Wednesday, July 02, 2014

Silver and Gold Prices Both Rose Today with the Gold Price Closing at $1,330.70

2-Jul-14PriceChange% Change
Gold Price, $/oz1,330.704.300.32%
Silver Price, $/oz21.250.190.89%
Gold/Silver Ratio62.609-0.352-0.56%
Silver/Gold Ratio0.01600.00010.56%
Platinum Price1,509.70-3.50-0.23%
Palladium Price857.802.800.33%
S&P 5001,974.621.300.07%
Dow in GOLD $s310.32-0.69-0.22%
Dow in GOLD oz15.01-0.03-0.22%
Dow in SILVER oz939.88-7.39-0.78%
US Dollar Index79.980.140.18%

3 Day Gold Price Chart
30 Day Gold Price Chart
3 Day Silver Price Chart
30 Day Silver Price Chart
In the teeth of all my worries silver and GOLD PRICES both rose today. Gold gained $4.30 (0.32%) to 1,330.70 on Comex while silver augmented 18.7 cents to 2125.4c.

Just to be picky about it, gold actually closed on Comex higher than the last (April 14) high, $1,330.70 today against $1,327.20 then. Anyway, you'd expect it to pause a bit to hammer through that high. Still, the clock is ticking, and when markets don't rise, they fall. Yes, that does sound like a profound but senseless tautology, but what I mean is that when markets stop progressing and lose momentum, they fall back. Leave it here: the GOLD PRICE needs to rise tomorrow, because it can't float here under resistance forever.

The SILVER PRICE advanced to 2125.4c, above the range that had entrapped it. It needs to show strength by closing over 2150c, and remains very overbought on it's Relative Strength Index.

Market has a proverb: "Bull markets climb a wall of worry." Here I am exampling it for y'all in living color.

Here are some questions from a reader which many of y’all may share. Be warned to filter whatever I say thru the filter of knowing that I buy and sell silver and gold, and have done for 34 years, so my bias leans very much toward hard money.  That doesn’t say I am automatically wrong or right, it merely reveals my worldview.

Question: I see some recommendations that IRAs invested in the stock market should be moved them to an IRA funded in physical gold or silver. What do you think of this?

Answer. Fundamentally the stock market’s rise since 2009 has been driven by the Federal Reserve’s massive creation of new money, roughly quadrupling the money supply.  Historically, there’s no precedent for this.  The Fed has avoided a hyperinflation in consumer prices in large part because the new money has been drained into and has driven the stock market.  Instead of inflating consumer prices, the new money has inflated asset prices.

Fundamentally, this promises that whenever the Fed stops creating new money, the stock market will stop rising.  Why?  Not economic outlook but inflation is driving stocks higher.  Remove the cause (inflation), then the outcome (higher stock prices) ceases.  The Fed has already begun removing the cause with its “tapering” since December 2013.

Technically stock indices have formed a huge bearish rising wedge since 2009, which portends a breakdown and much lower prices.  More, since 1995 the Dow and S&P500 have formed an enormous head and shoulders top that presages a huge drop.  Third, stocks are at the top of a 300 year up cycle, which implies correcting a 300 year up move and therefore much lower prices.

You are watching that topping process now, and it should be complete by the end of this year, perhaps sooner.  

Meanwhile, the massive inflation 2008 - now will eventually send up silver and gold prices, because fear of inflation creates the monetary demand that drives silver and gold higher.  All these reasons lead to only one conclusion:  sell stocks and put the proceeds into silver and gold.

Question: I have seen another recommendation to cash out IRA accounts and pay the tax and penalty, then invest in gold and/or silver.

Answer: An IRA puts you in partnership with the federal government, and they are the senior partner.  They make the rules, and they can change the rules at any time.

Ownership has two parts, title and control.  You have title to your IRA, but the government has control.  That may not bother you, but if you want control, too, you may only secure that by closing the IRA and paying the taxes and penalty.  That is the price of getting control of those assets.  Every individual has to weigh that against his own personal desires and prudence, asking, “Is it worth the price?”  Only you can answer that question.  Personally, I want no partnerships with the federal government, but everyone doesn’t think as I do.

You have another alternative, a Precious Metals IRA, i.e., sell the stocks within the IRA and put the proceeds into precious metals held by the IRA.  For this you must move your IRA from whoever now manages it to New Direction IRA in Louisville, Colorado, our recommended IRA trustee.  See

Once you have transferred management of your IRA to New Direction and the funds are on account there, you can call us and order precious metals. They will be shipped to the IRA custodian of your choice.

Now to markets:

Buoyed by a lying employment report from the yankee government the US dollar caught wave today and surfed up 0.18% (14 basis points). This gainsaid my expectation, proving that the Dollar deserves a starring role in a Freddy Kruger movie. It jumped up enough to close above that downtrend channel line it had fallen through two days ago, bouncing off a scroungey internal support line. I've been bitten and fooled by the US dollar index so many times I'm not sure what to make of this, but if it climbs over 80.17, the 50 DMA, it has a chance to rally.

Yen took it on the chin (a rhyme if you live in the South where we know no short e before n). Lost 0.25% to 98.25, falling like your glasses out of your breast pocket and into the lake, slicing through the 200 DMA (98.47). Still range-trading.

Euro shrank back like the Wicked Witch of the West facing a bucket of water. Dropped back 0.16% to $1.3659, below the 200 DMA ($1.3669). A close below $1.3600 nixes any chance of a rally.

Stocks millimetered up today (I'm going metric-- NOT). Dow added 0.12% (20.17) to 16,976.24. S&P500 "rose" 1.3 (0.07%) to 1,974.62. This has become a waiting game, waiting for the big break. Be patient.

Dow in gold gained 0.04% to 12.78 oz (G$264.19 oz), flat from yesterday. Dow in Silver dropped 0.49% to 800.58 oz (S$1,035.09 silver dollars), bouncing off the very steep downtrend line. If a corrective rally is about to happen, this would be a likely place for it to start.

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.