Monday, October 06, 2014

Gold Price Sprang Up $14.50 or 1.19% Percent to $1,206.70

6-Oct-14PriceChange% Change
Gold Price, $/oz1,206.7014.151.19%
Silver Price, $/oz17.180.402.38%
Gold/Silver Ratio70.239-0.831-1.17%
Silver/Gold Ratio0.01420.00021.18%
Platinum Price1,248.4022.401.83%
Palladium Price765.2511.551.53%
S&P 5001,964.82-3.08-0.16%
Dow in GOLD $s291.09-3.76-1.28%
Dow in GOLD oz14.08-0.18-1.28%
Dow in SILVER oz989.05-24.64-2.43%
US Dollar Index85.89-0.92-1.06%

3 Day Gold Price Chart
30 Day Gold Price Chart
5 Year Gold Price Chart
3 Day Silver Price Chart
30 Day Silver Price Chart
5 Year Silver Price Chart
The GOLD PRICE sprang up $14.50 (1.19%) to $1,206.70. I'll fret and fume about the ambiguity of that close in a second. Silver rose 40 cents (2.4%) to $17.18.

Both planted the clear first half of a key reversal, viz., a break into new low ground with a higher close for the day. That first half is useless and a liar unless followed by the 2nd half, a higher close tomorrow. Third day's higher close offers more proof still.

Look at the changes inside silver and GOLD PRICES. Silver came out of an oversold fever that began 10 September. Other indicators have turned up. The downtrend line from the end-August high lies above at $17.65, and silver's high today reached $17.36. If fuelled by short-covering, silver could o'erleap that tomorrow. As yet this turn is no more than a small cloud on the horizon, but it has all the elements of a turnaround -- except confirmation, which only tomorrow can give.

Zut alors! Donnerwetter! Gold's low today -- really over the weekend -- came at $1,183.30, pennies above the June and December 2013 low. Observe that the ever-more-volatile silver cracked those lows ($18.60) while gold has not. That would be typical behavior, with silver always weaker on the downswing but often outpacing gold on the upswing.

Gold/Silver Ratio
The GOLD/SILVER RATIO confirmed that by gapping down today. It has painted a classic complete gapped movement with breakaway gap, exhaustion gap, island top, and gap down from the island. Chart to the right.

That argues that the recent highs in the ratio also mark the lows in silver and gold prices.


What next? The gold price must close -- not tomorrow, but soon -- above $1,225, then $1,237. then $1,237. $1,300 is the first big goal.

The SILVER PRICE needs to climb above $18, then $18.75 where it fell down. In the aftermarket silver was trading at $17.36, 18 cents above its close, a sign that shorts are covering. Platinum and palladium also shot up.

Call me a nat'ral born durned fool from Tennessee, but I bought silver and gold today. I'll buy more if it keeps rising, though I am careful to note that it must keep rising or gainsay today's signal.

US dollar index lost 92 basis points of that 107 bp it won on Friday, leaving today looking a lot like a key reversal, only because its 86.85 high lacked 2 bps of Fridays. Nonetheless, a follow-through tomorrow will confirm the dollar's reversal. Closed at 85.89, and fell off its grotesquely overbought condition (RSI now 64.64, i.e., below overbought 70 line). I saw an article today by Clive Maund which credited unrest/potential war in Ukraine, Hong Kong, and the Middle East with sending investors, especially non-US investors, into the US dollar. In other words, it's a flight to safety. Add momentum following hedge funds to that and he's likely correct.

Dollar's stumble was health and well-being to the yen and euro. Euro found a ladder and climbed 1.14% to $1.2657. This means little until the Euro crosses that 20 DMA (now $1.2797), but it did carry the euro up out of oversold territory. Yen rallied Wednesday and Thursday, crashed Friday, then bounced back today, up 0.92% to 91.95. Clearly above oversold.

Ten year treasury note yield fell along with the dollar, and has sunk below its 50 day moving average. Suddenly all the certainty that Mother Yellum "must" raise interest rates evaporated.

All the stock indices I watch stumbled today: Nasdaq, N-100, Russell 200, Wilshire 5000, Dow, S&P500. Ain't that what they call "across the board"? Dow lost 17.78 (0.1%), not much but enough to crack the 17,000 level upon which investor moral hangeth. S&P500 lost 3.08 (0.16%) to 1,964.82.

Owch. Dow reached up and punched its 20 DMA today, but fell back. S&P500 didn't do that well and ended below its FIFTY day moving average. Durn! Did I forget to remind y'all the Dow is trading BELOW its uptrend line from March 2009? I did, didn't I.

Dow in gold jerked back Friday's gains and fell to 14.07 (G$290.85 gold dollars). That's below the previous (19 September) high at 14.20 oz (G$293.54). Looks like that and Friday have left a double top, but that will not be confirmed until the DiG again closes below its 20 DMA, now 13.95 oz (G$288.37).

Too early to declare certainly, but that 19 September peak in stocks may have been the Big One.

Dow in Silver has also left a double peak, 30 September at S$1,298.86 silver dollars (1,004.59 troy ounces) and 3 October at S$1,305.57 (1,009.78 oz.). Today the DiS lost S$38.23 (29.57 oz or 2.93%) and ended at S$1,267.34 (980.21 oz). Needs to fall through the 20 DMA at S$1,231.35 (952.37 oz) to confirm reversal, but presumption already lies with gravity.

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.