Thursday, July 03, 2014

Silver and Gold Prices are Coming Off Overbought Conditions, So it is Logical for them to Fall Further

27-Jun-143-Jul-14Change% Change
Gold Price, $/oz.1,319.001,320.401.400.1
Silver Price, $/oz.21.07721.0890.0120.1
Gold/silver ratio62.58062.6110.0310.0
Silver/gold ratio0.01600.0160-0.0000-0.0
Dow in Gold Dollars (DIG$)264.11267.223.111.2
Dow in gold ounces12.7812.930.151.2
Dow in Silver ounces799.54809.349.811.2
Dow Industrials16,851.8417,068.26216.421.3
US dollar index80.0780.270.200.2
Platinum Price1,478.501,506.1027.601.9
Palladium Price843.25862.3019.052.3

3 Day Gold Price Chart
30 Day Gold Price Chart
3 Day Silver Price Chart
30 Day Silver Price Chart
Stocks did well for the week, silver and GOLD PRICES went sideways, platinum and palladium climbed. US dollar index reversed.

Comex today saw the GOLD PRICE lose $10.30 (0.9%) to $1,320.40 and silver give up 16.5 cents to 2108.9c.

Both silver and gold prices are coming off overbought conditions, so it is logical for them to fall further. Gold's low today hit $1,309.40. A 50% correction of the move from $1,258.00 on 17 June would take gold to $1,396.45. A close above $1,334.90 would knock that expectation in the head and shout that gold is going higher.

If the SILVER PRICE corrected half of its last rise it would fall back to 2042c, not coincidentally the current location of its 200 DMA also (2040c). But look out: a close above 2133.5c says silver wants to hit 2220c before it rests.

Looking across markets the two charts that jump out and slap me are the US dollar index and the Ten Year Treasury note yield. The Dollar Index because it spiked down two days ago, reversed slightly, then today jumped 29 basis points(.036%) to close at 80.27. It sliced into its 50, 20, and 200 day moving averages but only closed above the 50, above internal resistance about 80.25, and above the risk of falling to the center of the earth. That last was a distinct possibility three days ago.

This new found dollar strength landed like a ball peen hammer on the euro and yen. Euro sank from $1.3650 to a low of $1.3596 but closed down 0.36% at $1.3608. Twenty day moving average stands at $1.3602 as well as support, so breaching $1.3600 should put the euro back into free fall mode. Yen fell all the way to the bottom side of the long narrow even-sided triangle it had been building, and had been wanting to escape skyward. It sank 0.39% to 97.87.

For now, the US dollar has 'em all on the run. Think of the strongest leper chasing the other lepers out of the leper colony, nothing more.

After attempting to pierce its intermediate downtrend line in mid-June, the 10 year Treasury yield fell back, but to a higher low than May's. Day before yesterday it gapped up. Yesterday it jumped through its 20 and 50 DMAs AND broke through that downtrend line. Today it jumped clean away, nearly hit the 200 DMA (2.696%), and closed 0.75% higher at 2.648%. I can't quite parse that. Maybe the market thinks an improved economy per the jobs report means the Fed will let interest rates rise sooner -- senseless wind, all, but Zero Interest Rate Policy is the keystone of central bank control, and if the market wrestles interest rate control from the Fed's hands, Janet Yellen will need not one but two therapists AND a case of Scotch.

Stocks made another marginal new high, floating atop the lying employment report. Dow gained 0.54% to close at 17,068.26 and the S&P500 gained 10.82 (0.55%) to 1985.44. Both are making new highs on falling volume. Imagine one of those old Tarzan movies with Johnny Weissmuller. Remember what happened when the English heard the drums in the distance? How all the bearers in the safari threw away their bundles and ran away? "Bad juju, bwana!" That falling volume is those drums beating in the jungle, but the Wall Street English are so complacent they are paying no attention.

Dow in silver turned up again and broke through its steep downtrend line. Ended up 0.68% to 806.06 oz (S$1,042.18 silver dollars) After that steep fall all through June and a severely overbought condition, some upward correction has been overdue.

Dow in gold also broke through its downtrend line today and hit a resistance line left over from April and May trading. Closed up 1.12% at 12.93 oz (G$267.29 oz).

Both indicators have needed an upside correction. It will tell us whether the June peaks were permanent downturns or not.

I hope y'all have a wonderful Fourth of July, but as you do you ought to remember that the human drive to tyranny is so great that freedom must be won anew by every generation. Today most of us think we have too much to lose to risk life, liberty, or property for liberty. The irony is, you won't keep property if you lose liberty.

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.