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Tuesday, June 18, 2013

Gold Prices are Near the Bottom of an Even-Sided Triangle Sketched Out Since April

Gold Price Close Today : 1366.60
Change : -16.20 or -1.16%

Silver Price Close Today : 21.676
Change : -0.081 or -0.37%

Gold Silver Ratio Today : 63.794
Change : -0.507 or -0.79%

Silver Gold Ratio Today : 0.01568
Change : 0.000124 or 0.79%

Platinum Price Close Today : 1439.40
Change : 5.30 or 0.37%

Palladium Price Close Today : 706.80
Change : -9.50 or -1.33%

S&P 500 : 1,651.81
Change : 12.77 or 0.78%

Dow In GOLD$ : $229.00
Change : $ 4.70 or 2.09%

Dow in GOLD oz : 11.078
Change : 0.227 or 2.09%

Dow in SILVER oz : 706.69
Change : 8.99 or 1.29%

Dow Industrial : 15,318.23
Change : 138.38 or 0.91%

US Dollar Index : 80.639
Change : 0.006 or 0.01%

Clearly silver and GOLD PRICES are waiting on the Fed announcement, too. Today's trading wrung out both. Oddly, they didn't quite agree. Silver dropped 8.1 cents (0.37%) to 2167.6 cents although gold buckled $16.20 to $1,366.60.

Until 11:15 a.m. New York time gold traded above $1,373, but then gapped down to $1,366.30 and closed on that low. Today takes the gold price back near the bottom line of an even-sided triangle it has sketched out since April's $1,321.50 low. That line stands now about $1,340.

Gold's performance tomorrow will decide much. If it can recover and rally, then maybe it can break out to that triangle's upside. That needs a close over $1,380. On the other hand, a close below $1,340 will take it lower, to $1,321 or further. It's sitting now at the bottom of its recent trading range, as defined by Bollinger Bands.

SILVER PRICE ranged between 2188.8 and 2162c -- 26.2 cents, for heaven's sake. Why didn't they just take a day off today? Did silver fall less than gold today because it's stronger, or simply sluggish?

Here are the boundaries of the falling wedge on silver's chart (most of the time falling wedges break upside, but they also break out downside just often enough to bankrupt anyone who depends on them breaking out upside every time): Above, 2225c; below, 2100c.

This deadness frustrates me as much as it does y'all, but we just have to wait it out. Try comforting yourself with knowing that silver and gold prices usually make significant lows in June, and move higher the rest of the year. Remember also that their refusal to drop sharply lower so far indicates a lack of investor interest, that is, the sellers have gone to richer pastures. Commitments of traders reports reflect that. And silver lies moldering at the bottom of its recent trading range.

Meanwhile we wait, seething more than soothing.

Finally, there's a cloud on Bodacious Ben's horizon, no bigger than a man's hand, but a very black cloud: interest rates have turned up. Keystone of Bernanke's capitalism-killing strategy is to keep interest rates at zero. They bottomed a year ago May, and have steadily but gently declined since then. In May this year, they broke out upward. Recall, too, that when interest rates fall, so does the dollar, and so do bond prices.

What meaneth this meditation? Only that if Bernanke STOPS or even slows his bond purchases ("inflation"), he has a prickly tumbling dollar problem. Whoops. Did I forget to mention that as interest rates rise, the US government's financing rate rises, and it has to borrow more and its deficit grows? I am so forgetful, but I bet Ben ain't. I bet Ben sleeps nights open-eyed, staring at the dark ceiling and sweating 50 caliber Minié balls.

Stocks answered yesterday's question by rising strongly today. Evidently most of the market shares my conviction that Bodacious Ben isn't about to pound a wooden stake into the stock market's heart by announcing Wednesday any slowing of inflation (a.k.a., bond buying).

Dow Industrials levitated 138.38 (0.91%) to close 15,318.23. S&P 500 wasn't quite as perky, up only 0.78% (12.77) to 1,651.81.

By crossing decisively above the downtrend line today, and closing above 20 day moving averages, both indices are set up to mount higher. However, should Bernanke not peep and mutter exactly what the market wants to hear, everything might change. That's the problem with making a market dependent on newly created money: very quickly everybody figures out what's driving it, and if you stop inflating, you stop the market. Riding a tiger is never easy.

Gold's faint today combined with stocks spurt took the Dow in Gold higher, up 2.9% to 11.078 oz. (G$229 gold dollars). Continues to move in a frustrating, drawn out broadening top. Only a close above 11.353 oz. followed by higher prices would gainsay that.

Odd thing about today's trading was that silver and gold disagreed, that is, silver refused tumble with gold. Dow in silver closed 706.69 oz., up 1.29%, up 9 oz. Here, too, there's a broadening top, vexing us waiting for its resolution.

US dollar index did today what you'd expect on the day before a potentially direction-changing FOMC announcement: it went flat. Oh, it gained 0.6 basis point to 80.639. Touching a support line, the bottom boundary of a broadening top, it has held just above 80.50. But nobody wants to bet on a rally or plunge on the day before the Fed messes with markets. Must hold 80.50 or fall to 79.25 and lower.

Yen and euro couldn't agree today, either. Yen fell down out of a nearly two week rising wedge, closing down 0.92% at 104.78 cents per Y100 -- not yet a decisive break of the uptrend. Euro rose 0.23% to $1.3396 and remains within the nose cone of a like rising wedge. Odds of that breaking out to the upside seem mighty slim. Expect rather a breakdown on any news from the Fed.

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.