Wednesday, December 03, 2014

Look for the Gold Price to Break $1,218 Tomorrow

3-Dec-14PriceChange% Change
Gold Price, $/oz1,208.509.300.78%
Silver Price, $/oz16.36-0.05-0.30%
Gold/Silver Ratio73.8740.7871.08%
Silver/Gold Ratio0.0135-0.0001-1.07%
Platinum Price1,227.0010.400.85%
Palladium Price796.85-6.20-0.77%
S&P 5002,074.337.780.38%
Dow17,912.6233.070.18%
Dow in GOLD $s306.40-1.81-0.59%
Dow in GOLD oz14.82-0.09-0.59%
Dow in SILVER oz1,094.975.290.49%
US Dollar Index89.010.330.37%

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
Parabolic rises never end well, and often stage a trial collapse that leaves a double top separated by a V. Purely for educational purposes I offer you the chart on the right which depicts the GOLD PRICE from March 2011 through 30 September 2011. Notice the peak on 23 August, $1,917.9, followed by a plunge to $1,705.40 (down 11%), followed by a straight up rise to $1,923.70 and the final top on 6 September. Mark ye well the parabolic rise that began about $1,560 in August then rose straight up into August. That sort of rise is always followed by collapse and tears. Now go look at the Dow or S&P500 chart from June through today.

Dow in gold dropped 0.78% today to end at G$303.86 gold dollars (14.81 oz). Still trending down. Dow in silver rose 0.4% to S$1,409.60 silver dollars (1,090.24 oz). Still looks like a broken market.

The SILVER PRICE spoiled the soup with a 4.9 cent drop today to $16.359 on Comex, but that's not fatal. Silver is merely dragging its feet as a rise begins, not unusual. The GOLD PRICE gained $9.30 (0.78%) to $1,208.50, above the $1,205 resistance. Ranges were $1,215 to $1,193.50, silver $16.59 - $16.24. Notice that the gold price dipped below $1,200, all the way to $1,193.50 and still closed higher. Very good.

Today's close took gold above its 50 DMA ($1,203.55) and through $1,205. Good. Behold, the next barrier is the October high at $1,255.60. The gold price might still wither at that level, and will no doubt meet heavy selling there. Far more important still is the 200 day moving average up at $1,274. Above that mark gold will earn respect.

Silver below $16.65 is nothing and nowhere. 50 DMA stands at $16.71, big resistance at $17.00 where silver fell off in October, and $18.60 where silver broke down in September.

So far gold is acting precisely as it should and silver -- blast it! -- is lagging. Look for the gold price to break $1,218 tomorrow.

Yes, I have bought both silver and gold. Higher prices coming.

To give y'all some idea of the oil market's plunge, West Texas Intermediate Crude has dropped from $107.68 a barrel on 13 June to a low of 63.72 on 1 December, a 41% loss in less than six months. Outcome of lower prices will be pain and suffering in US shale oil production, which had been one of the few bright spots in the US economy. Whoops. Chart on the right:

In May at a Ludwig von Mises Institute Conference in Germany a former economist with the ECB and former VP of the German Bundesbank J├╝rgen Stark called the entire world financial system "pure fiction" and vulnerable to collapse, built on the premise of infinite money created by central banks without regard to goods and services available. Sounds about right to me.

This, too, caught my eye, quoted by John Hathaway of Tocqueville in an article called "Monetary Tectonics" from Paul Singer of Elliott Management: "Nobody can predict how long governments can get away with fake growth, fake money, fake financial stability, fake jobs, fake inflation numbers, and fake income growth. Our feeling is that confidence, especially when its unjustified, is quite a thin veneer. When confidence is lost, that loss can be severe, sudden, and simultaneous across a number of markets and sectors."

Arresting comment when you recall that the fiat money system is built on "confidence." Right, it's a "confidence game."

Today the US dollar index broke upward through the upper boundary of its trading range, rising 33 basis points to 89.07, up 0.37%. That points to a target at 93.50 or higher, unless the dollar index immediately reverses.

Dollar's rise broke the euro's back. It fell out of an even-sided triangle to the downside and lost 0.59% to $1.2310. Target is $1.2150, measured by triangle height. The wretched yen fell again, 0.48% to 83.47, another new low and no change in sight.

Edge, edge, edge -- stocks keep inching and edging to new highs. Dow gained 33.07 (0.18%) to 17,912.62 today and the gurus are burbling. Optimism could hardly be higher. S&P500 also rose 7.78 (0.38%) to 2,074.33, another new high.

I'm not predicting, but the possibility occurs to me that stocks might yet make a parabolic (vertical) rise, blow out the top, and the Dow reach 20,000 next year before it collapses. Or they could stop here.

Aurum et argentum comparenda sunt -- -- Gold and silver must be bought.

- Franklin Sanders, The Moneychanger
The-MoneyChanger.com

© 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.