|Gold Price, $/oz.||1,303.20||1,318.70||15.50||1.2|
|Silver Price, $/oz.||19.927||19.933||0.006||0.0|
|Dow in Gold Dollars (DIG$)||260.34||251.23||-9.11||-3.5|
|Dow in gold ounces||12.59||12.15||-0.44||-3.5|
|Dow in Silver ounces||823.64||804.03||-19.61||-2.4|
|US dollar index||80.56||79.57||-0.99||-1.2|
The GOLD PRICE backed down $1.40 (0.7%) today to $1,318.70, while that rascal silver gave up 14.5 cents (0.1$) to 1993.3.
Gold's loss signifieth nothing, as it remains above its 200 ($1,298), 50 ($1,314), and 20 (1,311.25) day moving averages, as well as support/resistance at roughly $1,318. Every indicator I watch points higher, so why am I gnawing my nails? Gold's moving slowly and that scoundrel silver won't climb up high enough to confirm gold's move. Of course, that is easily explained by the weakness in stocks, but still . . .
The GOLD PRICE weekly chart shows upward bias, too, and gold stands above its 18 week MA ($1,284.43) and 50 week MA ($1,312.79) and barely above its downtrend line from August 2011. All burners lit.
The SILVER PRICE actually fell back from its 20 DMA (2007c) today and closed below it. 2015c keeps stopping it. In fact, silver needs to throw a leg over 2050c and run. Yes, yes, all the indicators point higher, but this is awfully slow and trying.
Back off and review the last year. The gold price must better its $1,434 peak from last August, then climb over $1,550 where it was clobbered last April. Silver needs to beat its recent 2218c high, then its 2512c August high, and then 225c where it fell off a year ago.
Until gainsaid, the double bottom in June and December says silver and gold prices won't drop any lower, and that they have begun their next leg up. Bull markets always climb a wall of worry, so y'all ought to expect that now. Meanwhile gold and silver's best friends remain the Federal Reserve, world central banks, and the yankee government since their policies are bound to send them higher.
Wall Street bled and bled this week, and no bandaids are in sight, let alone tourniquets. US dollar index broke, too, while silver and gold held up and the white metals (platinum and palladium) also gained. Nothing normal about this situation, and a stock market rout always carries in its bosom the threat of contagion to other markets. 2008 was not so long ago.
Stocks had their worst week since memory runneth not to the contrary, and today only opened more blood vessels. Technically the damage astounds me.
Dow lost 385.96 points this week or 2.4%, 143.47 points today (0.89%) 7 closed at 16,026.75. That's 3.3% lower than the high close on 3 April.
Damage doesn't stop there. Dow closed today beneath its 50 day moving average ((16,172) -- 20 DMA (16,331.25) was left behind yesterday. Recall that in November last year the Dow "threw over" its upper boundary line. Today it crossed beneath it again, and for good measure punched thru the bottom Bollinger Band.
February's low was 15,340.89. The Dow could fall much, much further as
Don't overlook the Nasdaq Composite. It's lost 8.3% since its downtrend began on 5 March. Since 2 April it has lost 6.5%. It, too, languisheth far below its 20 and 50 DMA, and treadeth not far from its 200 DMA (3,936.25).
Then there's the S&P500. Down 2.6% this week, it lost 17.39 (0.9%) today to end at 1,815.69. 200 DMA stands at $1,761.43 and the last (February) low at 1,737.92.
Why do I mention the 200 DMA? In a rising market the price spends most of its time ABOVE the 200 DMA. From time to time in large corrections it will re-visit its 200 DMA, and wide knowledge of this fact means that investors will wait to buy there, and thus support the market. A bfreak below the 200 DMA is very bad juju.
This is a rout, like First Manassas. The blue army is running back to Washington and throwing away rifle and knapsack as they flee. Mark, however: it is not impossible for stocks to return and make one last high in May.
Dow in Silver dropped 0.54% today (4.36 oz) to 802.94 oz (S$1,038.14 silver dollars) in what appears to be a downtrend renewed after the correction from March through 1 April. Dow in Gold has really tanked. Dropped another 0.91% today to 12.16 oz (G$251.37 gold dollars) and skidded to a stop smack atop the 200 DMA. Bottom of that correction was 11.62 oz (G$240.21) so the DiG has not far to travel to confirm unequivocally a new downleg.
US dollar index experienced a Niagara week, and waterfalls don't flow up. Gained 10 basis points today to end at 79.57. Stinks. Sits below its 20 and 50 DMA, but won't confirm a new debacle until it closes below 79. Euro has been the chief beneficiary of the dollar's woes, but is now stuck below its last peak. Ended today flat at $1.3876. Yen has met its major downtrend line and top of its 2 month trading range. Must fish or cut bait or row back to the dock. Flat at 98.42 cents/Y100. Could escape skyward.
I watch the Philadelphia Bank Stock index divided by Gold because that reveals which way the investing public's confidence is leaning. The spread is a fraction, with the bank stock index as the numerator and the gold price as denominator. Thus when gold is rising faster than the Bank Stock Index the denominator is growing faster than the numerator so the graph falls. Voilà, chart is here: http://bit.ly/1sOiOAy
This spread peaked early in January, sank with the gold rally/stock correction into end-February, rose as stocks rallied and gold corrected, and since 1 April has cascaded down to close at its 200 DMA today. It has twice already reached this point in March, not a hopeful sign. This suggests investors appetite for risk and confidence in financial markets is dropping as they adopt the motto, "In gold we trust, not banks."
Another measure of dropping confidence or panic, call it which you will, is the yield on the 10 year treasury note. It has also looked like Iguaçu Falls lately, and has even fallen below its uptrend line to 2.619%. Bear in mind that yields (interest rates) fall as bonds rise, and bonds rise because there is more demand for the safety they offer. Sizeable shift like this rolls snake-eyes for stocks.
Y'all enjoy your weekend!
Aurum et argentum 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.