Friday, February 20, 2015

The Gold Price Dropped $2.70 or 0.22 Percent Today Ending the Week at $1,204.40

13-Feb-1520-Feb-15Change% Change
Gold Price, $/oz.1,226.501,204.40-22.10-1.8
Silver Price, $/oz.17.27816.2631.015-5.9
Gold/Silver Ratio70.98674.0583.0714.3
Silver/gold ratio0.01410.0135-0.0006-4.1
Dow in Gold $ (DIG$)303.70311.367.652.5
Dow in gold ounces14.6915.060.372.5
Dow in Silver ounces1,042.911,115.4472.547.0
Dow Industrials18,019.3518,140.44121.090.7
US dollar index94.2294.430.210.2
Platinum Price1,210.501,172.90-37.60-3.1
Palladium Price794.75779.20-15.55-2.0

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 Comex today the GOLD PRICE dropped $2.70 (0.22%) to $1,204.40 while silver peeled off 0.66% or 10.8 cents to perch at $16.263.

Gold Price
Time to look 'em in the eye and talk serious. Look at the chart on the right, it stands at a make or break cliff: either that blue uptrend line off the November low will hold or it will drop and re-visit one of those previous lows, December's $1,167 or November's $1,130. Indicators are indecisive & only one is whispering "Higher -- maybe." Gold stand below its 20, 50, & 200 day moving averages and the 20 today crossed beneath the 200. Momentum is down, as we look behind us. Most of the time looking at these charts I feel like I am driving a pick-up 100 mph down a road by looking in the rearview mirror. I look for some sign the road aims to turn, and just hope I don't miss it. But at the turns, up or down, you're still looking in that rearview mirror. Just hope you don't wreck the truck.

The Dow in Gold is telling us something, too, namely that stocks will outrun silver & gold for another month or more. That doesn't necessarily mean the dollar gold price will drop, but strongly suggests that. A GOLD PRICE break of $1,202 - $1,997 shouts it.

The SILVER PRICE formed a bullish falling wedge, broke out of that upside, on 13 February, then the following Tuesday gave back all that gain and fell clean to the bottom of that wedge. Failed breakout. Now it's riding along the bottom boundary of that wedge, making me remember there's no law that says a falling wedge can't surprise & break out downside.

Assuming there's a normal distribution in statistics (a BIG assumption with any market), then two standard deviations (standard deviation or sigma measures how variable the data are) plus or minus the mean will catch 95% of all the readings. Push that out to 3 sigma or standard deviations, and you'll catch 99.7% of the possible readings. Bollinger bands use the 20 day moving average as that mean, and usually uses 2 sigma. Push it out to three & you plumb near embrace everything that can happen.

Silver Price
So I tried that with silver and that 3 sigma on the low side stands today at $15.41. Silver chart on the right, I say that not to set a target, but merely to point out that's near the lowest price we might expect from silver. Of course, it could surprise and turn around & climb out of that wedge.

All this will come plain next week. Should gold hold that uptrend line then silver won't fall out of bed either. If gold breaks, so will silver. For some reason not present in my conscious mind, I expect that uptrend line to hold, but I sure wouldn't swing over hell using that for a rope.

If silver & gold do break next week, y'all have a buying opportunity a little later in your future. If they give us some confirmation they intend to hang on here, then that's another reason to buy. As I said, this is a make or break point.

Great week for paper investments, ending with a deal between Greece & the Europeans. Dow & S&P500 hit new highs, & will probably rise more still. Silver & gold have stalled & are living under a cloudy question mark. US dollar index can't rise but won't fall. White metals got clubbed all week. Whew. I'm looking forward to some quiet this weekend.

Greece's newly-elected socialists climbed down off their high horse and hat in hand took whatever deal they could get. European finance ministers agreed to extend Greece's bailout for four months, but the Greeks have only until Monday to outline what measures they intend to take & show they are not abandoning "austerity." For the Greeks, there is some hope it can ease the conditions of its bailout loans. In other words, this is the typical "Made in Europe" deal that solves nothing and merely kicks the can of Kalamata olives down the road a little further.

What's that proverb that keeps rattling in my head? "The borrower is the lender's slave." That one holds always & everywhere.

The Greek "deal" (deal-ette?) sent Candide on a buying spree in the stock market, driving both the Dow & the S&P500 to new all time highs. Dow rose 154.67 (0.86%) to close at 18,140.44, versus 18,053.71 on 26 December. S&P500 added 12.85 (0.61%) for a 2,110.30 close against the last high at 2,100.34 on 17 February. Look at the Dow chart on the right.

Those new highs are cleanly above the old & point to higher prices still as economic reality fades further and further away in the rearview mirror.

Dow in Gold
Dow in Gold rose 1.01% to G$311.32 (15.06 troy oz), headed for the top Gator Jaw. Look at the chart on the left.

Dow in Silver
Dow in silver is playing the same game, rising toward that top jaw. Reached S$1,441.31 silver dollars (1,114.76 tr. Oz), rising 1.31%. Chart on the right.

US dollar index has traded out into a long narrow even-sided triangle. A triangle like that tells you nothing about which way it will run, only that it will. However, the dollar has been trending up since July, & hasn't managed much of a correction yet, so it's more likely to break out up than down. Needs to close well below 94 to fall out of bed. A close above 95.25 sends it higher.

Even with the Greek deal the scabby euro did no more than rise 0.12% & close at $1.1380, barely above its 20 DMA ($1.1352). It has sketched out a timid uptrend, but needs a close above $1.1500 to reach escape velocity.

Yen has traded sideways long enough to intertwine its 50 & 20 day moving averages, but could close above neither today. Dropped 0.02% to 84.03 cents/Y100. No direction.

West Texas Intermediate crude is climbing an uptrend line, but acts like it might want to give it up. Fell 2.61% today to $50.81/barrel.

Y'all enjoy your weekend.

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

- Franklin Sanders, The Moneychanger

© 2015, 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.