Thursday, June 20, 2013

Silver and Gold Prices Have Made One Last Plunge for this Correction

Gold Price Close Today : 1285.00
Change : -87.70 or -6.39%

Silver Price Close Today : 19.822
Change : -1.800 or -8.32%

Gold Silver Ratio Today : 64.827
Change : 1.341 or 2.11%

Silver Gold Ratio Today : 0.01543
Change : -0.000326 or -2.07%

Platinum Price Close Today : 1363.10
Change : -60.10 or -4.22%

Palladium Price Close Today : 663.55
Change : -31.30 or -4.50%

S&P 500 : 1,588.19
Change : -40.74 or -2.50%

Dow In GOLD$ : $237.42
Change : $ 9.84 or 4.32%

Dow in GOLD oz : 11.485
Change : 0.476 or 4.32%

Dow in SILVER oz : 744.54
Change : 45.62 or 6.53%

Dow Industrial : 14,758.32
Change : -353.87 or -2.34%

US Dollar Index : 81.840
Change : 0.500 or 0.61%

Silver and GOLD PRICES needed a break, and today got one. Gold cascaded $87.70 (6.39%) to $1,285.90. Silver caved in 8.3%, 180 cents, to 1982.2c.

If y'all think this has me puking up fingernails in my waste-basket, think again. This is, I reckon, gold's last plunge for this correction and I am glad to see it. Ditto for silver.

Whither gold from here? It could stop at $1,260, or, if not, $1,125. That's where trading channel bottoms hit.

The SILVER PRICE either stops about 1875c or drops to 1750c. Before that comes support from 2010 at about 1950c.

This ought to be the last plunge of this long correction. It shouldn't carry much further, but for now we watch and wait, looking for signs of selling exhaustion and reversal.

You are watching Bernanke's clever inflation web come unraveled. Since 2008 he has taken the Fed and the world's central banks into the terra incognita of endless inflation. It was a brave bet, but one destined to come up snake-eyes.

However, all that money he has created hasn't gone to money heaven. It's still out there, and from here he has no option but to keep on inflating. Certainly, he doesn't seem to have the will to stop inflating and screw up interest rates to 24%. He ain't Iron Paul Volcker, and Obama ain't Ronald Reagan.

What happens when the world at large grasps that stocks were rising on inflationary gas? That the bond bubble is bursting? That the economic recovery existed only in the Fed's mind and government statistics?

Some of them will buy gold, and the door into the gold market is far, far smaller than the door out of the bond market. Silver and GOLD PRICES could rally savagely.

I can wait, patiently.

If Bernanke's mere mention, his hint, that the Fed might taper QE IF -- if -- the economy improves could wreak such havoc on markets, how will he ever taper off in fact? He can't.

In two days the Dow has lost 3.7%, the S&P 3.4%. How many days like that can Bernanke or his successor stand? How many such days can the White House stand? Dow today lost 353.87 points (2.34%) and ended at 14,7458.32. S&P tumbled 40.74 (2.5%) to 1,588.19.

Both stock indices sliced through their bottom channel lines and their 50 day moving averages. Next support stands at 14,550 and 1545. Both indices will probably reach that.

Ahh, but silver and gold prices both fell more than stocks, so the Dow in Gold and the Dow in Silver both made new highs.

Dow in gold rose about half an ounce to 11.485 oz (G$237.42), up 4.32%. If it corrects 38.2% of the fall from 2007 to 2011, it would rise to 11.6 oz.

Dow in silver rose 45.62 oz (6.53%) to 744.54 oz. A 61.8% correction of its 2007 - 2011 fall would take it to 802.8 oz.

Think a moment about currencies. Major determinant of a currency's exchange rate is what interest rate it pays. And bond prices move opposite interest rates. Bernanke's suggestion that the Fed would stop supporting bond prices/suppressing interest rates by buying bonds sent the 10 year T-not rate gap up. Closed at 2.419%, confirming a break out above last year's high, and setting me to wondering if Bernanke's Bond Bubble is bursting. Oh, this is going to be a mess, after he has ruined interest rates on everything else and forced everyone into bonds. Door to escape is very low and narrow as they try to flee bonds.

Rising interest rates are not healthy for gold, either, since gold pays no interest. Higher rates rise, more income must be foregone to hold gold. But then, rising rates will also knock any housing recovery in the head.

US dollar index rose another 0.64% today (50 basis points) for a two day gain of 1.54%. It ended at 81.84. Certainly will rise through 82, perhaps to 83.3.

Meanwhile the yen and euro have hit the skids. Yen dropped down 0.92% to touch its 20 DMA and close 102.79 cents/Y100. Euro lost only 0.54%, also touched its 20 DMA, and closed $1.3220.

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

- Franklin Sanders, The Moneychanger
10:00am-5:00pm CST, Monday-Friday

© 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.