Tuesday, July 24, 2012

The Silver and Gold Price are Sitting at the Bottom of Correction Ranges This is as Low Risk as it Gets

Gold Price Close Today : 1575.80
Change : -1.30 or -0.08%

Silver Price Close Today : 2679.0
Change : -22.9 or -0.85%

Gold Silver Ratio Today : 58.820
Change : 0.450 or 0.77%

Silver Gold Ratio Today : 0.01700
Change : -0.000131 or -0.77%

Platinum Price Close Today : 1382.30
Change : 3.50 or 0.25%

Palladium Price Close Today : 562.25
Change : 5.55 or 1.00%

S&P 500 : 1,338.31
Change : -12.21 or -0.90%

Dow In GOLD$ : $165.52
Change : $ (1.21) or -0.73%

Dow in GOLD oz : 8.007
Change : -0.059 or -0.73%

Dow in SILVER oz : 470.97
Change : 0.14 or 0.03%

Dow Industrial : 12,617.32
Change : -104.14 or -0.82%

US Dollar Index : 84.00
Change : 0.296 or 0.35%

Five day GOLD PRICE chart appears to have troughed yesterday about $1,563. Today gold lost a cosmetic $1.30 to close Comex at $1,575.80, but the aftermarket is gainsaying that at $1,581. Once again, this gives me no change to report. However, chart says that if the GOLD PRICE can break through its 20 DMA (1,583) it ought to race toward the top bound of that even-sided triangle ($1,610). 50 DMA, too, stands nearby at $1,586.51. Gold must hold the line at $1,560 or be o'errun by hordes of barbarian hedge funds and Nice Government Men.

The SILVER PRICE barely moved today, 2716 cents to 2662c. Closed Comex, that international paragon of exchange traded integrity, at 2679c, down 22.9c. For SILVER 2660c is the last ditch. Today kept silver above the rising triangle boundary.

Folks, I live with the possibility that the SILVER and GOLD PRICE might see another deeper break here, but I think not. Once they work their muddy path through August, a rally is coming, unless an all out international financial panic bites down. Even then, exactly how long (I wonder) will it take folks to grasp that the dollar and it's scrofulous fiat counterparts are no "safe haven" but gold (and silver) are.

There's always risk whenever you buy, but right now both metals are sitting near the bottom of their correction ranges. That's about as low risk as you get for anything in a continuing bull market.

Here's something y'all can mark down in that little book you carry with you. When day after day a market makes new highs or new lows, a whistle is blowing, warning that this won't persist much longer. Oh, it might continue a month or longer, but the message remains, "Reversal approacheth."

What makes me say these things? Yield on US treasuries hit another record low today (= bonds made a new high). As part of the same package, the euro made another new low today. Six months from now, these will be dim memories.

Trouble is, when the dollar breaks and confidence in US Treasuries as a (har-de-har-har) "safe haven," panic's liable to be coursing through the whole universe.

BWDIK, just a natural born fool from Tennessee, sitting up on a ridge suspecting everybody and everything.

Controlling my mentation about the US dollar is the presupposition that criminal central bankers conspire to manipulate exchange rates, and more than all else except a fat retirement check, they want stability. Don't let anything move too far or too fast.

So I was fiddling around with a pencil today, 'cause I have noticed that the dollar trades roughly around 80 eurocents and the yen around 80 to the dollar. Then my mind recurred to all those exchange rate bands central bankers love to play with, keeping one currency within some announced exchange rate range.

So my pencil wrote down 80 cents and added and subtracted a 2.5% band on either side: 82 cents at 78 cents. Hmmm. Yen is today at Y78.17=US$1.

Then my pencil wrote 80 cents and banded it by 5%: 84 at 76, or, for euros in terms of dollars, $1.1905 at $1.3158.

Upshot is that I suspect the central banking criminals will intervene strongly in behalf of the euro and against the US$ if the euro threatens to drop beneath $1.1905. Likewise, the miscreant banksters will intervene against the yen and for the dollar at any dollar value higher than Y82 (122c/Y100).

Leastways, that's what I'd do in their shoes, if I wore them shiny, pointy-toe Eyetalian shoes, but I go barefoot.

TODAY that US dollar index threatened to break the leash of 84 again, closing at 83.998, up 29.6 basis points or 0.38%. High came at 84.10. If the Nice Government Men and international central bank criminals cannot keep the dollar below 84, they will find themselves in boiling oil and habaƱeros. Panic could easily float the Samolean up to 90, and the consternation and commotion would become general to the whole world.

Euro made and closed at a new low, $1.2062, down 0.48% on the same old news we've been hearing two years, "euro is falling apart."

Meanwhile the yen closed higher for the 5th straight day, edging up 0.23% to 127.90c (Y78.17). This takes it through, but barely, the downtrending fan line. If the yen doesn't reverse, it will sprint for 128.75 and higher.

Moody's altered credit outlook for Germany, Holland, and Luxembourg (where's THAT?) to negative. This is all as ridiculous, as me trying to sing Grand Opera. Strong as Germany looks compared to the rest of Europe, it's broken-legged in real terms, burdened with government debt, social costs, and rotten banks. Comparing Germany to the rest of Europe is like comparing the US to California. It looks good till you look closer. The entire world economy has been hollowed out by the looney Keynesian dogma that countries and businesses can borrow and spend their way into prosperity.

Dow in Gold Dollars (DiG$) today punched through the lower boundary of its diamond formation and hit the 50 DMA (G$164.34 or 7.95 oz). Diamonds are notoriously slow to resolve, but this one has internal support around that 50 DMA, say, G$161.25 (7.80 oz). Close below that might be the straw that breaks Bernanke's back.

Stocks began the day underwater and kept sinking, floating slightly toward days end -- probably just the NGM tidying up loose ends before they race home for their preprandial martini.

Dow slipped 104.14 (0.82%) to 12,617.32. Today's low at 12,522 pretty much marks the point where stocks fall off the cliff. S&P500, too, abated 12.21 (0.9%), and it appears to me it is already hanging on the edge of that cliff. I'd be surprised if the S&P500 didn't roll on over that cliff tomorrow.

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.