Monday, May 10, 2010

Silver and Gold Prices Will Move Much Higher and Stocks Will Move Lower

Gold Price Close Today : 1200.40
Change: -9.60 or -0.8%

Silver Price Close Today : 18.530
Change 10.1 cents or 0.5%

Platinum Price Close Today: 1696.40
Change: 34.50 or 2.1%

Palladium Price Close Today: 530.25
Change: 17.55 or 3.4%

Gold Silver Ratio Today: 64.78
Change: -0.876 or -1.3%

Dow Industrial: 10,785.14
Change: 404.71 or 3.9%

US Dollar Index: 84.26
Change: 0.39 or 0.5%

Ahhh, it turned out it wasn't natural causes that drove silver up a dollar in 20 minutes last Friday. At 11:15 central time the US Commodity Futures Trading Commission issued a warning to the market to remind traders that speculative trading limits apply throughout the trading day as well as at the end of trading. Exactly at that time both silver and gold prices surged upward, leading to the conclusion that more than a few traders were out there breaking the law with oversized and illegal short positions they suddenly decided to close out. Cheezit, boys, the cops!

Yesterday the Eurocrats laboured till late in the night, burning the taxpayers' midnight oil to figure out how they would bail out the banks. Final plan calls for E750 billion ($954.83 bn) in form of E440 bn from loans from Eurozone governments, E60 bn in EU emergency loans, and E250 bn in IMF loans. Happy Days Are Here Again sang the Euro-stock markets, rising 5 - 6 %. US markets rose about 4.5% (Dow closed 10,78.14, up 404.71 & S&P closed at 1,159.73, up 48.58.)

The US DOLLAR INDEX fel to 82.0909 in Euro trading, then rose on the US open and kept climging steadily the rest of the day. Now trading at 84.256, up 38.7 basis points. Dollar will move higher.

Obviously, only the lunatic can play these markets. Dow was down 350 on Thursday, down 140 on Friday, then up 405 today. Nuts. Markets are showing signs of schizophrenia. Trends will resume: down for stocks, up for US $ and down for Euro, up for silver and gold.

Meanwhile gold opened down at $1,198.85, traded up above $1,200, dipped again, and after 1:00 EST never fell below $1,200. Now trading at $1,200.90, and Comex closed down $9.60 at $1,200.40. Eye-catching here was gold's power to close above $1,200. Most likely gold will see several days of sideways to lower trading without much loss, maybe to $1,185 briefly. A close above $1,210 carries gold up to the last high close at $1,217 then runs wild above that.

SILVER marched in place today, trading between an 18.18 low and an 18.62 high. Comex closed up 10.1c at 18.53. That 100c rise on Friday left a very strange chart. Silver might fall to 17.80 (while market digests Greek bailout) but could just as well work sideways not falling below 18.20. The barrier silver must break to move sharply higher is 18.60c Once thru that gate, 'twill run.

Who can judge such markets, where government surprise partie abound? I can't. I am sure that silver & gold will move much higher and stocks will move lower, but what they might do in the next few days is anybody's guess. Most of all, do NOT short silver or gold. Don't even short stocks. Take or hold your long positions in silver and gold, and be thankful for the relative peace and quiet there.

On this day in 1934 incredible dust storms swept away an estimated 300 million tons of topsoil from Arkansas, Colorado, Texas, and Oklahoma. Instead of grazing the prairie sod, for which it is perfectly fitted, farmers plowed it up, breaking up the
soil's sod protection. The tuition fee was centuries of topsoil. It always pays to work WITH nature, not against it. Then one remembers, and wonders with trembling, that "no till drill" has taken over agriculture so that today farmers actually hit their fields with powerful plant-killer chemical that kills every living thing in 24 hours, leaving behind a vast grave of brown. Then they come back and plant monoculture Genetically Modified corn or soybeans without tilling, just drilling the seed into the ground. The tuition fee for these chemicals, which kill also all microbial life in the soil, and GMO foods will be high. Nature is vengeful.

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.