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Tuesday, April 16, 2013

The Gold Price Gained $26.20 What is the Bigger Message Markets are Sending Us?

Gold Price Close Today : 1386.80
Change : 26.20 or 1.93%

Silver Price Close Today : 23.622
Change : 0.263 or 1.12%

Gold Silver Ratio Today : 58.708
Change : 0.461 or 0.79%

Silver Gold Ratio Today : 0.01703
Change : -0.000135 or -0.79%

Platinum Price Close Today : 1450.00
Change : 25.80 or 1.81%

Palladium Price Close Today : 677.05
Change : 11.20 or 1.68%

S&P 500 : 1,574.57
Change : 22.21 or 1.43%

Dow In GOLD$ : $219.97
Change : $ 7.50 or 3.53%

Dow in GOLD oz : 10.641
Change : 0.363 or 3.53%

Dow in SILVER oz : 624.70
Change : -0.28 or -0.04%

Dow Industrial : 14,756.78
Change : 157.58 or 1.08%

US Dollar Index : 81.80
Change : -0.522 or -0.63%

Cannot tell anything from bounces the silver and GOLD PRICE made today. A dead cat dropped from the 2nd story might have done as well. Gold gained $26.20 to $1,386.80 while silver rose 26.7c to 2362.2. The GOLD/SILVER RATIO, however, is only very slowly rising, today at 58.708.

At this point, another leg down is possible, taking the GOLD PRICE to $1,250. Today's high was $1,395.09, low came at $1,340.50. The SILVER PRICE high was 2379 and low 2255.6c. Can only wait for the picture to clear.

Let's take another view of the last few days' events, with another question in mind: What is the bigger message markets are sending us?

Yesterday the Dow lost 1.8% and the S&P500 2.3%, huge moves and easy to overlook in the shadow of gold and silver's plunge. More ominously, Copper, the canary in the economy's coal mine, broke down. Where copper, the bellwether, leads the economy will follow. Broke down from a huge head and shoulders top stretching back to 2009.

In summer 2008, Markets were hard to parse, sending messages that seemed to contradict themselves or make no sense. They were telling us a panic was brewing. What are they saying today?

For background, look at a 20 year stock chart, any index. That gigantic head and shoulders seems to make no sense, because it targets a price below zero. How could that come about? Yes . . . How indeed?

The long term US dollar index chart also has an enormous head and shoulders, targeting 40 or lower.

In 2008, stocks, gold, silver, everything except US dollars and those dollar proxies, US treasury securities, fell. Why? Because in a panic, people rush for LIQUIDITY, the most liquid instrument in the system, and that's "cash." For the present, "cash" means US dollars. Depending on circumstances, that might change.

Is another panic brewing? I don't know. I can say with some assurance that if Ben Bernanke weren't fearful of another panic, he wouldn't be throwing another 1.2 trillion bucks into circulation this year. He knows, as well as anyone, how fragile the entire system really is.

After the bond market locked up in Fall 1998, Willy Clinton went to the Wise Men of the CFR and convened the Financial Vulnerabilities Project to develop means to deal with the periodic financial panics. They met several times, even "war-gamed" crises at the Harold Pratt house in New York, and published a report, a model of turgidity, which I, glutton for punishment, read entire. I teased out two conclusions, no, make that "admissions."

1. The Masters of the Universe fear that a crisis one day will result in "systemic collapse," i.e., the entire global house of cards falls down.

2. Against panics they have only two weapons, Liquidity and Blarney. Liquidity is pouring tsunamis of new money into the system. Blarney is my polite word for their propaganda, trotting out Greenspan or Bernanke or O'Bama or Buffett or Soros or other apparatchiki to assure all the stampeding sheep that "the economy is basically sound and we have nothing to fear but fear itself" and such like lying clichés.

In the past 40 years the crises have become more frequent and bigger -- bigger numbers, more participants. One day, maybe tomorrow, maybe 20 years from now, will come the panic that will overwhelm even liquidity and blarney.

After that day, everything will change. After that day, all the wet cardboard backdrop of control and stability will melt. Power will be re-distributed, and all wealth.

A sane man, a prudent man, has to ask himself what he will do when that day comes. More importantly, what will he do the next day, and all the days after.

Based on 6,500 years of human experience, I have always guessed/assumed/concluded that silver and gold would carry value even across the worst gulf of economic collapse. They have in the past, at least. Carrying capital across that gulf of panic has been one of my strongest arguments for silver and gold.

Will they in fact do that? I can't promise you that, nor can anyone else. We don't know the future, and it might turn out that the best carrier of value is cigarette papers to roll joints in, or half pints of whiskey. But I don't smoke dope and don't trust people who drink too much whiskey, so I'm left with silver and gold, and of course, the other metal, lead.

TODAY'S MARKETS:

Stocks broke badly yesterday with 90% down days. Both indices dipped beneath their 20 DMAs, but closed above them today. Looks like they broke yesterday, at least for this move.

Stocks bounced well today, Dow up 1.08% to 14,756.78 and S&P500 at 1,574.57, up 1.43%. Notwithstanding, they most likely broke yesterday and will move lower.

US Dollar Index closed below 82 and 81.80 support, losing 0.67% today or 52.2 basis points. This continues the fall off the rounding top. Watch that dollar, because sudden dollar strength might point to a panic.

Euro rose above its 62 DMA today to $1.3181, up 1.03%. Yen lost 1.01% to 102.53. Take no refuge in either.

Argentum et aurum comparenda sunt -- -- Gold and silver must be bought.

- Franklin Sanders, The Moneychanger
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© 2013, 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.