Friday, October 05, 2012

The Gold Price Closed $1,778.60 Up 0.5 Percent this Week but a Correction is Still Likely

Gold Price Close Today : 1,778.60
Gold Price Close 28-Sep : 1,770.40
Change : 8.20 or 0.5%

Silver Price Close Today : 34.52
Silver Price Close 28-Sep : 34.42
Change : 0.1 or 0.3%

Gold Silver Ratio Today : 51.530
Gold Silver Ratio 28-Sep : 51.429
Change : 0.10 or 0.2%

Silver Gold Ratio : 0.01941
Silver Gold Ratio 28-Sep : 0.01944
Change : -0.00004 or -0.2%

Dow in Gold Dollars : $ 158.18
Dow in Gold Dollars 28-Sep : $ 156.90
Change : $ 1.29 or 0.8%

Dow in Gold Ounces : 7.652
Dow in Gold Ounces 28-Sep : 7.590
Change : 0.06 or 0.8%

Dow in Silver Ounces : 394.31
Dow in Silver Ounces 28-Sep : 390.34
Change : 3.97 or 1.0%

Dow Industrial : 13,610.15
Dow Industrial 28-Sep : 13,437.13
Change : 173.02 or 1.3%

S&P 500 : 1,460.93
S&P 500 28-Sep : 1,440.67
Change : 20.26 or 1.4%

US Dollar Index : 79.417
US Dollar Index 28-Sep : 79.922
Change : -0.505 or -0.6%

Platinum Price Close Today : 1,703.30
Platinum Price Close 28-Sep : 1,647.40
Change : 55.90 or 3.4%

Palladium Price Close Today : 661.75
Palladium Price Close 28-Sep : 626.80
Change : 34.95 or 5.6%

'Twas not a bright day for the silver and GOLD PRICE, but neither was it fatal. Gold shaved off $15.50 to close $1,778.60, while silver peeled away 52.5 cents to 3451.6c. Look closer.

The GOLD PRICE five day chart plainly shows a peak yesterday about $1,795, followed by a sharp slide today. Yet $1,775 contained two thrusts downward, and that, I remind y'all, stands above $1,773-ish support-resistance. It held.

On a longer chart, gold has now drawn two tops, with a spike low to $1,740 between. This is a broadening top, a reversal, unless and until gainsaid by a close above those double tops. The 20 DMA awaits below at $1,767.31. Should gold break that, all those cosmic gobs of trend-following hot money will dump gold quicker than a fool drops a red hot horseshoe.

WHEREFORE although gold closed barely higher (0.5%) this week, next week is more likely to weigh gold down. In fact, my boundaries from last week still hold:

Gold above $1,805 (2 day close) with silver above 3525c screams that no correction is coming soon, or

Gold below $1,738 (1 day close) with silver below 3336c sets both up for lower prices.

The 20 day moving averages, first tripwire of a decline, stand now at 3438c and $1,767.31. Any closes thereunder point down.

Correction targets are $1,700, $1,691.90 (50 DMA) and $1,650 for gold, 3200c and 3100c for 3200c and 3100c for silver. If they do fall, expect to last no more than 3 weeks.

The SILVER PRICE marked its low today at 3430c, high at 3509. Silver's 5-day chart is not a reflection of gold's. Silver has a range, call it 3535c - 3420c. It broke downward today and closed nearer the range's bottom than its top. 3420c support therefore becomes worth watching that much more closely.

Panic not, neither lose heart. 'Tis a natural and usual correction silver and gold will make. It will strengthen them just like pruning strengthens a pear tree. By June 2013 $2,000 gold will be ancient history.

Y'all cheer up. A glorious fall is coming up and the election season has almost ended.

I know a guy who's addicted to brake fluid. He says he can stop any time.

Y'all, I oughtn't be doing this job, because I am highly allergic to Hogwash. I am, quite literally, risking a fatal Hogwash reaction just reading about central banks, banks and governments, let alone thinking, pondering, and writing about 'em. One of these days they're gonna find me here on the floor, four paws in the air, dead as a ball peen hammer.

Take today. US government jobs report said 174,000 new jobs were added and unemployment rate dropped from 8.1% to 7.8%. No. 1, it's a government report and we all know the way to tell a government employee is lying is to watch his lips. If they move, he's lying. No. 2, it's in an election year, but we know NO honest administration would pressure its bean counters to fake statistics. Yes, but we haven't had an honest administration since James K. Polk retired in 1849. No. 3, they way they count unemployment, you are only "unemployed" until you despair and give up looking for a job. Then you are no longer unemployed.

For all these reasons, said report was almost as meaningful as an anemometer in a tornado, but nonetheless, markets, with the attention span of a fruit fly, reacted. If Bernanke is watching unemployment, and it drops, then he will print less money, so inflation will drop and the dollar ought to rise and gold to drop. And since clearly unemployment is improving, stocks ought to rise, too, because the economy is recuperating.

Y'all know this makes no sense at all, but markets bought it, like they always swallow the hogwash that central banks and governments can fix they economy they broke in the first place. I have to change the subject. My throat's tightening up and I'm breaking out in hives.

Not one single event today changed my suspicious mind. I still expect the dollar to stage a surprise rally, and silver and gold to correct. In fact, today hardened my suspicions.

US dollar index yesterday fell out of an even-sided triangle downward, but was that a false breakdown? Today it traded down to 79.103, sharply and suddenly, but just as suddenly climbed back up, leaving behind the V-bottom characteristic of reversals. Ended up trading 79.417, up 5.4 basis points. In other words, it tried to break down, but didn't. Provided it advances Monday beyond 79.45, and doesn't close below that 79.10, the US dollar reversed today. Whether it can now conquer resistance at 80 above, we'll see. Remember, no long dollar rally is needed here to trip silver and gold. They are already vulnerable after a long rally of their own.

Today US$1 = Y78.67 = €0.7678. Euro barely climbed, up 0.04% to $1.3025. Yesterday the head of the wicked criminal enterprise known as the "European Central Bank," Mario "The Enforcer" Draghi, announced that the ECB would soon begin buying bonds. He is a master of the gas bag, with a deep grasp of the Blarney Cannon. He fires the blarney cannon, then doesn't need to follow through with the acts, because with central bankers, words speak louder than deeds.

Yen lost again today, 0.24% to 127.12c. It draweth nigh unto its 200 DMA, 126.19c.

Friends, stocks are not right. Remember one day earlier this week all the indices dropped but the Potemkin Dow rose a skootch? It had that sulfury stench of Nice Government Men all over it. Then today, all the indices save the Dow and the Nasdaq 100 PMI (whatever that is) closed down. Nasdaq lost 0.42%, Nasdaq 100 lost 0.59%, Russell 2000 lost 0.27%, S&P500 even lost a tiny 0.3%, but not the Dow. It gained 0.28%.

Now defenestrate the Nice Government Men -- throw 'em out the window and don't even think about manipulation. Markets as interwoven as these stock indices ought, generally, all rise in step. When all the other indices close down, but the Dow closes up, it's a glaring non-confirmation. Oh, I confess that one swallow doth not a spring make, but this queasy performance twice ought to make the wary swallow hard.

I thank all of you most humbly for so strongly supporting my new book, At Home In Dogwood Mudhole. Y'all just keep on buying them (and thanks, Brazil, for your order). If you'd still like to order, we're still selling it at AHIDM comes with a money back guarantee: If it doesn't make you laugh, cry, gasp, hug your spouse, or jump up and down (any one of the five), I'll refund your money even though I won't believe you, and you can use the book to throw at your smart-aleck brother-in-law.

Y'all enjoy your weekend.

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.