Friday, December 19, 2014

The 1 December Gold Price Lows Were the Final Lows

12-Dec-1418-Dec-14Change% Change
Gold Price, $/oz.1,222.001,195.90-26.10-2.1
Silver Price, $/oz.17.01915.9911.028-6.0
Gold/Silver Ratio71.80274.7862.9844.2
Silver/gold ratio0.01390.0134-0.0006-4.0
Dow in Gold $ (DIG$)292.33307.7715.445.3
Dow in gold ounces14.1414.890.755.3
Dow in Silver ounces1,015.381,113.4398.049.7
Dow Industrials17,280.8317,804.80523.973.0
US dollar index88.3389.841.511.7
Platinum Price1,231.001,196.50-34.50-2.8
Palladium Price816.55805.70-10.85-1.3

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
Silver and GOLD PRICES remained flat today. The gold price rose $1.20 to $1,195.90 while silver added 9.7 cents to $15.991.

This week was wounding but not fatal. The SILVER PRICE took a worse beating than gold. We may see more downside prices, maybe $15.00 in silver and maybe even $1,155 in the GOLD PRICE. Next few days' trading will be light, and when the big cats are away the rats tend to play. Those traders who do show up may run the stops just to do business, leaving big swings but prices not much changed, i.e., no significance left behind.

I remain persuaded that the 1 December price lows were the final lows for the after-2011 correction. We need confirmation that silver and gold prices have turned up, but that may not come before 2015 begins.

Volatility is metastasizing from market to market. Stocks this week staged two huge daily gains, and ended the week 3+% higher. Gold and silver got whacked with an ugly stick, down 6% and 2.1% respectively, and saw the gold/silver ratio over 75:1 and nearly at 76:1. The scrofulous, scurvy US dollar index, powered like stocks by the FOMC's benignity, jumped a huge 151 basis points (0.17%) but is moving awfully slowly up the chart for something that intends to run away.

Platinum/Gold Ratio
S'posed to be my job to watch milestones, but sometimes I don't pay close attention. Today I was astonished to realize that platinum and gold are trading at par! Right here y'all will find a 20 year chart of the Platinum/Gold ratio (Platinum/Gold ratio is the platinum price divided by the gold price, or how many ounces of platinum will buy an ounce of gold.) I'm not just foamy-mouth enthusiastic about playing this spread, but the chart says that whenever it reaches 1:1 then it usually rises for a while, although not always by any means. So if you have a lot of gold, you might swap a tiny amount for platinum and play the spread. Platinum today closed at $1,196.50 while gold closed at $1,195.90. Or just buy a little platinum outright. Note even as I say this that this didn't work particularly well from 2009 -2010 (rose to 1.53), and since then the ratio has been a loser. However, 2011 -2014 has been a precious metals correction while 2000 - 2008 was mostly a raging bull market.

Stocks had two banner days this week, up 1.69 and 2.43%, thanks to Mother Yellum on the Federal Open Market Committee. They promised to keep interest rates low for a while, which markets bought the way tourists buy the Brooklyn Bridge. Stocks today tailed off. Dow gained only 26.65 (0.15%) to 17,804.80 while the S&P500 added 9.42 (0.46% to 2,070.65.

In the ebullience of the season I wouldn't be surprised if stocks hit a marginal new high. That would only nail one more nail in their coffin, far's I'm concerned. Dow, for instance, still is trading below its uptrend line from March 2009, with it broke only in July of this year.

By the way, folks who expect falling oil prices are good for stocks ought to look at this chart, 20 years of the S&P500 against West Texas Int. Crude. WTIC today gained 2.97% to $56.52 and appears to be readying a tergiversation.

Of course stocks' two strong days this week, combined with metals' weakness, led to higher prices in the Dow in Metals. Still, the pattern in both is the same, Gator Jaws or broadening top (megaphone). In both cases they formed the patterns, broke down out of the pattern, and now have traded back up into the pattern. This is the same wearing, frustrating action Gator Jaws always put you through, but in the end, even when they rally up or even a little beyond the top boundary, they fall.

Dow in Gold
Dow in Gold rose 0.33% to G$307.80 (14.89 troy ounces). Chart on the right:
Dow in silver fell today, 1.07% to S$1,432.50 silver dollars (1,107.95 troy ounces). Chart on left:

US dollar index, vampire on the global carotid, jumped up 0.42% to 89.84, but that's not really a breakout although it is higher than the last high 89.57). The rising wedge formation remains valid and point to an earthward breakdown soon.

Euro had rallied up to its 50 DMA and promised more when the FOMC cold-cocked it on Wednesday. In the last three days it has lost all the December gains and closed today at a new low for the move, $1.2232, down 0.44%. Still expecting a rally.

Yen has been mauled, but not as badly as the euro. It fell 0.54% today to 83.70 cents/Y100.

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.