Friday, March 14, 2014

The Gold Price is in the Middle of a Rally, Up $40.90 this Week

Gold Price Close Today : 1,379.00
Gold Price Close 7-Mar-14 : 1,338.10
Change : 40.90 or 3.1%

Silver Price Close Today : 21.384
Silver Price Close 7-Mar-14 : 20.897
Change : 0.487 or 2.3%

Gold Silver Ratio Today : 64.487
Gold Silver Ratio 7-Mar-14 : 64.033
Change : 0.454 or 0.7%

Silver Gold Ratio : 0.01551
Silver Gold Ratio 7-Mar-14 : 0.01562
Change : -0.00011 or -0.7%

Dow in Gold Dollars : $ 240.83
Dow in Gold Dollars 7-Mar-14 : $ 254.17
Change : -13.34 or -5.2%

Dow in Gold Ounces : 11.650
Dow in Gold Ounces 7-Mar-14 : 12.296
Change : -0.65 or -5.2%

Dow in Silver Ounces : 751.29
Dow in Silver Ounces 7-Mar-14 : 787.32
Change : -36.03 or -4.6%

Dow Industrial : 16,065.67
Dow Industrial 7-Mar-14 : 16,452.72
Change : -387.05 or -2.4%

S&P 500 : 1,841.13
S&P 500 7-Mar-14 : 1,878.04
Change : -36.91 or -2.0%

US Dollar Index : 79.440
US Dollar Index 7-Mar-14 : 79.730
Change : -0.29 or -0.4%

Platinum Price Close Today : 1,469.00
Platinum Price Close 7-Mar-14 : 1,483.00
Change : -14.00 or -0.9%

Palladium Price Close Today : 773.00
Palladium Price Close 7-Mar-14 : 781.60
Change : -8.60 or -1.1%

Exactly one month after the silver and GOLD PRICE surge on 14 February, they are repeating their act. Stocks, on the other hand, have lost 287.37 or 2.4% in a five day losing streak. US dollar index looks puking sick, and platinum and palladium are breathing hard to keep up.

The GOLD PRICE scooped up another $6.80 (0.5%) today to pierce $1,375 and close at $1,379.00. Silver joined in, grabbing 21.5 (1%) cents to rise to 2138.4.

The SILVER PRICE was pushed to a 2114c low but gapped up about 5:30 a.m. EST. It stopped a leap from 2120 at 2180, but backed off that and traded between 2130c and 2150c most of the day.

Silver has formed what is probably a bullish flag (down-pointing flag) and today broke above the top of that range, but at the close was only about 8 cents above it. At day's end silver stopped at 2146c. Climbed today above the 20 DMA.

The gold silver ratio at 64.487 STRONGLY witnesses that silver is verging on playing catch up with gold, and running past it. First, however, silver must close above 2160 and then above 2218c, the February high.

Gold is a little overbought, but bull markets can stay overbought a long time. Since today it punched through its top Bollinger Band (a measure of range), we might see gold take a rest for the first couple of days next week. Of course, anything can happen over a weekend.

Last week gold closed above the downtrend line from its August 2011 high and above its 50 week moving average. This week's trading all took place above that downtrend line. On the monthly chart gold remains below its 20 and 50 month moving averages, but has broken out through the downtrend line there, too, and posted three rising months.

On a weekly chart silver has spent five weeks above the post-April 2011 downtrend line and this week closed barely below its 50 week MA (2150). It has spent four weeks trying to fight through that moving average. Silver's monthly chart reveals a breakout similar to gold's above the downtrend line, but only two months.

We're in the middle of a rally. Buy -- more silver than gold. If you have gold to swap for silver, do it fast.

Whoops! The Fed has sprung a money leak!. It holds US government securities in custody for foreign central banks, and for the week ending 12 March those fell $104 billion to $2.86 trillion. Speculation is that the Russians pulled theirs out ahead of the US government possibly locking them up. Now that little smidgen of treasuries withdrawn doesn't amount to anything, but its about three times the last biggest drop ever. And if more central banks took a notion to take delivery, or, worse yet, simply to sell, why there would be big trouble in Fed-ville.

