Friday, October 19, 2012

The Gold Price Gave Back $35.20 this Week How Far Will it Fall?

Gold Price Close Today : 1,722.80
Gold Price Close 12-Oct : 1,758.00
Change : -35.20 or -2.0%

Silver Price Close Today : 32.07
Silver Price Close 12-Oct : 33.63
Change : -1.56 or -4.6%

Gold Silver Ratio Today : 53.715
Gold Silver Ratio 12-Oct : 52.270
Change : 1.44 or 2.8%

Silver Gold Ratio : 0.01862
Silver Gold Ratio 12-Oct : 0.01913
Change : -0.00051 or -2.7%

Dow in Gold Dollars : $ 160.11
Dow in Gold Dollars 12-Oct : $ 156.73
Change : $ 3.38 or 2.2%

Dow in Gold Ounces : 7.745
Dow in Gold Ounces 12-Oct : 7.582
Change : 0.16 or 2.2%

Dow in Silver Ounces : 416.04
Dow in Silver Ounces 12-Oct : 396.30
Change : 19.73 or 5.0%

Dow Industrial : 13,343.51
Dow Industrial 12-Oct : 13,328.85
Change : 14.66 or 0.1%

S&P 500 : 1,433.19
S&P 500 12-Oct : 1,428.59
Change : 4.60 or 0.3%

US Dollar Index : 79.633
US Dollar Index 12-Oct : 79.689
Change : -0.056 or -0.1%

Platinum Price Close Today : 1,613.00
Platinum Price Close 12-Oct : 1,657.10
Change : -44.10 or -2.7%

Palladium Price Close Today : 623.30
Palladium Price Close 12-Oct : 637.95
Change : -14.65 or -2.3%

The GOLD PRICE cascaded down $20.50 to $1,722.80 while silver waterfalled 76.5 cents to 3207.3c. Ranges were $1,738.9 - $1,715.89 and 3276.5c - 3192c.

Ponder the GOLD/SILVER RATIO When metals are rallying, it falls (because silver usually outperforms gold) and when they are correcting it rises. Right now, it's rising. Closed last week at 52.270 but today at 53.715, up 2.8%. Today it filled the gap left behind on the way down, and nearly closed above its 200 DMA. I haven't mentioned it before, but another gap stands at the beginning of the August rally, when the ratio leapt from 57 to 56.5. Yes, it is possible that gap, too, might be filled. $1650 gold at a 57:1 ratio puts silver at 2895 cents. Not predicting, just mathematicizing.

The GOLD PRICE has now touched its 50 DMA ($1,720 today) which certainly MIGHT fulfill a correction target. A 38.2% correction would end about $1,718, a 50% about $1,693. Yet below that the 150 and 200 DMAs stand at $1,648.52 and $1,662.39, along with lateral support smeared from $1,650 to to $1,680.

Confused markets don't rise, and now bewilderment beclouds the horizon: currency turmoil, weak dollar/strong dollar, presidential election. That sky will clear, but meanwhile the storm.

The SILVER PRICE fell through its 50 DMA (3246c) today to its 300 DMA (3205c), but closed barely above that at 3207.3c. The 300 Day Moving Average acts for silver as the 200 DMA acts in other markets. After breaking above the 300 in September's first days, it was to be expected silver would return for a last kiss good-bye. That's how it's behaved before during this bull market.

The 200 DMA stands beneath at 3094c, and that's an often seen target of corrections. Today's close fulfilled a 38.2% correction, and 3112c will fulfill a 50%. Of course, volatile silver often overshoots, so don't overlook the 61.8% correction to 3013c. If all also fails, there's a floor at 2840c.

Whoa! Put that pistol down. I'm only the messenger. Besides, it's not enough to get bothered about. This correction won't last much longer than the election, and even in the unlikely event Romney wins, will reverse by endo-November latest.

What do you call a dinosaur with an extensive vocabulary? A thesaurus.

Last week's confusion broke this week. Stocks tried to rally, but failed wretchedly. Dollar index probed lower, but climbed back up to unchanged. Metals took a beating all around, and silver took the worst bruising. Euro tried to climb but fell back with only 0.55% gain to its credit. Yen lost 1.1%, big move for a currency.

Once again European Union leaders have firmly decided to re-decide everything decided shortly before without taking any action, even the sort of goofy action you expect from statists and Keynesians and socialists. They can only make up their minds to consider and re-consider.

This equates to pure strychnine for markets, for all markets hate uncertainty. Thus even US stocks were kneecapped, the euro made no headway for the week, and the dollar begins to look not so bad after all. After all, it's late, and the bar is closing.

Let us stand back and take a long term view -- really long term, about 350 years or since 1650 when the centralizing trend really took hold in creating national states. Yes, there is a "primary trend" in society as well as markets.

That trend has been rolling over since about 1980. Conventional war's cost has made armies like those of the 1940s impossible -- witness the 4th generation guerilla warfare of the last 45 years. Viet Nam, Iraq, Kosovo, Afghanistan -- armor and paratroops won't work. Now the national state's economic system has begun irretrievably faltering. Worse yet, the ultimate centralization -- the empires into which the national states have been fondued -- are stumbling. Soviet Union's gone, USA is overstretched in 130 countries around the world and dead broke, European Union is flying apart of its own volition.

National states and empires have had passed their prime. The process of decentralization in human affairs, including the economic, began with the Viet Nam era and is proceeding rapidly. Even if growing popular opinion weren't on its side, centralization can no longer keeps its promises and will alienate even more. Ask anybody under 30 whether he believes centralized power is better than decentralized. They young have already decided. The future will be decentralized. Power will flow away from centers to the periphery, and not a moment too soon.

We are now in the worst turmoil, that change where the old is fighting not to give way to the new, and the new is not yet strong enough to take control. The future belongs not to empires, but to secession, to affinity tribes, to small nations. The giant national state is dead for another 300 years.

Meantime, while the elephants battle, we ants must hide.

Currencies today stand at US$1 = Y79.28 = E0.7678.

That lying US dollar index, like a trashy girl, lied about breaking down and turned around and gave us a big kiss. (I won't miss it when it's gone.) Didn't close the week higher, but cast dark cloudy doubt on any further fall. It closed 29 basis points higher today at 79.633. This left behind a rounding bottom Wednesday and Thursday, and victoriously pierced the 79.40 lip of that bowl. Unless it falls below that 79.40 next week, the dollar will climb.

Stocks simply collapsed today, sinking, sinking, sinking. Dow lost -- WHOA! -- 205.43 points (1.52%) and closed at 13,343.51. S&P500 shucked even more percentagewise, 1.66% or 24.15, ending at 1,433.19.

Friends, boys and girls, ladies and gentlemen, this dragged the Dow to a close beneath its 50 DMA (13,353), erasing the last five days' gains. If it continues to plunge, the next support stands at 13,250. A close below that pulls the trip rope on Madame Guillotine.

I got a note from the printer today that At Home in Dogwood Mudhole ought to ship on 24 October, which puts them here about the 29th. We'll start shipping then. Thanks very much for your orders and generous patience.

If you don't want to wait for a hard copy, the digital versions of At Home in Dogwood Mudhole are ready. You can purchase AHIDM in PDF, Kindle, or e-Pub format for $16.95 at I can't figure out how to autograph the durned thing, so it won't do you any good to ask. It has plumb defeated me.

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.