Friday, March 06, 2015

The Gold Price Wiped Out it's 2015 Gains This Week Dropping $48.50 or 4 Percent to Close at $1,164.10

27-Feb-156-Mar-15Change% Change
Gold Price, $/oz.1,212.601,164.10-48.50-4.0
Silver Price, $/oz.16.51315.784-0.729-4.4
Gold/Silver Ratio73.43373.7520.3190.4
Silver/gold ratio0.01360.0136-0.0001-0.4
Dow in Gold $ (DIG$)309.12317.107.982.6
Dow in gold ounces14.9515.340.392.6
Dow in Silver ounces1,098.091,131.3233.243.0
Dow Industrials18,132.7017,856.78-275.92-1.5
US dollar index95.3297.672.352.5
Platinum Price1,186.701,159.90-26.80-2.3
Palladium Price818.45818.05-0.40-0.0

The new Gold Price Performance table showing annual performance since 2000.
Available on the front page of GOLDPRICE.ORG and updated daily.
The new Silver Price Performance table showing annual performance since 2000.
Available on the front page of SILVERPRICE.ORG and updated daily.

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 wiped out all its 2015 gains today. Dropped $31.80 (2.7%) to close Comex at $1,164.10. Silver resisted the urge to play right along by dropping only 34.8 cents (2.2%) to $15.784. That brought the Gold/Silver Ratio DOWN to 73.752.
The GOLD PRICE is shamefully oversold, but where will it go from here? One problem trying to read markets is that we always want to project today's move out into the infinite future. But sometimes it stops & turns. The gold price today hit its last low. It might yet -- like Monday or Tuesday if ever -- revisit $1,141.70 (1 December low) or $1,130.40, the November low.

On the other hand, maybe that's the blow out. I've told y'all about Bollinger Bands, which work on the [WARNING!] questionable assumption that markets move randomly, and that those moves follow a normal distribution. That is, if you add or subtract two standard deviations (or sigma, which measures the variability) to the mean, you will capture 95% of all possible moves. Extend that to three sigma, & you'll snag 99.73% of all the data. In other words, not much lies outside 3 standard deviations.

Gold Price
Today at its low ($1,162.90) gold actually poked into that line, although it ended higher. Now that's no promise gold won't fall more, it just argues that it's fallen about as far as it intends. Go look a the chart on the right, Oh, it might lick its wounds here another day or two, but that's probably about exhausted the downside. Gold's also resting at the bottom boundary of its trading channel.

The SILVER PRICE punched into but closed above its two sigma Bollinger Band, shown on the chart, but never touched the 3 sigma ($15.55) since it fell no lower than $15.74.

Silver Price
More, silver has been building a bullish falling wedge, & closed nearly on that wedge's bottom boundary. Manic-depressive silver is just too cheerful here, and it's holding up better than the gold price.

So while some folks may be poor mouthing silver & gold & talking 'em on down, I'm happy to see this washout. It will clean the rest of the weakness out of the market and should give them a new foothold to rally from. Things sometimes don't mean what they seem to mean.

But I could be wrong.

Gold/Silver Ratio
Then there's that GOLD/SILVER RATIO, that pictures silver's outperformance. Didn't it do something outlandish today. It broke up through the downtrend line on the open, then fell back sharply. Ended the day closing at the intertwined 20 & 50 DMAs, but most importantly, LOWER than yesterday's close. That's the first half of a key reversal downward. A lower close Monday clinches the key reversal.

Surprise ending to the week. US dollar index shot up to 97.67, & that was the last straw for stocks, which had been just barely hanging on. Also the last straw for silver, gold, & white metals. Now y'all think you know what that means, but maybe it don't. Bear with me a minute. Things may point the opposite direction you think they do.

Stocks plunged today. Remember that some time ago I pointed out they had broken their uptrend. Today that paid off in big bills. Dow crashed 278.94 (1.54%) to 17,856.78, wiping out all the year's gains. S&P500 dove 29.78 (1.42%) to 2,071.26. Both smashed their 20 day moving averages and skidded to a stop a little above the 50 DMA. Every indicator is pointing down, so this cascade shouldn't end soon.

Dow in Gold
Now ponder the Dow in Gold & Dow in Silver, with all their momentum & trend indicators turning down or rolling over. They are also near the top Gator Jaw, typical of this formation. It trades from one side clean to the other. If this is a broadening top, it implies that stocks have run out of steam against metals. Dow in Gold has nearly reached that top jaw, with a G$316.07 gold dollar close today (15.29 ounces), same as the last December high, so ought immediately turn down. That implies a price low for gold & past price high for stocks.

Dow in Silver
Dow in silver has me vacillating over which line is the top Gator Jaw, but let's say it's that flat one about S$1480.40 silver dollars (1,145 troy ounces). DiS made its high for this move today at S$1,449.76 (1,121.30 tr. Oz). Looks mighty heavy up there, so far up.

Please don't miss what this implies: silver & gold prices must be very near a price reversal upward.

This would also be a likely place to mark the US Dollar Index' high. Closed up 1.31% at 97.67, taking it into way overbought territory, but, of course, overbought can get overboughter. Still, that's an 11-1/2 year high. Cycle people I follow say that fulfills a lot of targets. To a know-nothing nat'ral born durned fool from Tennessee, it just looks awful expensive for something the Fed makes out of electrons. Durn, in Tennessee electrons are FREE.

That dollar move poisoned the euro something fierce. It lost 1.7% to a new low, $1.0843. Way oversold, so maybe time for a turnaround. Even the Yen broke down out of that range it's been trading in since December - not much, but some. Lost 0.56% to 82.76.

The lying US government labor report said the US created 295,000 new jobs this week, leaving out the footnote that those jobs required 295,000 new hamburger spatulas. Thus spake the media that the dollar had risen on expectation the Fed would soon raise interest rates. In a pig's eye. Fed is scared to death to raise interest rates, & ought to be. Hide & watch.

But that same speculation did drive up the yield (drove down the price) on the US Treasury 10 year note, and I mean up a lot, 6.06% to end at 2.24%. That pushes that yield up against the downtrend line from the high that closed 2014. Wonder how the Fed feels about that? Wouldn't be like the Fed to let markets take away control of interest rates.

West Texas Intermediate Crude lost 2.38% to $49.78 but is trading in the same range without breaking down. Since everybody & his cousin already knows "oil is going down," we've probably seen the lows already.

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.