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Monday, July 22, 2013

Gold Price Burst Through $1,325 Resistance Gaining $43.10 to Close at $1,336.40

Gold Price Close Today : 1336.40
Change : 43.10 or 3.33%

Silver Price Close Today : 20.498
Change : 1.050 or 5.40%

Gold Silver Ratio Today : 65.197
Change : -1.304 or -1.96%

Silver Gold Ratio Today : 0.01534
Change : 0.000301 or 2.00%

Platinum Price Close Today : 1447.00
Change : 17.30 or 1.21%

Palladium Price Close Today : 749.55
Change : 0.90 or 0.12%

S&P 500 : 1,695.53
Change : 3.44 or 0.20%

Dow In GOLD$ : $240.46
Change : $ (7.98) or -3.21%

Dow in GOLD oz : 11.632
Change : -0.386 or -3.21%

Dow in SILVER oz : 758.39
Change : -40.85 or -5.11%

Dow Industrial : 15,545.55
Change : 1.81 or 0.01%

US Dollar Index : 82.220
Change : -0.237 or -0.29%

The GOLD PRICE gapped up $25 on the US open, from Friday's $1,293.30 close to today's $1,318.30 open. Whoa! Burst through $1,325 resistance and ran $43.10 (3.3%) before stopping at $1,336.40.

The SILVER PRICE gapped up, opening at 1990c. Once silver climbed above 2000 it must have hit thousands of open buy orders. Gained 105 cents (5.4%) for the day and closed at 2049.8c.

Encouraging as this is, put it into perspective. Gold fell off last time (June) at $1,350, and before that in April at $1,550. Sure, today's close takes gold above and outside both its trading channel and the downtrend line from the April plunge, and right at its 50 DMA ($1,335.70). All very constructive, but what next? Can the GOLD PRICE clear $1,350, then $1,425? Or is it just sucking us in before one last plunge?

Durned if I know, just like I can't yet be certain that the $1,179.40 low in June was THE low. Clearly the momentum leads upward (12 day rate of change is 6.59% today), but that rate of change has also reached the high where gold fell in May.

SILVER PRICE today punched above its downtrend line from April, closed above its 20 DMA, but remains below its 50 DMA (2109c). Silver needs to make good those batterings it has suffered since April. That means closing above 2133c (plunge in June) and 2350c.

Now the question of buying once again becomes "Which would you rather hold, dollars or metals?" Given the record, that's a pretty easy one.

The Detroit bankruptcy has given us a harbinger of future municipal and state bankruptcies: the pensioners get a 90% haircut. This is inevitable. Municipalities and states promised pensions based on projections of stock market gains from the 1990s and earning 6% on bonds, then hit a stock bear market and Bubble Ben's zero interest rate policy. Pensioners will sue and scream, but will be lucky indeed to get anything. Whoops -- for three years Detroit paid nothing at all into its retirement fund. Well, they just FORGOT, I reckon.

I don't want to spoil y'all's supper, but I really haven't been candid. I've been seeing the bond bubble Bernanke has built since 2008 and the sovereign debt crisis -- including the good ol' USA, where the admitted government debt without the hidden liabilities is 105% of gross domestic product. Because everyone who receives government money will fight like a banshee to keep it coming, and no politician will say no, short of a collapse or dictator, spending will never be cut, which means default is likewise inevitable because revenue falls so short of spending. Whether the default comes through an outright repudiation (the best but least likely solution) or it comes through a hyperinflation to inflate away the debt, default will come.

Either way, if you are in dollars, stocks, or bonds, your goose will be charbroiled. I dislike telling y'all this because I dislike disaster-mongers, but there it is. Sure, sure, everyone will tell you it's impossible the US would default, it's unthinkable the Fed would allow a hyperinflation, etc., etc. They cannot admit the truth because it implies such horrors, but the truth won't go away. Bernanke and the central banks of the world have already put the world onto that path.

So now it becomes a question, would you rather hold dollars/stocks/bonds facing default or hyperinflation, or gold and silver threatened by another decline -- maybe?

Big moves today, all 9 months pregnant with meaning. Stocks hit new highs today. S&P hit its fifth new high in seven days, third new high in three days. Dow has made three new highs in the last seven trading days. Folks, it just don't get that good.

There's more: in the teeth of new stock highs, the Dow in silver and Dow in gold broke down today, decisively, unarguably, probably irrecallably. The US dollar index fell through support at 82.50, closing at 82.20, down 23.7 basis points or 0.3%. Finally, silver and gold gapped up 3.3% and 5.4%, causing a run on Tums and Tagamet in the neighborhood around the Federal Reserve in Washington.

Looking more closely, the Dow closed up 1.81 at 15,545.55, which is as close to flat as you can get without actually being a skillet. S&P500 made another new high, rising 3.445 (0.2%) to 1,695.53.

I have been expecting stocks to move even higher than highs we've seen, but I looked at 5 month chart today and my poor old eyes could see nothing but an arresting double top. Now, that's merely where they sit now, and both could move higher, wrecking that double top formation --- but three new highs in three days, and 5 in 7? That's a mania, due for a whupping.

Meanwhile stocks measured in metals finally broke down out of that long topping formation, and in the teeth of stock strength.

Both the Dow in gold and Dow in silver had formed triangles, and both fell out of those triangles today. Dow in gold fell 3.21% to 11.632 oz (G$240.46 gold dollars, down nearly eight gold dollars). 50 day moving average awaits at 11.40 oz, and the DiG already fell below its 20 DMA (12.05 oz) on Friday.

Dow in silver plunged 40.85 oz (5.11%) today and ended at 758.49 oz, versus Friday's 799.25 oz. DiSoz smashed the 20 DMA (781.91) today, so next confirmation comes at the 50 DMA (724.03). Remember, we want to see the DiSoz fall back under its 16 year downtrend line, now about 600 oz.

Don't miss the portent here: If stocks measured in metals continue to plunge, it means that the rigged and phony Bernanke Rally, floating higher on a sewer full of newly created money, has ended, and that metals will resume outperforming stocks.

Dollar index fell 23.7 basis points (0.3%) to 82.22. Heavy news, for 82.50 support had held it till now. Next logical stopping place is 82.00 support, but the bottom of the gigantic rising wedge lies at about 81 right now, and a trip thitherward can't be ruled out.

Euro rose 0.33% to $1.3186, still rallying. Yen reversed sharply upward and closed barely above its 20 DMA and right at the 50. A break out tomorrow above today's 100.72 high will take it much higher.

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.