Thursday, July 17, 2014

The Gold Price Shot Skyward, Up $17.10 to Close at $1,316.70

17-Jul-14PriceChange% Change
Gold Price, $/oz1,316.7017.101.32%
Silver Price, $/oz21.090.361.73%
Gold/Silver Ratio62.444-0.257-0.41%
Silver/Gold Ratio0.01600.00010.41%
Platinum Price1,503.0018.001.21%
Palladium Price884.108.751.00%
S&P 5001,958.12-23.45-1.18%
Dow in GOLD $s266.53-6.07-2.23%
Dow in GOLD oz12.89-0.29-2.23%
Dow in SILVER oz805.12-21.73-2.63%
US Dollar Index80.58-0.00-0.00%

3 Day Gold Price Chart
30 Day Gold Price Chart
3 Day Silver Price Chart
30 Day Silver Price Chart
About the time the airliner's crash was announced, the GOLD PRICE, which had been having a pretty calm day below $1,306 shot straight skyward to $1,325.90. For the day it rose $17.10(1.73%) and closed Comex at $1,316.70. Silver added 35.9 cents (1.32%) to close Comex at 2108.6c.

Before y'all go to jubilatin' and opening bottles, let me caution that these safe haven rallies last only about as long as the crisis dominates the headlines. More to the point, most corrections play out in an A-B-C wave counter to the main trend. If a market is correcting a rally, the correction will drop sharply ("A"), then rally, often as high as the point where the rally began ("B" waves can be stronger than a garlic milkshake), then finish the correction with one more fall ("C") usually to a lower low. As I said above, "cause" here should really be called "catalyst" for a move already in the market. It's sort of like my dear wife: if she wants to eat out, she will FIND a reason.

So today's rally was a B-leg in a correction. It took the SILVER PRICE above its 20 DMA (2106c), good, good, but it remains in a downtrend until it climbs higher than 2163c (last peak). The GOLD PRICE punched through its 20 DMA on the way up, hit its downtrend line from October 2012, then backed off to close just below that 20 DMA ($1,319.77). Again, a close higher than $1,346.80 (last peak) is necessary to call the correction over.

Of course, if today's events precipitate World War III, all bets are off and you'd better buy all the gold, silver, ammo, and dehydrated food you can afford.

A Chinese proverb says, "When the pupil is ready, the teacher appears." Of markets we might also say, "When the market is ready to turn, the cause appears." At least, that's what "technicians" argue against "fundamentalists," namely, that everything the market knows is already in the price, so for a market ready to turn, almost any old cause will do.

Lo, I am not that radically given to technical analysis, but the Dow today furnishes a case in point. "Overbought" does not even begin to describe the state of stocks, and they have been for a long time. Yesterday to the cheers of the unthinking, the Dow rose again and I reckon everybody tucked himself in bed thinking tomorrow would be like today, only more so.

Only, it wasn't. Today was the day a market looking for a cause to turn down (Stocks) met a cause sufficient (Malaysian Airlines plane shot down by a missile over the Ukraine). Stocks sank like your Rolex watch into the Greers Ferry Lake over the side of the bass boat.

Dow lost 161.39 (0.94%) to end at 16,976.81, giving back almost all the last three days' gains, closing at the bottom of the day's range, and almost but not quite breaking through the 20 day moving average. S&P500 lost 23.45 (1.18%) to 1,958.12. Along the way it punctured both the 20 DMA (1,967.14) and closed through the top boundary of that rising wedge it left behind since may, AND closed below the bottom border of its upward trading channel wherein it hath dwelt since mid June.

Altogether a demoralizing performance. Every indicator I watch is pointing stubbornly down, down.

Today's stock tumble helped the Dow in Metals. Dow in gold fell 2.2% to 12.29 oz (GS254.05 gold dollars), below the 50 DMA (13.00 oz or G$268.73) and through internal support at 12.91 oz (G$266.87). 20 DMA stands at 12.85 oz (G$265.63), easily close enough to be crossed tomorrow.

Dow in silver dropped 2.37% to 803.29 oz (S$1,038.60 silver dollars), also below its 20 DMA (805.06 oz or S$1,040.89). I want to see this confirmed before I say itfinally has turned down again.

I reckon not a single Nice Government Man anywhere in the world got any peace today. They were all staring at computer screens and sweating bullets trying to keep the currency markets from going wild after that Malaysian Airliner was shot down. US dollar index ended at 80.58, down just 4 basis points, nothing. Euro, which stands to lose most by a shooting war next door in Ukraine, actually rose 0.01% to $1.3526. It's still hanging over Grand Canyon by low-test fishing line. Yen benefitted more than the other rotten, nasty, corrupt, wicked fiat currencies. It rose 0.5% to 98.45 and is bumping the top boundary of that old even-sided triangle I've been writing about. Japan is a long ways from Ukraine.

In a terrible shoot out in California today, three of four bank robbers were killed along with two of three hostages. You really have to wonder how anybody could be stupid enough to rob a bank. Banks have no money. For the last 40 years, they haven't kept much currency on hand, either, rarely as much as $10,000. I had a customer who panicked half his state a few years ago when he went into the bank and told 'em he wanted every bit of his $300,000 right there on the counter. He was told they didn't keep that much on hand, and they'd have to order it from the Fed. Fine, he said (he's pretty feisty), order it! I still laugh when I think how those bankers' faces must have looked.

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.