Gold Price Close Today : 1564.50
Change : -50.30 or -3.11%
Silver Price Close Today : 2683.30
Change : -155.0 or -5.46%
Gold Silver Ratio Today : 58.305
Change : 1.412 or 2.48%
Silver Gold Ratio Today : 0.01715
Change : -0.000426 or -2.42%
Platinum Price Close Today : 1437.10
Change : -28.20 or -1.92%
Palladium Price Close Today : 607.40
Change : -10.95 or -1.77%
S&P 500 : 1,325.51
Change : -30.18 or -2.23%
Dow In GOLD$ : $166.14
Change : $ 1.98 or 1.21%
Dow in GOLD oz : 8.037
Change : 0.096 or 1.21%
Dow in SILVER oz : 468.59
Change : 16.75 or 3.71%
Dow Industrial : 12,573.57
Change : -250.82 or -1.96%
US Dollar Index : 82.32
Change : 0.807 or 0.99%
The GOLD PRICE lost $50.30 today to close Comex at $1,564.50. Gold also began sinking at the open and kept it up all day. However, judging from our overloaded phone lines today, gold will find plenty of buyers down here.
Gold shattered its uptrend line from the May low. Last low was at 1,556.40 (intraday), so that is a possible stopping point. However, that strong support around $1,526 offers a backstop, too. Break that, and gold is facing $1,475 or $1,450. Brace yourself: MACD points downward. points downward, too.
Meanwhile, remember that great Texas oil man, H.L. Hunt, who said, "Never get really elated in victory; when times are tough, never get down." The GOLD PRICE will recover. Be patient, keep your eyes on the horizon, not the rocky path under your feet.
The SILVER PRICE lost a meaty 155 cents today to end at 2683.3, a 5.5% loss. Owch. Silver's chart looks pretty much like gold's steadily declining from the open until 1:30, then flattening out.
SILVER must now either hold 2625c or fall further, as low as 2250c. I'm inclined simply to shut my mouth and watch until it stops.
People call me and, trying to make a decision, ask what I think the market is doing. My best answer is that I've watched lots of investors, and the successful ones don't hesitate. They decide what price they are willing to pay and buy and take the consequences. Several years ago I found some notes from when gold has risen to $340. I was trying to figure out whether it would correct to $320 or $300. Mmmm. Would you buy gold at $340 today? From that perspective, that forty bucks doesn't amount to a hill of beans. Equivalent decline here from $1,600 would take gold to $1,386.70 (no, that is NOT my target, merely a comparison). We're buying silver and gold for the long run, for the BIG rise, and these little fluctuations, painful as they are, pass quickly.
GOLD/SILVER RATIO today rose above 58, so if you have been waiting to swap gold for silver, you'd better get cracking.
Clearly today knocked all my short-term optimism for the silver and gold on the head, but today's events go way deeper, and in fact strengthen my long term outlook for metals.
What happened? Proximate cause for falls of 5.5% in silver, 3.1% in gold, 2.2% in the S&P500, 2% in the Dow, and a 1% rise in the US dollar index was -- an announcement. Moody's rating service downgraded the credit of 15 banks, mostly metastatic ones like Credit Suisse, Morgan Stanley, Goldman Sachs, JP Morgan Chase, and Citigroup. Apparently -- get this, and stop snickering -- nobody out there knew that these big banks were having trouble, so the announcement came as a surprise. Have mercy.
Ask yourself: if an announcement of what everybody already knew can roil markets like that, how fragile are they?
The latest explanation du jour of market events is the "risk-on, risk-off" trade. Schizophrenic investors one day run to risky investments (stocks, gold) and then, affrighted by the crisis du jour, run back to [what they perceive as] less risky ones, like the US dollar and US treasury debt (I never said this would make sense, only that it's the explanation du jour).
Now attempt to unravel with me this knotty skein. Mega banks' credit rating downgraded, megabanks in trouble. Who bailed them out last time? Federal Reserve and US gummit. Who will bail them out this time? Federal Reserve and US gummit, because the banks own the Fed and the gummit. How will the Fed and the USG bail them out? By printing/loaning/ floating more dollars. What will this do to the dollar? Gut its value.
Whether this happens sooner or later, 'twill happen. Oh, and add thereto the virtual certainty that as the stock market plunges over the black cliffs of depression, taking the economy with it, the Fed and the US gummit will create even more dollars.
Y'all got the picture now? So, let me ask a question: would you -- personally -- rather own green pictures of famous Americans or certificates signed by the US gummit that promise to pay pictures of famous Americans, or would you rather own something real? Beans, goats, a Chevrolet, gold, silver, anything.
Or, you could just follow the crowd into its black panic, until the crowd reverses and runs the other way.
Moody's announcement came out in the afternoon, but somebody must have known because the dollar started climbing at 8:00 a.m. and never looked back. Time the doors were shut the US dollar index had gained 80.7 basis points (1.04%) to 82.316. Dollar bounced off that 81.16 low clean up to is 20 day moving average (82.31). Looks like a turnaround to the upside to me.
'Twas not a happy day for the yen and euro. Yen gapped down on its way to the ocean floor, jumping over its 50 dma (125.24) to lose 0.94% and end at 124.60c/Y100 (Y80.26/US$1). Euro slammed down through that 126.24 support resistance like it had two anvils tied to its feet, fell clean to the 20 DMA (1.2532), down 1.28%, and closed $1.2543. Most likely this begins another plunge, this one toward $1.2000 or lower.
Dow today lost 250.82 or 1.96% and closed at 12,573.57. S&P outdid the Dow by dropping 2.23% (30.18 points) to 1,325.51.
S&P500 will only confirm that it has turned down when it closes below 1,305, but today it fell through the neckline of that supposed upside down head and shoulders, which also is support/resistance from the January high. Should the Dow close tomorrow below today's close, it will have duplicated what the S&P500 did today. Possibility exists that stocks will recover and proceed higher, but that's the least likely outcome.
Argentum et aurum comparenda sunt -- -- Gold and silver must be bought.
- Franklin Sanders, The Moneychanger
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© 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.
