Friday, May 27, 2016

Gold Price Lost $38.60 or -3.1% this Week

Here's the weekly scorecard:
 20-May-1627-May-16Change% Change
Silver, cents/oz.1,651.901,624.60-27.30-1.7
Gold, dollars/oz.1,252.401,213.80-38.60-3.1
Gold/silver ratio75.81674.714-1.102-1.5
Silver/gold ratio0.01320.01340.00021.5
Dow in Gold Dollars (DIG$)288.87304.3915.535.4
Dow in gold ounces13.9714.730.755.4
Dow in Silver ounces1,059.441,100.1640.723.8
Dow Industrials17,500.9417,873.22372.282.1
US dollar index95.2995.750.460.5

27-May-16PriceChange% Change
Gold, $/oz1,213.80-6.60-0.5
Silver, $/oz16.25-0.92-5.4
Gold/Silver Ratio74.714-0.364-0.5
Silver/Gold Ratio0.0134-0.0008-5.4
S&P 5002,099.068.960.4
Dow in GOLD $s304.392.440.8
Dow in GOLD oz14.720.120.8
Dow in SILVER oz1,100.1661.585.9
US Dollar Index95.750.590.6

Tough week for metals, good week for stocks &, at the end, for the US dollar index. The study of history has left me philosophical, not to be bent out of shape when the inevitable doesn't happen for a week or two. Now let it stretch out three weeks, & I get irritable. 

'Twas Friday, and had been a nasty week for the Nice Government Men. Try as they might, they just couldn't inject any spine into the US dollar. "Hey! Janet! It's Friday, time for a surprise party. You got a speech scheduled? Yeah, Haaavaad? Go over there an talk that dollar up. Sure, sure, blow hot and cold out of both sides of your mouth like you always do, but blow harder on that interest rate rise. The suckers are beginning to catch on. Say something to kick that dollar up a notch." 

This, we imagine, the Fly on the Wall at the Fed heard today, for LO! Janet the Bobbling Banker spoke at Harvard & said, "It's appropriate . . For the Fed to gradually & cautiously increase our overnight interest rate over time, and probably in the coming months such a move would be appropriate." Listen, I am not low & mean & ungentlemanly enough to point out to a grown woman, an academic at that, that she not only split but double split an infinitive with two out of place adverbs, or used the word "over" twice too close to each other, or generally foamed at her bureaucratic mouth with a sentence that sayeth nothing much while threatening something. In other words, it was the Nice Government Men at their best, spooking markets. 

(That image might be a really salable idea, a "Bobble-Janet". Y'all know those dancing hula girls people carry on their dashboards, or bobble=head German dogs in the back window? We could make Bobble Janets and Bobble Baracks and Bobble Hillarys.) 

Bobbling Janet's late in the day speech took gold as low at $1,206.10 and pushed the dollar index up to a new high for the move. Wall Street has apparently changed its mind, deciding higher interest rates are somehow good for stocks. Meanwhile at the G7 meeting in Tokyo, Japanese prime minister Shinzo Abe warned that the world may be on the brink of a global financial crisis on the scale of Lehman Brothers. Yet Abe failed to get his counterparts to warn about the risk in their wrap up communiqué. They did, however, find time to slap their gums about how horrible Brexit would be, right up there with war, terrorism, and refugees. 

For the first time in six weeks, stocks ended the week higher. After yesterday's moderate decline, the Dow added 44.93 (0.25%) to 17,873.22. S&P500 rose further, 8.96 (0.43%) to 2,099.06. 

It's May, the season for stocks to shut down for the summer. Will they buck that powerful pattern & keep rising past last years high? Or bust and take the hopes and tears of millions with them? I haven't got a clue, but I never bet on breaking patterns. It happens, but not often. 

Thanks to Jaundiced Janet the US dollar index finished 59 basis points (0.62%) higher at 95.75. Did y'all see if Janet broke a sweat pushing that US dollar index through 95.50 resistance? 

Today's theatrics answered nothing for me. The dollar is unpacking a lethargic, unconvincing rally. Above stands the 200 DMA at 96.63, a likely place to turn down. One sign of the market's skepticism about Janet's rates is the 10 year yield today, which rose only 

Why does it matter? Only to how fast or slow silver & gold will rise. If the dollar can pierce that 200 dma and climb to 100, it might go higher. That would put concrete galoshes on silver & gold. But so far that's only a possible and not terribly likely outcome. 

Janet slapped the euro and yen winded today. Euro ended down 0.71% at $1.1113 while the yen dropped 0.49% to 90.66. 

Last few days gold is getting the hand of this dropping thing. Dropped $6.60 (0.5%) today to $1,213.80 on Comex. When Janet spoke long after Comex had closed, it dropped to $1,206.10, but in the aftermarket clawed its way back to $1,209.50. 

Hmmm. $1,206.10. My first target for this correction. Chart's here, 
Look for gold's struggle to continue next week, but a bottom should come soon. I began buying today near $1,206. 

Comex silver dropped 9.2¢ (0.6%) to 1624.6¢. In the aftermarket it saw no panic, but backed off to 1619¢. Behold, the chart, 

On silver's chart you see it nearing that 1600¢ level I have been expecting. However, it could also drop as low as 1520¢, the 200 DMA. That latter price is a nest of potential support: the 200 DMA, the uptrending range line from March, and the downtrend line from April 2011. Any of these points would satisfy a correction. But until I see some fear and a lot faster fall in silver, I keep on expecting a shallow rather than a deeper correction, in other words, something around 1550 - 1600¢. 

Yes, I am anticipating, but I am also following my own advice. I began buying today. I would certainly buy silver around 1600¢. 

Monday is Memorial Day holiday in the United States when the country honors its fallen soldiers and veterans. Oddly enough, this began in the South, in May 1865 when the ladies in Columbus (some say Georgia, some Mississippi) went to decorate Southern soldiers' graves. Since they were gracious Southern ladies, they honored both their own dead and Northern dead. They understood that death ends all hostilities. 

In memory of those brave Southerners who fought a Second War for Independence, I will tell y'all the story of the Army of Tennessee's retreat from the Battle of Nashville. General Bedford Forrest was charged with covering the retreat, in bitter December. When he took command, he saw that his shoeless men had bleeding feet, cut by the ice on the puddles. Out of the chaos he commandeered wagons, and put these brave soldiers in them. When they came to a place where they had to stand and fight, they rolled out of the wagons and fought like furies on bleeding feet, then remounted the wagons and rode to the next stand. 

If you come South and notice on every county's courthouse lawn a statue of a Confederate soldier, that's why. In their honor in Greensboro, Georgia stands this monument: "In honor of the brave who fell defending the right of local self-government." 

Deo vindice. 

Y'all enjoy your weekend.

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

- Franklin Sanders, The Moneychanger

© 2016, 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.  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.