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Wednesday, October 03, 2012

The Gold Price Gained $4.60 Today to $1,777.30 Must Close Above $1,790

Gold Price Close Today : 1777.30
Change : 4.60 or 0.26%

Silver Price Close Today : 34.631
Change : 0.027 or 0.08%

Gold Silver Ratio Today : 51.321
Change : 0.093 or 0.18%

Silver Gold Ratio Today : 0.01949
Change : -0.000035 or -0.18%

Platinum Price Close Today : 1690.30
Change : 7.40 or 0.44%

Palladium Price Close Today : 656.25
Change : 3.70 or 0.57%

S&P 500 : 1,450.99
Change : 5.24 or 0.36%

Dow In GOLD$ : $156.96
Change : $ (0.25) or -0.16%

Dow in GOLD oz : 7.593
Change : -0.012 or -0.16%

Dow in SILVER oz : 389.67
Change : 0.05 or 0.01%

Dow Industrial : 13,494.69
Change : 12.33 or 0.09%

US Dollar Index : 79.94
Change : 0.187 or 0.23%

The silver and GOLD PRICE have both traced out that sort of pattern. They have broken through their uptrend lines and traded sideways. Certainly, that may prove no more than a consolidation before moving higher. However, after that long rise from mid-August, isn't it more likely a reversal pattern?

Tension is growing in both metals as their daily ranges shrink. The GOLD PRICE gained $4.60 today to $1,777.30, but the range was only $10, from $1,781.55 to $1,771.58. That limb just keeps growing farther from the tree, and gravity never stops insisting.

A GOLD close above $1,790 would prove my musings wrong, but if it closes below $1,765 y'all will hardly have time to move out of the way.

The SILVER PRICE added 2.7 cents today to 3463.1c, which is about as close to flat as you can come without actually being a fritter. Range narrowed from 65 cents yesterday to 38 cents today, 3486c to 3448c. That limb's growing longer and longer. MACD indicator has also turned down for silver and gold.

I walked outside this morning and the crisp world had been washed clean by rain and the sun was painting the trees and I thought, "I could live 100 years in a dark basement just to live on one day like this."

My wife says that's probably an exaggeration, but not much.

I've been wavering back and forth on silver and gold but have finally come to an easier mind about it. It's always dangerous to ditch your first analysis after that proves correct, and more dangerous still to anticipate future rather than accept present facts. More later.

Read something today that prompted my brain to shake off the dust. What is the one outcome that investors expect least? Right, a dollar rally, 'cause after all the world "knows" that QE3 has doomed the dollar. But wait -- if all the world knows that, then they've already put down their money and placed their bets, that's already done its work. That's priced in, and the biggest surprise would be the dollar index climbing through 80. Rally like that wouldn't have to last long to smash silver, gold, and stocks very painfully.

Today the US dollar index did NOT follow through toward the earth's core, but jumped up off yesterday's lows to 79.938, up 0.187 or 0.24%.

Since the mid-September intraday low at 78.60, the dollar index has tried but failed to break down that door at 80. Today the downtrend line stands about 80.25. A close above that would first puzzle, then astonish all those folks short the dollar. After a day or so with higher closes, they would panic and cover those short positions -- at any price. Next resistance up there stands about 81.00.

A close below 79.40 would knock this theory in the head.

Yen's and euro's behavior today makes the theory yet more plausible. Yen gapped down 0.45% through its 20 and 50 day moving averages (trading near each other) and closed below the 50 DMA at 127.38c. After sledding up its 20 DMA for six days, today the Euro closed at $1.2899, down 0.14% and below the $1.2921 20 DMA. In fact, it's floating only a little higher than its 200 DMA, now $1.2831.

Gravity is not pleased with these markets.

Likewise gravity is weighing heavily on stocks. Stocks tried mightily to rise today, but gave up about mid-day. Once again today, the Dow was weaker than the other indices, although it did not close down while the others closed up. S&P500 gained 0.36%, Dow gained 0.09%. Dow rose 12.33 to 13,494.69. S&P500 gained 5.24 to 1,450.99.

If QE3 was such a great boost to stocks, why have they stalled here? Maybe Bernanke shot the inflation cannon but it was only a popgun.

Nor is gravity absent from the silver and gold markets. Think of a live oak limb. Y'all know how the grow out impossibly long from the tree? Along comes a hurricane . . .

Finally, what can the central bank announcements on Thursday add to the gloomy outlook for the US dollar? Not much. If other central banks lower interest rates, it will only make them LESS attractive against the dollar. And if Spain asks for a bailout and gets it, will that make the euro a better currency? Not till pigs fly.

There's no hurry here. Another market train leaves the station every day. I can wait a little while on the next one, rather than climb on one going the wrong way.

On 3 October 1776 Congressed borrowed $5 million to halt the rapid depreciation of the Continental currency. It didn't.

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.