Thursday, October 16, 2014

The Gold Price Has Progressed Up into its September Trading Channel Closing at $1,240.50

16-Oct-14PriceChange% Change
Gold Price, $/oz1,240.50-3.60-0.29%
Silver Price, $/oz17.39-0.03-0.16%
Gold/Silver Ratio71.342-0.096-0.13%
Silver/Gold Ratio0.01400.00000.13%
Platinum Price1,252.40-9.00-0.71%
Palladium Price745.15-18.25-2.39%
S&P 5001,862.49-15.21-0.81%
Dow in GOLD $s268.580.370.14%
Dow in GOLD oz12.990.020.14%
Dow in SILVER oz926.920.030.00%
US Dollar Index85.04-0.04-0.05%

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 lost $3.60 and close at $1,240.50. Silver lost 2.7 cents on Comex to close at $17.388 cents. GOLD/SILVER RATIO at close was 71.342 oz of silver to buy one ounce of gold.

The gold price has progressed up into the trading channel it fell out of as September began. Crossing $1,237 resistance helped, but now gold must conquer $1,260. All this pales next to $1,296, which is the half-way point of the gold gain from 2008 to 2011. Volume yesterday, by the way, was huge.

The big challenges for the SILVER PRICE are $17.60 and $18.00. Right now, $17.75 has it stalled, but $18.00 makes the decline from mid-September look like an inverted head and shoulders, with a neckline at $18.00.

Both silver and GOLD PRICES will move higher, soon. I would buy some. Well, I already have.

I saw a chart that really helped put things in perspective. Stocks have really gained against silver and gold since 2011, but look before that. Stocks lost about 85% of their value against gold and 90% against silver from 1999 and 2001. Earlier you bought, better off you are, but stocks' rally since 2011 has only been an ordinary reaction, and early gold and silver buyers still have strong profits.

But the latter half will be better than the first, and stocks will lose another 85% to silver and gold before the metals bull market ends.

Sorry I was short on details yesterday, but I was short on time.

The mess in the bond market yesterday really was a throat-crusher. Yield on the 10 year treasury fell as low as 1.86% at one point. It was the largest one-day fall in yields since Lehman Brothers bankrupted in September 2008. If that doesn’t grab your attention, it ought. And oil crashed for the second day running.

Atop all this comes a storm of bear market news: Ebola, Ukraine, Middle East, ISIS, Greek stocks crashed 9%, bad winter forecast. Nasty.

I was a little irritated yesterday, and when I am I tend to blame things on the Nice Government Men. We know they're there, but like the Yeti, we can only follow their tracks in the snow. But given that Old Bulls Die Hard, it could have been speculators thinking, "That's dropped enough! Time for me to jump in for bargains." That's possible. Yeah, sure.

I also find it tough to parse that gold has not yet caught some bid in this turmoil. Oh, sure, gold has labored away and steadily if not spectacularly climbed. But it keeps pushing against the ceiling. That makes me suspicious, although I'm sure natural causes might explain that, too. (Sure -- like the Abominable Snowman has been selling?)

Okay, Okay, I'll straighten up, I promise. Just this little added piece of data. The stock bust is propagating internationally. Add these to the casualty list, all below their last low and below their 200 DMAs and looking sick as a dog hawking up poisoned meat:

French CAC

German DAX

European STOXX

Dow Jones World Index

Japanese Nikkei

London FTSE


Now, today's markets:

US DOLLAR INDEX has established an unarguable downtrend with lower lows and lower highs. Today it lost another 4 basis points (0.05%) to close 85.04. Whoops -- slipped beneath the 20 DMA (85.57). Nothing suggests this downtrend has turned around yet.

Yen backed off today, 0.32% after piercing the 50 DMA (94.32) yesterday, and closed 94.06. It rallieth still, but is liable to run into trouble at the bottom of the former resistance range, 96.

Try to get this picture. In June 2013 the 10 year treasury note yield broke out upside from a long downward trend. Since the first of 2014 the yield traded lower, and in the past few days it has cascaded down from about 2.280% to a low yesterday at 1.868%. It has wiped out all the gains of the last 16 months. Reckon Janet Yellum is grinnin' like a mule eating sawbriars, but all those speculators who have been betting on the Fed raising interest rates soon have in the last couple of days changed their minds. Chart is on the right:

And don't you all think for a minute the Fed is finished with Quantitative Easing. If stocks fall enough, they'll start printing that money so fast it'll jerk a knot in your neck. The Fed follows, it doesn't lead. And while some of the benighted world may count central bankers as celebrity rock stars, the truth is they're just a bunch of chunky, clueless academics or worn-out banking apparatchiki. That's what so frustrating about watching them, it's like being basketed to death by a WalMart greeter -- No, No! That's an insult to WalMart greeters. They would never hit anybody with a basket.

Stocks didn't fall today, at least, not much, and from where they've been the last 10 days, that's success. Dow lost 24.5 (0.15%) to 16,117,24, but the S&P500 gained 0.27 (0.01%) to 1,862.76.

Stay tuned: more crash will come, and deeper.

The Dow in Gold continues to plunge/plummet/nosedive. It has crashed through the top of the even-sided triangle it broke out of in September. Then it made a top at G$295.19 gold dollars (14.28 oz) on 3 October and has plunged straight down ever since, back into that triangle and today almost through the triangle. It only stopped at the lower boundary and the 200 DMA (G$267.29 or 12.93 oz). That lower boundary is also the uptrend from August 2013. You can look at the chart on the right:

Dow in silver has plunged, too, since its 3 October high at S$1,305.57 silver dollars (1.009.78 oz). Down today another 0.34%, it has now crashed back into the rising wedge formation it "threw over" from. Nearing the 50 DMA (S$1,181.89 or 914.12 oz), it still stands relatively higher than the Dow in Gold. 200 DMA lies beneath at S$1,088.83 (842.14 oz). Chart is on the left:

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.