Wednesday, May 12, 2010

Today's Performance Shouts the Gold Price has Much Further to Climb

Gold Price Close Today : 1242.70
Change: 22.80 or 1.9%

Silver Price Close Today : 19.640
Change 36.8 cents or 1.9%

Platinum Price Close Today: 1741.00
Change: 36.80 or 2.2%

Palladium Price Close Today: 542.75
Change: 8.10 or 1.5%

Gold Silver Ratio Today: 63.27
Change: -0.025 or -0.0%

Dow Industrial: 10,896.91
Change: 148.65 or 1.4%

US Dollar Index: 84.85
Change: 0.38 or 0.5%

The GOLD PRICE is way overbought, more than the SILVER PRICE, but overbought can continue for a long, long space. Today the gold price rose an another amazing 22.80 to close on Comex at $1,242.70. Whew. Takes my breath away. This very strong performance today after slightly piercing old benchmark highs yesterday shouts that the gold price has much further to climb. Anytime here gold might correct to breathe, but it will be shallow. It sends chills down my spine to say this at $1,242, but sound trading demands you buy the breakout.

Gold today rose 0.87% while SILVER rose 1.58%, nearly twice as much. It may not mean much to those of you who have never witnessed a horse running away, but silver has the bit in its teeth and is not about to slow down. With a 19.70 high today silver exceeded its December 2009 intraday high. It stands a bare 100c below its 2008 all time high at 2068c. On Comex today silver closed at 19.64, up 36.8c. Silver's RSI & MACD have moved to the overbought zone, but not as strongly overbought as gold.

The GOLD/SILVER RATIO dropped today to 63.27:1. Critical here is that 62:1 level. Once that breaks, silver will begin to outperform gold magnificently.

THE US DOLLAR INDEX dropped as low as 84.20 overnight, then climbed in US trading to 84.85, up 38.4 basis points. Dollar is stymied at 84.90 - 85.00. It has now stretched out two days trapped between 84.70 & 84.90. this is either in a failure or continuation pattern. Since the Dollar is already trending upward, this pattern should break out sunward.

One must suspect that the sharks in European banks and other parasites are swarming the euro with short sales. Drive it down, drive it down, sell more and drive further down, then cover and go long. It's a classic predatory raid. Long as it continues the dollar will rise, and silver and gold along with it.

STOCKS rose today, the Dow by 148.65 points to 10,896.91 and the S&P500 by 15.88 to 1,171.67. This will cease to be amusing when stocks reach Dow 10,965, where fierce and pitiless resistance awaits in ambush. Dow in Gold Dollars has broken down badly, and today stands at G$181.27 (8.769 oz.). Long term, you will know time has come to sell gold and buy stocks when two ounces of gold or less will buy the whole Dow.

On this day in 1780 Charleston, South Carolina fell to British forces, yet here is an example of history's unforeseeable tergiversations. The British seemed to carry all before them with a brutal policy of suppressing guerrillas in the South. Alas, they only succeeded in arousing the sleeping Scotch-Irish of the Upcountry and Over the Mountain in North Carolina and Tennessee. Advancing north against his superior's orders, Lord Cornwallis thought to invade Virginia. At King's Mountain in October 1780 and Cowpens in January 1781 American forces annihilated or whipped British cavalry, forcing Cornwallis eastward. By October 1781, Cornwallis was trapped by Washington and the French fleet at Yorktown, Virginia, and the American Revolution, which had been gasping for its last breath in May 1780, emerged utterly victorious. It was one of the most amazing turnarounds in history.

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.