Thursday, May 27, 2010

One Way or T'other the Gold Price Will Move Big Tomorrow

Gold Price Close Today : 1211.10
Change: 15.40 or 1.3%

Silver Price Close Today : 18.292
Change 52.9 cents or 3.0%

Platinum Price Close Today: 1521.30
Change: 11.30 or 0.7%

Palladium Price Close Today: 437.25
Change: -2.95 or -0.7%

Gold Silver Ratio Today: 66.21
Change: -1.105 or -1.6%

Dow Industrial: 9,974.45
Change: -69.30 or -0.7%

US Dollar Index: 87.04
Change: -0.01 or 0.0%

One way or t'other the GOLD PRICE will move big tomorrow. $1,210 acted as a firm bottom today, as $1,215 acted the top. Forces selling and forces buying were evenly balanced. One wrestler will slip tomorrow. Comex gold closed up $15.40 at $1,213.40, but most of the progress from $1,203 to $1,215 was made before 6:00 a.m. Eastern, long before New York was awake & sipping Java. Stalemates ooze instability and cannot long abide. If gold stumbles it might hit $1,200, $1,195, even $1,185. If it clears $1,215 little resistance awaits shy of $1,250. Watch for an upside leap.

The SILVER PRICE has fallen out of step with gold, pulling at the leash. As if it were still angry about its humiliation yesterday on options expiry, at 10:00 the silver price shot from $18.20 to $18.38. Lo, this perch was too lofty, and silver tumbled to close Comex at $18.292, up 52.9c. Yet in the aftermarket the silver price dipped as low as $17.97. Now (9:40 CDT) the silver price has worked its way back to $18.20. What a traders market!

Despite silver's turn back at $18.38 it has stoutly defended the nether reaches of $18.00 and stands poised to batter at $18.60 again.

If you don't like the silver price today, wait till tomorrow, when you'll get to pay more.

Oooooooooooo. Dow looked sick today. Rose on open and climbed straight to 10,179 by 10:45. Next it traded sideways 10,150 to 10,060 until 2:30 EDT when it began edging toward 10,050. About 3:20 it broke and fell to 9,952. Closed at 9,974.45, down 69.3 and only a piddling distance off the low. S&P500 fell 6.08 to 1,067.95. Flee stocks, O flee.

What looked so sick today? The Dow tried to repair Tuesday's damage from that drop to 9,775 -- tried, and failed. Sorry, this game resembles duelling with hand grenades: you don't get second chances. Think of a bar fight. First chair cracks over a head, and the whole room is immediately galvanized by the announcement that something is afoot, something new. Just so the Dow below 10,000. All that psychological bragging and marketing invested in touting 10,000 on the way up now slices doubly deep and sharp on the way down.

Yet watch out! Stocks are a wounded rattlesnake, able to turn at any time and rally sharply. Don't get cute and short stocks unless you know what you're doing.

US DOLLAR INDEX turned down today also. Made a high at 87.388 and is trading now 87.113. That's 33.3 basis points higher than yesterday, but much lower on the day.

I'm not sure what I am seeing on the dollar chart, but it will clear tomorrow. Either it double topped Tuesday and Wednesday at 87.40 with lower prices pending, or it is consolidating for a further up move. A close above 87.50 turns the dollar up, a close below 86.40 turns it down. Wait and see.

Dollar is as overbought as bent-can beans on sale in Boston, but overbought can get more overbought. On the other hand, notwithstanding the long uptrend the dollar might be ready to fall and rest awhile, visiting 82.50 before it resumes its mountain climb.

Argentum et aurum comparenda sunt -- -- Gold and silver must be bought.

- Franklin Sanders, The Moneychanger

© 2010, 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 $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold; US$ or US$-denominated assets, primary trend down; real estate in a bubble, primary trend way down. Whenever I write "Stay out of stocks" readers inevitably ask, "Do you mean precious metals mining stocks, too?" No, I don't.