Friday, July 18, 2014

Gold Price Could Drop to $1,290 and Stop, or Spike to $1,280 and Scare Every Gold Bug to Death

11-Jul-1418-Jul-14Change% Change
Gold Price, dollars/oz.1,337.001,309.20-27.80-2.1
Silver Price, cents/oz.2,141.102,083.80-57.30-2.7
Gold/silver ratio62.44562.8280.3830.6
Silver/gold ratio0.01600.0159-0.0001-0.6
Dow in Gold Dollars (DIG$)261.97270.018.033.1
Dow in gold ounces12.6713.060.393.1
Dow in Silver ounces791.36820.6229.263.7
Dow Industrials16,943.8117,100.18156.370.9
US dollar index80.2280.610.390.5
Platinum Price1,512.301,489.20-23.10-1.5
Palladium Price874.75880.505.750.7

3 Day Gold Price Chart
30 Day Gold Price Chart
3 Day Silver Price Chart
30 Day Silver Price Chart
Today the GOLD PRICE misplaced $7.50 (0.6%) to $1,309.20. Silver dropped 24.8 cents (1.2%) to 2083.8 at Comex close.

The GOLD PRICE bounced off its ruling downtrend line form the October 2012 top downward. Silver simply retraced all the gain it made yesterday. Assuming that's the B-leg of the correction completed, next week we ought to see lower lows than we saw this week, but not too low, I think. I can't see the SILVER PRICE dropping further than 2000c, if it falls that far. Gold could drop to $1,290 and stop, or spike to $1,280 and scare every gold bug to death. Gold has established an uptrend line from $1,240.20 on June 1 to this week's lows. 'Twill be fascinating to see if gold can hold that line, on Monday about $1,300.

But all that bars another airliner shot down, or banks collapsing like dominoes, or any of a hundred things I haven't even imagined yet. Face it, the world ain't too stable, and the least stable element is the currency and financial system.

Nacheral born durned fools like me always want to know WHY. It's fatal curiosity, nowadays, cause don't nothing make no sense no way. Yesterday stocks fell like the Rooshians wuz on Main Street, and today they rose and danced like they Cooter Brown drinking bustskull whiskey. "Why" remains a mystery of the universe as yet unrevealed, but it will be, one o' these days. And I wouldn't be a durned bit surprised to find the WHY didn't have a bunch of Nice Government Men behind it. Don't none of this have nothing to do with value.

Before I get in to that, Look at the week. It held a whipping for silver, gold, and platinum, but fat meat for stocks and the US dollar (go figure THAT).

After yesterday's 161 point nosedive, the Dow turned today and rose 123.37 (0.73%) to 17,100.18. S&P500 out did that, up 10.03% (20.1) to a 1,978.22 close.

For the nonce, today's rise cancels the chance of a Key Reversal downward in stocks. For the time being stocks float, but yet loometh nearby a fall. Watch out.

Today's stock reversal upward and metals fall sent the Dow in metals zig-zagging. Dow in Gold jumped 1.29% to 13.04 oz (G$269.56 gold dollars), and back above the 50 DMA. Dow in Silver bucked up as well, 2% to 817.02 oz (S$1,056.35 silver dollars). No conclusions to draw but "Still correcting it's long fall from early June to mid-July." Patience.

US dollar rose 39 basis points or 0.5% this week, an amazing dance for a currency without legs or substance. Ended today up 3 basis points to 80.61. It has broken out of an even-sided triangle headed at the least for 81.20. If the last 4 months' trading prove to be the upside head and shoulders it appears to be, then the dollar index could touch 82.75.

The euro bell through $1.3600 this week, gapped down, and reached down lower today. Today's low was $1.3491. A close below $1.3500 opens the currency equivalent of a black hold beneath the Franken-currency. Yen bid far yesterday to break out of its long narrow triangle (abuilding since February, yawn!), but fell back today -- all pop, no corn. Closed down 0.18% to 98.67.

Yield on the 10 year treasury note, which I use as a proxy for interest rates, fell this week along with the Malaysian airliner. Such catastrophes send people fleeing into US dollar government bonds, and when bonds rise, interest rates fall. More than that, though, the 10 year note yield is dancing with the top boundary of a trading channel from 2012 and 2013. 'Twas out of that channel's top the yield broke free June a year ago, so it remains weighty support. Should it fall through 2.475% the yield could fall quite a ways, leaving Janet Yellum smugger than a hound sucking duck eggs.

Good night, and joy be with you all.
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.