Thursday, September 04, 2014

The Gold Price Gave Back a Lethargic $3.80 to Close at $1,265.10

4-Sep-14PriceChange% Change
Gold Price, $/oz1,265.10-3.80-0.30%
Silver Price, $/oz19.06-0.04-0.23%
Gold/Silver Ratio66.361-0.046-0.07%
Silver/Gold Ratio0.01510.00000.07%
Platinum Price1,409.80-4.20-0.30%
Palladium Price890.4015.051.72%
S&P 5001,996.92-3.80-0.19%
Dow in GOLD $s278.830.600.22%
Dow in GOLD oz13.490.030.22%
Dow in SILVER oz895.101.320.15%
US Dollar Index83.800.931.12%

3 Day Gold Price Chart
30 Day Gold Price Chart
3 Day Silver Price Chart
30 Day Silver Price Chart
Today's dollar surge helped not silver and gold. The GOLD PRICE gave back a lethargic $3.80 to close Comex at $1,265.10. Silver puked up 4.4 cents to close at a new low for the move, 1906.4 cents.

Today the GOLD PRICE hit a high of $1,279.20 then was trashed by the ECB's surprise party. Closed near the low of its range. Yet, in all this the gold price remains simply within that downsloping channel from the July high, in fact, not quite at the bottom line. Considering the strength of today's stroke, gold acquitted itself quite well.

The SILVER PRICE closed below that downtrend line from the August 2013 high, and barely above 1900c support. On news about as bad as an announcement that alchemists had learned how turn mulch into silver, silver dropped four point four measly cents. Silver is acting as if it is sold out, that is, not attracting any new sellers. Unhappily, that ain't no recipe for success. Got to have buyers to raise the price.

Best thing that can be said for silver and gold is that a large skunk sprayed all the markets, but silver and gold don't smell too bad. T'aint much, but 'tis something.

When governments or central banks throw a surprise party, all bets are off. Today the European Criminal Bank threw a heck of a surprise party, announcing (1) an interest rate cut from 0.15% to 0.05%, (2) cutting the interest rate on funds held at the ECB (think "Federal Funds" in the US) to negative 0.2 percent (yes, they are charging banks to hold reserves), and (3) an asset-backed securities and bond buying program, as much as E500 billion ($691 billion) over three years, or US$230 billion a year, about US$20 billion a month, small by Federal Reserve standards. In plain English, the European Central bank is going to inflate.

The ECB news sent the US dollar index screaming up 93 basis points (1.12%) to 83.80, highest close since 11 June 2013. That's a gigantic move for a currency.

Euro fell 1.59% to $1.2941, it's lowest since 10 July 2013. That sets up a further drop to target the last low at $1.2755. It appears the deal has been cut long ago to let the dollar rise and the euro drop. Come on! These things don't happen without consultation and conspiracy.

Japanese yen lost 0.3%, all yesterday's gain and then some for a new low for the move. It ended at 95.05.

All this currency turmoil has made the US dollar look better and pay more interest, a prime determinant of exchange rates. Ten year treasury yield rose 1.58% to 2.448%. That brings the 10 year yield near its 50 DMA (already above the 20 DMA) and not far from the bottom boundary of the triangle it broke down out of in August. Needs to climb over 2.5% to prove itself.

The ECB's currency tricks did not please US stocks. The Dow gave back 14.16 (0.08%) to close at 17,064.12. S&P500 dropped 3.8 (0.19%) to 1,996.92, below the fabled 2000 mark.

I'm no more'n a natural born durned fool for Tennessee, so I cannot peer into the deep thangs of the cosmos, but theseyere lines on charts fascinate me. S&P500 today closed below an internal uptrend line (it marked the rising wedge's lower boundary), and it is dropping on rising volume. That means that there's a feedback loop: faster it falls, more folks sell. Momentum indicators appear to be rolling over earthward, as for the Dow's.

Dow in Silver exceeded the 1 June high at 892.22 by closing up 0.58% to 894.40 oz (S$1,156.40 silver dollars). It has reached turning-green overboughtness on the RSI. Some time ago I calculated a possible target at 912 oz (S$1,179.15). We might see that.

Dow in gold rose today 0.23% to 13.48 oz (G$278.66 gold dollars). This takes it above the downtrend line from the 13.80 oz top in December.

Pondering both these indicators and their last 10 months' trading, I keep getting the picture that both are presently double topping, or will have by sometime next week.

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.