Gold Price And Silver Price Updates

March 30, 2016

Some positive developments for gold at the COMEX need to be noted.  Since January 29th Open Interest surged 137,249 contracts (Blue Plot) without retarding the advance in the price of gold (Red Plot) as much as it would have in the past.  Also, the increase in OI peaked last Wednesday and has since collapsed without the usual panic selling out of gold.  Should the price of gold begin to increase as COMEX OI continues to decline; that would be a very big change in the old rules the bulls and bears have played the game for a very long time.

Gold and its step sum below are positive.  Since March 7th the step sum (Red Plot) began collapsing; from 242 to 235 as of last Thursday (a net of seven down days of the past fourteen trading days) without much effect on the price of gold ($1,267 to $1,216).  Seeing the price of gold decline only 4% after all those net down days is impressive. 

Then this week arrived and in the first two days gold has cut that 4% decline to only 2% with gold Tuesday’s close at $1,241.  It’s too early to say whether or not we are at the beginning of a new surge in the price of gold.  But seeing the last two trading days cut in half the losses from March 7th to 24th is a good indication that April promises to be good for the gold bulls.

The following table provides a unique insight of what the gold and silver markets have had to put up with since February 23rd.   I highlighted all the down days in red, and there have been plenty of them in the past twenty-five trading days.  Gold’s 15 count (Net Advance - Declining days of the past fifteen trading days)  was -5 at the end of trading on Tuesday, and after all, that the price of gold is still higher from a month ago, which isn’t making the bears happy.

I still like silver more than gold.  The Silver to Gold Ratio (SGR: the number of ounces of silver one ounce of gold can purchase) peaked at 83.24 on March 3rd, and at the close of Tuesday was at 80.94.  In any terms you chose, silver priced in gold, dollars, or euros is ridiculously cheap, and nothing stays ridiculously cheap forever.  I expect the SGR’s current upwards movement has peaked.  Its next big move will be down to its 40 line.   

At silver’s last bull market high of 29 April 2011 ($48.58) the SGR declined to 32.03 with gold at $1,556.  When silver takes out the high of April 2011, one has to wonder where the SGR will be; above 40 or below 32.03?  I suspect it will be over 40, and coming down fast because of capital flight from Wall Street.  But like me, we all have to wait to see what actually happens.  Remember – the COMEX market is “regulated” by the Federal Government; that means that the big bears on Wall Street are allowed to cheat.  But I take comfort that the biggest bull in the gold and silver market will ultimately prove to be Mr. Bear; the same guy who took down the Roman Empire and the old USSR.  In due time, Wall Street and their “regulators” will get theirs too.

24 karat gold is pure elemental gold.

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