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Thursday, August 02, 2012

The Gold Price Closed $16.30 Lighter at $1,587.40 and Must Hold

Gold Price Close Today : 1587.40
Change : -16.30 or -1.02%

Silver Price Close Today : 2698.1
Change : -53.6 or -1.95%

Gold Silver Ratio Today : 58.834
Change : 0.554 or 0.95%

Silver Gold Ratio Today : 0.01700
Change : -0.000161 or -0.94%

Platinum Price Close Today : 1386.30
Change : -13.50 or -0.96%

Palladium Price Close Today : 567.05
Change : -14.75 or -2.54%

S&P 500 : 1,365.00
Change : -10.32 or -0.75%

Dow In GOLD$ : $167.71
Change : $ 0.53 or 0.32%

Dow in GOLD oz : 8.113
Change : 0.026 or 0.32%

Dow in SILVER oz : 477.33
Change : 5.95 or 1.26%

Dow Industrial : 12,878.88
Change : -92.18 or -0.71%

US Dollar Index : 83.32
Change : 0.270 or 0.33%

Today the GOLD PRICE closed Comex $16.30 lighter than yesterday, at $1,587.40. Silver gave back 53.6 cents and ended at 2698.1c.

Gold and silver seem determined to test the lower boundaries I mentioned yesterday, $1,580 and 2680 cents. The GOLD PRICE today touched $1,584.90, but never climbed higher than $1,615. Since $1,585.83 marks a 61.8% correction of the 12 to 30 July move ($1,564.9 to $1,619.70), gold needs to hold that line. If not, it whispers lower prices will come. My opinion -- but only my natural born fool opinion -- is that it will hold, but tomorrow will tell me.

The SILVER PRICE low today at 2697c comes mighty close to retracing the entire advance from 2679c to 2801.4c. That's not unusual for silver, but both metals have reached that cliff-edge where they must reverse course or tip over. Gold closed below its 20 DMA ($1,590.81), which doesn't promise great things. Silver has reached the bottom of that flat-topped triangle we have been watching. Not holding there would be in very bad taste.

Thanks to central bankers, not only does economic hardship abound, but short term bewilderment and confusion as well. Be patient, silver and gold may struggle here but will have sorted it out by the month's end and should be rising by then.

With decisive indecisiveness ECB head Mario Draghi (a Goldman Sachs alumnus) packed full the Blarney Cannon, then forgot to light a match. He said something equal to, "You all better watch out, or I might have to start doing something."

It's not nice to disappoint markets, and stocks responded by dropping all over the world. One begins to wonder whether the entire euro-debacle is being managed to bring the Southern countries to a point of such desperation that they will accept whatever fiscal controls Berlin wants to impose.

But Occam's razor says that we ought always to prefer, as the most likely explanation, the most obvious explanation. Therefore we conclude that nothing more is motivating Draghi and the ECB than simple feckless incompetence born of the unworkable central banking system.

Yield on 10 year US treasuries fell again (bonds rose), but still look toppy. Whether that top in bonds and faith in the Elmer Gantry of currencies, the US Dollar, comes next week or in six months, the fall of that house will be great.

Have mercy on the world! Now that the drunk Mario bought for markets last week has worn off, what happens next?

The US dollar index rose 27 basis points (0.35%) to 83.321 today. Meanwhile the Euro, which had reached its 50 DMA ($1.2414) before Mario closed the bar, sank all the way through its 20 DMA ($1.2237) and filled the gap it left behind a few days ago. Closed $1.2183, down 0.36%. Promises to drop below $1.2000. Yen is acting like a kid that hangs back hoping nobody will notice him. Rose today 0.28% to 127.85c (Y78.2), but is flat lining on the chart, carefully controlled and held below 128.18c.

On 2 August 1858 the rule of the East India Company was transferred to the British government. Hard for us to believe that for nearly 200 years a corporation had been running a large part of the country. Imagine that, a corporation running a country! Why, it would be like the Federal Reserve running our monetary system, or the Too-Big-To-Fail Banks ordering government to bail them out, or defense corporations calling the shots in Washington! Unthinkable!

By the way, it was the East India company that emptied all the silver out of England. Under the corrupt regime of Charles II the company hired his mistress to influence legislation allowing silver to be exported from the realm. Once it passed they had every reason to ship silver to India, because the ratio in England was 15.5 oz of silver to one ounce of gold, while in the Far East it was 12 - 10 oz. Thus all the silver they drained out of England bought far more in India than gold would have, and they could convert their profits into cheap gold and ship it back to England. That's one reason why in 1718 when Newton reformed the English monetary system he put it on a de facto gold system. He had no choice: very little silver remained in England.

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.