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Friday, January 04, 2013

The Gold Price Suffered Again Today and I Bought More 2013 Will Take Gold Up Wildly

Gold Price Close Today : 1,648.10
Gold Price Close 28-Dec-12 : 1,654.90
Change : -6.80 or -0.4%

Silver Price Close Today : 2989.6
Silver Price Close 28-Dec-12 : 2992
Change : -2.40 or -0.1%

Gold Silver Ratio Today : 55.128
Gold Silver Ratio 28-Dec-12 : 55.311
Change : -0.18 or -0.3%

Silver Gold Ratio : 0.01814
Silver Gold Ratio 28-Dec-12 : 0.01808
Change : 0.00006 or 0.3%

Dow in Gold Dollars : $ 168.52
Dow in Gold Dollars 28-Dec-12 : $ 161.61
Change : $6.90 or 4.3%

Dow in Gold Ounces : 8.152
Dow in Gold Ounces 28-Dec-12 : 7.818
Change : 0.33 or 4.3%

Dow in Silver Ounces : 449.40
Dow in Silver Ounces 28-Dec-12 : 432.42
Change : 16.97 or 3.9%

Dow Industrial : 13,435.21
Dow Industrial 28-Dec-12 : 12,938.11
Change : 497.10 or 3.8%

S&P 500 : 1,466.47
S&P 500 28-Dec-12 : 1,402.43
Change : 64.04 or 4.6%

US Dollar Index : 80.491
US Dollar Index 28-Dec-12 : 79.663
Change : 0.828 or 1.0%

Platinum Price Close Today : 1,555.20
Platinum Price Close 28-Dec-12 : 1,517.40
Change : 37.80 or 2.5%

Palladium Price Close Today : 687.80
Palladium Price Close 28-Dec-12 : 699.60
Change : -11.80 or -1.7%

The silver and GOLD PRICE suffered again today. Gold lost 25.60 (1.5%) to $1,648.10 while silver lost 77.5 cents (2.5%) to 2989.6.

Then a funny thing happened after the Comex closes: gold shot up nearly $10 and silver nearly 30 cents.

Bollinger bands are a technical indicator too complicated to explain (a 20 day running band at +/1 2 standard deviations from the mean) but fairly reliable. Both silver and gold have now twice punched the bottom band. Points to higher prices immediately

The GOLD PRICE low today was $1,625.25. New low for the move, but it closed nearer the top of today's range ($1,658.43) than the bottom. All today's loss came before New York opened, so strange as it sounds, today in New York gold steadily climbed.

London p.m. fixes have now double bottomed. 21 December 2012 fix was $1,651.50 (a.m. fix that day was $1,648.25) while today's p.m. fix was $1,648. That doesn't answer any question beyond quibble, but points in the right direction.

Downtrend line from recent lows stands about $1,620 today, and from the Sept 2011 high at about $1,610. Final kiss good-bye?

The SILVER PRICE made a new low today at 2920c, just about the downtrend line defining recent lows. A bit further draw, about 2875c, lies the downtrend from the April 2011 high. Again, this appears a likely place to turn around.

I throw my hands up in the air and wait for the market to speak. 'Tis long past time silver and gold should have turned around, but they work on their schedule, not mine. One comforting encouragement is to hear long time gold advocates growing chilly about the bull market. That generally is a sign a significant bottom has been reached.

A bull market climbs a wall of worry -- the bull wants to shake off as many riders as possible. Neither in time nor price has this metals bull market fulfilled reasonable targets, so the best must lie in front of us.

I keep accumulating on the way down. If it falls more, I'll buy more. I remain persuaded that 2013 will take silver and gold up wildly.

One week can certainly turn things around. For stocks and the dollar, a turnaround upwards, for metals (other than platinum) downward. Is that all there is? Is it the end of the silver and gold bull market? Have stocks begun a new bull market?

Yes, and if frogs had wings they wouldn't bump their little rears when they jump. Just be patient.

Here's the biggest story of the week, although you may not see it mentioned many places. The YIELD on the US 10 year treasury note broke out to the Upside. It gapped up to the downtrend line on Monday, then smartly advanced the rest of this week.

So what does this whisper? Since the yield (interest paid over the life of the bond) is the INVERSE of the bond's price, this implies lower bond prices. It's also not good news for Ben the Beneficent, because the Zero Interest Rate Policy has been the keystone of his rickety recovery arch. The Fed does NOT control interest rates, any more than a flea riding an elephant controls the elephant. Fed controls only the Fed Funds rate, and if the market decides it does not trust the dollar, they will shuck bonds like they were blankets from a leper colony (bonds are only a promise to pay dollars tomorrow, when the dollars will be worth less).

Ben's Zero Interest Rate Policy has also been wreaking havoc in the economy, because pension funds and insurance companies must operate on virtually no interest income when for long years they have assumed 4% - 6%. And of course, Ben's dumb policy has created a bubble in US treasury bonds because his ever lowering interest rates guaranteed the bonds' price would rise.

Too early to say yet exactly what this 10 year yield breakout means, but at the least it means lower bond prices for a while, and headaches for the NGM at the Fed. First big resistance to further rise in the yield come at 24 (2.4%).

A bursting bond bubble might cover everybody in goo.

US dollar index surged yesterday and appeared to break through its downtrend line, but was it real, or only a feint for suckers? Dollar dropped back 7.7 basis points today to 80.491. Dollar cannot maintain upward momentum if it closes below 80, but for now it's headed up.

Euro gained a little today, up 0.21% to $1.3075, but this repairs on damage. Euro has gapped down through its 20 day moving average (1.3128) and is hovering above its clustered 62 DMA ($1.2985) and 50 DMA ($1.2984) Uptrend appears broken beyond repair, but who ever knows with currencies?

Defying even pessimism, the Yen made a new low for the move today, down a whopping 0.98% to 113.45 cents/Y100, and at its lowest level since June 2010. Must be somewhere near a bottom -- monstrously oversold.

Stocks jubilated today. Dow rose 43.85 (0.33%) to 13,435.21, still comfortably above that ol' 13,300 resistance/support. However, they're blocked right now by a long standing internal resistance line. S&P500 rose 0.49% (7.1) to close at 1,466.47.

As they did from June 2012 through September 2012, stocks are forming another Rising Wedge. This pattern is a trickster. It points upward, and will fool you with its apparent strength and enthusiasm, but 'tis destined to respond to gravity, not levitation. Will break down, and hard.

But stocks may rise to a new high, even above 13,660. Right now they are running on hope, not evidence. Regardless how long this rally lasts, eventually economic gravity will take them down. US economy has not recovered, and can't until it purges out all the bad investment from the last boom. Banks haven't cleaned up their balance sheets, real estate remains oversupplied, and prices haven't retreated enough to form a bottom. That will take another 15 years or so.

Sooner or later, stocks will bend their back under those burdens.

Y'all enjoy your weekend.

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.