Wednesday, May 07, 2014

The Gold Price Lost $19.70 or 1.51 Percent to Close at $1,288.60

7-May-14PriceChange% Change
Gold Price, $/oz1,288.60-19.70-1.51%
Silver Price, $/oz19.30-0.30-1.53%
Gold/Silver Ratio66.7740.0170.03%
Silver/Gold Ratio0.0150-0.0000-0.03%
Platinum Price1,433.80-23.30-1.60%
Palladium Price796.85-21.70-2.65%
S&P 5001,878.2110.490.56%
Dow in GOLD $s264.995.852.26%
Dow in GOLD oz12.820.282.26%
Dow in SILVER oz855.9719.102.28%
US Dollar Index79.260.110.14%

The GOLD PRICE lost $19.70 (1.51%) to $1,288.60 while silver lost 30 cents (1.53%) to close Comex at 1929.8c.

Before I say anything else, I will face the riddle in silver and gold prices. After those dramatically strong reversals, they ought to have proceeded higher, but today they didn't. That might mean lower prices ahead, some lurking spike, but I am going to interpret by the other fork. Until we see lows below April's lows, I'm going to assume both are headed higher.

Should you draw a trend line from the March $1,392.60 high through the April $1,331.40 high, you'd also catch the other April high at $1,306.50. Last Friday's rally burst through that downtrend line (a "breakout"), carried to the 50 DMA, then backed off. Today carried gold below its 20 and 200 DMAs, but stopped short of that downtrend line -- could be classed as that "final kiss good-bye" after a breakout. Must hold $1,285 or gainsay that call.

Don't put that ruler up! Draw another trendline across recent silver tops. Start with February's 2218c, ignore March's 21.795, but connect to April's 2040 and 1995. Over THAT downtrend line the SILVER PRICE broke out on Friday, and now has traded back to it. Must hold 1930c or contradict.

In Greek tragedy they had a cheap trick to get the actors out of an impasse in the script: the deus ex machina. When the characters are painted into a corner, a crane backstage ("machina") would lower down a character ("deus", a god) who with a wave of his hand would overcome all difficulties. So deus ex machina or god from the machine is not great writing, just a contrived device to overcome a poorly planned plot.

In the same way, I could every day explain market movements by pointing to the Nice Government Men. More, a matter of notorious fact and law and government policy the US Treasury intervenes in markets through the President's Working Group on Financial Markets (Plunge Protection Team, primarily for stock markets) and in the silver and gold markets (Exchange Stabilization Fund, Gold Reserve Act of 1934, etc.). Thus it is not conjecture but hard fact that your yankee government intervenes in markets.

But not every day. More, because markets are so huge, they can only manipulate at the margin, and never successfully long term against a primary trend, witness their "suppression" from $4.01 silver price and $252 GOLD PRICE to $20 and $1,290 today. If that "success" ain't the hallmark of a government job, I don't know what is.

Yet although they don't manipulate every market every day, sometimes they do, especially when they want to skew public perception. To convict of a crime, you must show that the criminal had Motive, Means, and Opportunity.

Do the NGM have Motive lately to manipulate gold? Well, with a war brewing and the dollar tanking and $3+ trillion of newly printed money waiting to hit consumer prices, I'd say so. Nor do they want folks to see stocks tanking and gold rising. Even as great a nincompoop as Alan Greenspan knew that the public views gold's price as the barometer of US dollar's health.

Do they have the means to Manipulate? Go visit if you need proof, but they've been intervening in markets for over 80 years that I know of. And the opportunity arises whenever they take it up.

All this is my sideways explanation of why gold and silver MAY have dropped today: the NGM simply couldn't stand to leave gold alone while the dollar is tanking and gold offers a safe haven from potential war. (I do not, by the way, put much credence into "safe haven premiums" on gold. They vanish as quickly as they appear.) On the other hand, gold and silver may be signaling some as yet unresolved weakness, some lingering doubt over both metals that requires time and lower prices to resolve.

By the way, the NGM let down a DEA magna et crassa ex machina today when Mother Janet Yellen spoke to congress. This assuaged all those panicky stock investors and pumped up the stock market, and apparently bopped gold on the noggin. Looking deeper, where she said anything in the blizzard of persiflage, she said they would keep interest rates low for a long time. That of course is GOOD for gold, because it lowers the opportunity cost suffered by receiving no interest while you hold gold. Never mind.

To the details:

Dow gained back 117.52 (0.72%) to 16,518.54 after losing 129.53 yesterday. S&P500 added 10.49 (0.46%) to 1,878.21, after losing 6.94 yesterday.

That seems awfully volatile and indecisive. Outcome will probably spikes to new highs soon, but stocks might also suddenly tank. Odds are against vastly higher prices.

Dow in gold is simply sawing up and down sideways without any resolution. Rose 2.19% today to 12.82 oz (G$265.01 gold dollars). Dow in Silver jumped up 1.96% to 854.02 oz (S$1,104.19 silver dollars). Bounced up off the 20 DMA. Should rise further.

US dollar index rose 11 basis points, a bound that would make any dead cat proud, to 79.26. The euro backed up 0.11% to $1.3913, but solidly broke out yesterday for a trip to $1.4000 or higher. Yen fell 0.23% to 98.54 cents/100 yen. Dollars stands on parlous slick ground, slicker than otter snot.

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.