, and I think silver will hold its own, although may prove me a fool. But wait! That's all I claim to be anyway, a natural born fool from Tennessee, so I have nothing whatever to lose by voicing my opinion. This is great: when you ain't nobody, you ain't got nothing to lose! It's like a bank going bankrupt -- How could it? It's already insolvent!

Markets were thoroughly confused today. Long ago I gave up expecting any rational reaction out of markets, addicted as they are to government spending and "stimulus." Today the Federal Reserve Open Market Committee said it expects "to maintain a highly accommodative stance for monetary policy" keeping interest rates at "exceptionally low levels for the federal funds rate at least through late 2014." Plus the FOMC extended Operation Twist -- selling short term treasure debt and buying long term -- until year end. Supposedly this will drive down long term interest rates and increase lending. (All of which is grade B hogwash, as it will only further prolong the depression by preventing the market from adjusting with higher interest rates.)

Although the Fed handed stock investors the plum they were expecting -- more inflation, 'cause that's what a "highly accommodative monetary stance" means -- stocks spent most of the day underwater, barely poking their nose above the surface, only to sink again vigorously. S&P 500 and Dow dropped, other indices rose slightly. This may be the level where stocks stall, 1,405 S&P target notwithstanding.

Dow today lost 12.94 (0.1%) to close 12,824.39. S&P500 lost 2.29 (0.17%) and ended at 1,355.69.

STOCKS -- you can't get into the Poor House without 'em.

Currencies reacted a bit more logically to the FOMC announcement. US dollar index lost 57 basis points (0.69%) to end at 81.38. This changeth not the chart, since today's low struck about the same spot as yesterday's (81.16). It catches my eye that this is the 50% correction level of the rise from the May low to the 1 June high. Thus it becomes a candidate for a turnaround, since the dollar remains in an uptrend as long as it remains above 80.90. Don't short dollars for the short term.

The Yen threw down its cards today and fled the room. Dropped 0.73% to 125.76c/Y100 (Y79.52/US$1). It busted clean through its 20 DMA (126.35) and fell for the 50 DMA (125.22). One more down day establishes a down trend with two lower lows and a lower high.

The euro tried to make good its upward escape today, rising 0.17% to $1.2708. Never mind: just below $1.2800 the euro will meet starchy resistance. Long term, the euro is cooked. Roasted. Poached. Toasted. Crispy fried. Read a clear-eyed and insightful analysis last night by Steve Belmont of Options Edge. Euro members have basically three choices: default, ditch the euro, or pool all the debt and print enough money to inflate the burden away. This is like being offered the option of death by barbed wire, burning, or boiling in a vat of acid. No matter the method chosen, the euro is cooked.

Oh, and those European banks? They're so insolvent that they make US banks look good. This ain't a recipe for economic progress. If any road leads to safety other the gold and silver road, I don't know it.

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

- Franklin Sanders, The Moneychanger
10:00am-5:00pm CST, Monday-Friday

© 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. No, I don't.