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Thursday, January 03, 2013

The Gold Price Backed Off $14.20 to $1,673.70 Dropping Through my Boundary of $1,685

Gold Price Close Today : 1673.70
Change : -14.20 or -0.84%

Silver Price Close Today : 30.671
Change : -0.281 or -0.91%

Gold Silver Ratio Today : 54.569
Change : 0.037 or 0.07%

Silver Gold Ratio Today : 0.01833
Change : -0.000012 or -0.07%

Platinum Price Close Today : 1576.70
Change : 11.60 or 0.74%

Palladium Price Close Today : 696.45
Change : -10.80 or -1.53%

S&P 500 : 1,459.37
Change : -3.05 or -0.21%

Dow In GOLD$ : $165.40
Change : $ 7.50 or 4.75%

Dow in GOLD oz : 8.001
Change : 0.363 or 4.75%

Dow in SILVER oz : 436.61
Change : 3.28 or 0.76%

Dow Industrial : 13,391.36
Change : -21.19 or -0.16%

US Dollar Index : 80.57
Change : 0.716 or 0.90%


By Comex closing today the GOLD PRICE had backed off $14.20 to $1,673.70, while the SILVER PRICE had lost 28.1 cents to 3067.1c. FOMC announcement panicked them down to $1,663.90 and 3013c. Clearly they didn't hold my lower boundaries set yesterday at 3100c and $1,685.

Well, good enough. I can wait. I bought a little silver at day's end anyway, and some gold, just because today's action might not follow through, and because I know there's a bottom around here somewhere.

Like the story of the two little boys, one an inveterate optimist and the other a pessimist. To test their responses a psychologist locked them in two different rooms, the pessimist in a room full of toys, the optimist in a room knee deep in horse hockey.

Psychologist came back an hour later, opened the door to the pessimist's room, and there he sat in the corner, doing nothing. "Son," he asked, "You've got all these toys here. Don't you want to play with them?"

"Naw," said the kid, "that stuff's dangerous. Look at that electric train: you could electrocute yourself on that thing. And that beebee gun: you'll shoot your eye out!"

Psychologist moved on to the room with the little pessimist, opened the door, and a hail of horse manure came flying through the air. Little optimist was digging with both hands as fast as he could. "Son, son, what are you doing?"

"Mister," the boy replied, "I don't have time to talk to you now. Look at all this manure! There's GOT to be a pony under here somewhere!"

Only one other thing: GOLD/SILVER RATIO is around 54.5. If you have gold you meant to swap for silver but missed your chance earlier in the year, your chance has returned. Give us a call if you want to swap some gold for silver. From this 54.5 level the next big move will be a fall to 30:1 or lower, offering you a 75%+ increase in ounces.


When month old news from the minutes of a clot of goofy apparatchiki who don't know an economy from Adam's off ox, let alone how to run one ("Ben, is this here the handle ya push to get this contraption a-goin'?" "Ed, fer heaven's sake! Don't touch that one or you'll blow up half the banks in the country. It's the OTHER one!" How many times I gotta tell ya?") can whack markets across the board, brain function in a large segment of humanity has ceased. Only thing you're left wondering is, How did these dimwits who react to such news by panic buying and selling ever get any money to invest in the first place? Isn't there some natural law that says, "Money runs away from stupid people?" Like, "Water runs downhill"? If a fool and his money are soon parted, how come these people have any left?

Minutes after the metals markets had closed, out come the FOMC minutes that hint that some members of the highly decorative but otherwise non-functioning FOMC didn't want to inflate quite so much in 2013.

But wait! What did this change? Will Ben the Beneficent slap his forehead and exclaim, "Wowser! I've got to stop inflating!" Not by the fuzz on your bald banker's pate. Nothing changes, absolutely nothing, except the money moved from the accounts of the gullible to those of the knowledgeable and the insiders.

The US dollar index, which all day long had shown all the enthusiasm of a fat boy for jogging, jumped up on the news and now is trading 71.6 basis points (0.89%) higher than this time yesterday: 80.568.

That paints a long line on the chart, but remains below the last high at 80.66, and below the 200 DMA at 80.82. It does take the dollar index above its downtrend line, and another internal resistance line. Were it to follow through, the dollar might reach 81.50, but more likely this is a short-covering panic. We'll see whether it can follow through.

'Twas the headsman's ax for the euro today. Closed down 1.01% at $1.3048. Gapped down past its 20 DMA (1.3138) and kept on falling below the last little low and below $1.3100. Might mark a downward reversal in the euro and upward reversal in the dollar.

Yen firmed today to 114.57 cents/Y100, up 0.03%. Actually rose much higher during the day, but closed up only a skootch. Preposterously, politically oversold.

A calm person would have expected a down day out of stocks today after yesterday's huge surge, but the FOMC announcement hit it hard. Dow was struggling above unchanged when the news hit. Ended down 21.19 (0.16%) at 13,391.36. S&P500 lost 3.05 (0.21%) to 1,459.37.

Gaps, those open spaces on a chart where the market doesn't trade but jumps up or down, really aren't all that common. You can search a classic like Edwards and Magee's book, and you won't find many of them. So how come they are so common this year in currency charts, in stocks, in silver and gold and in cross market charts?

Why, I reckon Mother Market -- the cousin of Mother Nature -- has just changed. After all, only other explanation might be that the Nice Government Men with their interventions and the moronic Fed with its announcements are jerking markets from side to side like a terrier with a tough weenie in his teeth.

Never mind, forget the philosophical, and look at the Dow/Gold chart. It makes a topping formation that looks like an Island Reversal, then reverses the reversal and today even gaps up, nearly to the top of the island. Durned if I can figure it.

What mystifies all the more is how markets -- which, by the way, are NOT by any means always right in processing information accurately -- keep moving contrary to reasonable cause and effect expectation. The Fed promises more inflation -- sure to poison the economy -- and stocks rise. Makes no sense, except that people have been brainwashed by Keynesianism.

And folks, over the long term, silver and gold do NOT move tandem to the stock market, I don't care what they've done this year. Leave it be, my job is to report, not to criticize.

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.