|Gold Price, $/oz.||1,192.20||1,221.00||28.80||2.4|
|Silver Price, $/oz.||16.78||17.252||0.472||2.8|
|Dow in Gold $ (DIG$)||294.93||280.10||-14.84||-5.0|
|Dow in gold ounces||14.27||13.55||-0.72||-5.0|
|Dow in Silver ounces||1,013.69||958.97||-54.72||-5.4|
|US dollar index||86.81||86.06||-0.75||-0.9|
|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|
On the weekly chart the GOLD PRICE poked its head above the downtrend line and closed there. 'Tis interesting as well that the Gold/Philadelphia Bank Index spread gapped up this week, indicating that confidence in financial markets is waning & turning to gold.
Gold has crossed above its 20 DMA, the first hurdle of a rally, but needs now to beat that last high at $1,237.00. Gold made a key reversal on Monday, then confirmed it on Tuesday, Wednesday, and Thursday by closing higher. Resistance above stands at $1,300, then $1,325, but the test will come at $1,350. There gold must prove whether it means business or not.
The SILVER PRICE had been trading down to the downtrend line on a weekly chart, hit it last week & bounced up this week. Silver's goals now are (1) close above the downtrend line from the end-August high about 1750c. Above that next big resistance is 1875c, but 1900c also stands in the way. At 2153c, the last high, silver faces its last high, but the year's high has been 2218c, so silver must swing over that.
Two interpretations are possible: the washout low last week exhausted and ended the precious metals correction that has lasted since 2011, and they will slowly advance & resume their primary uptrend from here. Alternatively, we will see a vigorous rally, but that will fail and take metals to one last low. Of the two I favor the first, but no one can tell until we see what gold does at $1,350.
Watch for higher silver & gold prices next week. GOLD/SILVER RATIO remains high and it is time to swap gold for silver.
It seems the waterfall has begun in stocks. They had a frightful week. Here are some statistics:
Dow, loss since last high, 4.6%; loss this week 2.7%; below 200 DMA
S&P500, loss since last high, 5.6%; loss this week, 3.1%; barely above 200 DMA
Nasdaq Comp, loss since last high, 7.3%; loss this week, 4.5%; below 200 DMA
Nasdaq 100, Loss since last high, 6.0%; loss this week, 3.9%; still above 200 DMA
Russell 2000, loss since last high, 13.2%; loss this week, 4.7%; below 200 DMA
Wilshire 5000, loss since last high, 6.3%; loss this week, 3.6%; below 200 DMA
NYSE, loss since last high, 7.3%; loss this week, 3.2%; below 200 DMA
In the arbitrary and goofy way the media do things, they now claim that 10% is a "correction." You can see all these indices pushing toward that mark, and the Russell 2000 well past it. Most significant is sinking below the 200 DMA. Markets often reach toward the 200 DMA in a correction, and when an upmarket touches it, that's a pretty good place to buy a correction. However, remember that by definition a bull or rising market is generally rising, so generally above its 200 day moving average, and vice versa for a falling market, that usually stays below its 200 day moving average. So that 200 DMA is a meaningful milestone.
This is about as bad as a correction gets, but 'twill get worse yet. And although it has been terribly steep, it won't prove stock markets saw their ultimate top on 19 September until we see further confirmations. That is a good first approximation, though.
Most of these indices (except for the S&P500 & N-100) have broken their uptrend lines from 2009, when the uptrend began. The S&P500 stands right at it (1906.13 vs. 1905.22) and the N-100 (3870.85 today vs. 3761.05). Hard for me to overstate the importance of breaking that uptrend line. Of course, markets often do that & recover, but seldom after a five year advance. It was the worst week for the S&P500 since May 2012.
So far the Dow in Gold & Dow in Silver are pinpointing the downturn in stocks & upturn in metals. I know that mathematically they are bound to do that, but I mean that when they speak, they speak not with forkéd-tongue but reliably.
Dow in gold fell 0.64% to G$279.48 gold dollars (13.52 oz). Already way below its 20 DMA, it stands only G$1.24 above the 50 DMA at G$278.24 (13.46 oz). This is free fall.
Dow in Silver hath piercéd its 20 DMA (S$1,224.22 silver dollars or 964.86 oz) and today lost 0.95% to close at $1,230.39 (951.63 oz). The DIS lost 5.4% in one week.
For both the DiG & DiS all indicators point down, calling for the move to continue.
Like a kid stealing cookies who aims one eye always on the door watching for his mom, I have one eye peeled for the US dollar index. That rascal's liable to come back and lay a baseball bat over our head when we're not looking. It peaked this week with a high at 86.87, but sank and cut into its 20 DMA. Rallied back 28 basis points (0.33%) today and ended at 86.06. This calleth not the peak into question, but seem no more than ordinary up and down action. Indicators still call loudly for lower prices.
That sorry euro touched its 20 DMA yesterday and it scared it so bad that today it fell back 0.53% to $1.2623. It helped not the euro (or US Stocks) that S&P today announced it was downgrading France's credit outlook as its budget & spending portended fatter deficits. Over in Japan, now in the sights of a super-typhoon, has a yen at least wanting to rise. Yen climbed 0.16% today and has begun a rally. Where it goes and how quickly the BOJ tries to kill it, we'll see.
Y'all enjoy your weekend!
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.