Stocks had a consistent week: consistently lower. Dow yesterday dropped a thumping 231.19, today another 43.22 (0.27%) to end the week at 16,065.67. S&P500 lost 5.21 (0.28%) and ended the day at 1,841.13.

Y'all know that moving averages are momentum milestones. A market above its moving averages has upward inertia, a market below downward. When a market falls below its short term moving average (say, 20 day), it's warning of a downturn. When it falls below the 50 DMA, it picks up steam, etc. In the last two days the Dow dropped through both its 20 (16,241) and 50 (16,148) DMAs. S&P500 fell through its 20 (1,854) but not yet the 50 DMA (1,821).

More interesting still, the S&P500 has fallen through a long term uptrend line it had "thrown over" or broken out above. Now its punching back below. Same holds for an old upper boundary of the Dow's range. It threw over that line in November, traded up until end-December, cascaded down through that support in January all the way to its 200 DMA, then rallied back over the line. Today it sits just above it. Add a downward or sell cross in the MACD indicator, and, well, stocks look a mite peaked.

It appears that the Dow's refusal to confirm new highs in the S&P500 and other indices in this last rally was telegraphing underlying weakness. However, it's like a dead rattlesnake. Don't count it out until somebody cuts off its head. Stocks will likely still back to a new high before May.

I'm strapping on a muzzle so I don't crow too much over the Dow in Gold and Dow in Silver. They fell from end-December until end-February, then managed a little counter-trend rally -- really a sort of counter-trend burp. Now they have earnestly resumed their fall as metals outperform stocks, and they point toward much more outperformance the further they fall. They gave a couple of sell signals this week. DiG closed today at 11.65 oz (G$240.83 gold dollars), well below the 200 DMA at 12.02 oz (G$248.48)

Yo! What of the DiS? Silver has lagged gold so the DiS hasn't performed quite as spectacularly, but respectably still. Tumbled today 1.38% (10.47 oz) to 750.28 (S$970.11), a gnat's eyebrow from the 200 DMA (748.51 oz).

Bearings check: Dow in Gold topped (stocks peaked in August 1999) at 44.767 oz (G$925.42) and Silver in June 2001 at 2,573 oz. In 2013 both broke above their long term downtrend lines in a correction, and now they are headed to break below those lines. From peak to the first trough in this bear market for stocks against metal, stocks lost about 85% of their value. They'll lose another 85% before the bear market for stocks ends. Rough guess, mind you.

US dollar index fell again today, 17 basis points (0.2%) to 79.44. The November low, lowest price in a year, was 79.06. If there dollar breaches that support, no safety net appears before, oh, 78. However, the dollar has spent most of 2014 tracing out a falling wedge, which usually but not always ends by reversing upward. However, if it lurches yesterday's low, about 79.28, it might just keep on lurching downward.

Since Europe has a lot more to lose by a war in Ukraine than the US, the euro ought to be dropping like a careless tourist off a cruise ship, but it's not. Yesterday it dropped 0.27% after hitting a new high for the move, then closed lower. Today it rose 0.27% and closed higher, gainsaying any key reversal downward. Seemingly intends to rise, but why remains a mystery.

Again today the yen picked up the safe haven bid and rose 0.49% to 98.73 cents/Y100. 'Twas at this same level as March began but slid, so if it can close higher then it is rallying and not merely trifling with us.

On 14 March 1900 congress passed the Gold Standard Act, allegedly to put the United States on a gold standard, really to try to make the banks' demonetization of silver permanent and demoralize bimetallists. The bill made the gold dollar of the standard of 1834 the "standard unit of value" to which the secretary of the treasury was supposed to maintain all other forms of money at parity The act is another irrefutable argument against government issuing any money at all, since the whole history of government issued money is a parade of corruption, stupidity, confiscation, and market suppression. A government monopoly on money issue, along with legal tender laws, is the tyrant's indispensable tools to rob the people.

Y'all enjoy your weekend.

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

- Franklin Sanders, The Moneychanger

© 2014, 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 or 18 ounces of silver. or 18 ounces of silver. US $ and 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.