Tuesday, September 18, 2012

The Silver and Gold Price Both Gain Ground Today I'm Expecting Corrections after their Long Runs

Gold Price Close Today : 1768.40
Change : 0.70 or 0.04%

Silver Price Close Today : 34.644
Change : 0.346 or 1.01%

Gold Silver Ratio Today : 51.045
Change : -0.495 or -0.96%

Silver Gold Ratio Today : 0.01959
Change : 0.000188 or 0.97%

Platinum Price Close Today : 1635.30
Change : -36.30 or -2.17%

Palladium Price Close Today : 666.85
Change : -21.75 or -3.16%

S&P 500 : 1,459.32
Change : -1.87 or -0.13%

Dow In GOLD$ : $158.56
Change : $ 0.09 or 0.06%

Dow in GOLD oz : 7.671
Change : 0.004 or 0.06%

Dow in SILVER oz : 391.54
Change : -3.61 or -0.91%

Dow Industrial : 13,564.64
Change : 11.54 or 0.09%

US Dollar Index : 79.19
Change : 0.235 or 0.30%

Platinum and Palladium are weighing on the silver and GOLD PRICE. Beginning mid-August platinum staged a magnificent run from the high $1300s to $1,716.50. Ahh, but what's won easily is lost easily, too. Platinum has lost $77 (4.5%) since Friday, leaving little doubt that this move has ended. Palladium rose from $562.35 to $705.80 on Friday, and today stands at $666.85. It's chart looks finished, too, and these two dropping want to drag silver and gold down as well.

The SILVER PRICE gained 34.6 cents today to end at 3464.4c. The GOLD PRICE gained 70 cents to $1,768.40.

Silver's 5 day chart has diverged from gold's. While the GOLD PRICE has formed what is probably a rounding top, silver today managed a new high at 3503c. Gold, on the other hand, traded rangebound by $1,769 - $1,775 over Friday and Monday, dropping off to $1,750. It rose again today as high as $1,773.13, but today's low was slightly lower. Overall impression is a rounding top.

Since I'm no more than a natural born fool from Tennessee, I could be dead wrong here, and if gold shoots through $1,825 I'll admit it. Till that happens, however, I'm expecting a correction after the long run silver and gold have enjoyed. It's okay --- they've earned it.

It dawned on me today:  the Fed is fixing up the banks' balance sheets by

1.  Buying their Mortgage Backed securities,

so the banks can take that newly created money and

2.  Buy US treasuries, and

3.  Instantly clean the banks' balance sheet,

trading a rotten asset for a solvent one.

But who pays?  You do.  Fed created money to buy MBSs, and must inflate hugely to do so, 12 x $40 bn = $480 bn = 1/2 trillion a year. Every dollar the Fed creates cheapens the dollars you own -- sucker.

Bottom line:  this amounts to creating $40 bn/month to buy, that is, to DIRECTLY MONETIZE, US government debt.  At heart this is precisely what the Reichsbank did for the Weimar government during the 1920-1923 German hyperinflation.

Ben Bernanke, I would say, finds himself just a little bit pregnant.

TODAY'S MORALITY PUZZLER: Does a moral government grant anyone the power to create money out of thin air? Is it immoral to default on a debt owed to such criminals?

Think about it this way: a man puts a gun in your ribs and takes your wallet, then asks, "Do you have any more money on you?" Are you morally obliged to tell him about the $100 in your shoe?

I keep telling y'all that the central banks probably have an exchange rate range for the yen, euro, and dollar that equals roughly Y80 = E0.80 = US$1 on the high side and Y75 = E0.75 = US$1 on the low side. That means that each currency in dollar terms will range between $1.2500 and $1.3333.

Clearly Bogus Ben and Super Mario have made a deal to inflate their currencies together to mask the real game, gutting their currencies.

Dollar index bottomed Friday at 78.60. Today it stands at 79.186, up 23.5 basis points today or 0.3%. It will probably rally up to 80 or so before it slows down.

Euro has shot its wad for the nonce. Shows two gaps, a runaway gap mid-August and an exhaustion gap Friday. Backed off 0.52% today to 1.3047. Time for a rest.

Yen has fallen back badly from Friday's high, down another 0.11% today to 126.90c (Y78.80/US$1). Expect no great things here.

Stocks were mostly falling today, although the Potemkin Dow did manage to add 11.54 (0.09%) to 13,564.64. Most other indices fell, including the S&P500, down 1.87 (0.13%) to 1,459.32.

On 18 September 1789 the US governemnt took oiut its first loan. Alexander Hamilton (don't spit, you'll mess up the floor!) took the loan from the Bank of New York and the Bank of North America.

Funny story about that Bank of North America. It was the bank cobbled together which the insiders hoped to make the central bank for the US, like the privately owned Bank of England. Problem was, they didn't have much capital, hardly any. But they had a few bags of silver coin, so they hired two stout fellows to send them up from the basement on a dumbwaiter, and two others to roll the dolly across the lobby so everyone could see how much money they had. Then they carried the bags downstairs, where the other two would load them into the dumbwaiter again.

It was sort of like Bogus Ben going on TV to tell all the hoi polloi that everything is fine in the economy.

On 18 September 1873 government bond agent Jay Cooke and Co. collapsed, causing a panic on Wall Street. More things change, more they remain the same.

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.