Tuesday, March 29, 2011

A Close Below $1,392 Sends the Gold Price Tumbling

Gold Price Close Today : 1416.20
Change : (3.70) or -0.3%

Silver Price Close Today : 36.984
Change : 10.1 cents or -0.3%

Gold Silver Ratio Today : 38.29
Change : 0.005 or 0.0%

Silver Gold Ratio Today : 0.02611
Change : -0.000003 or 0.0%

Platinum Price Close Today : 1742.70
Change : -2.80 or -0.2%

Palladium Price Close Today : 752.65
Change : 8.35 or 1.1%

S&P 500 : 1,319.44
Change : 9.25 or 0.7%

Dow In GOLD$ : $179.23
Change : $ 1.67 or 0.9%

Dow in GOLD oz : 8.670
Change : 0.081 or 0.9%

Dow in SILVER oz : 332.01
Change : 2.20 or 0.7%

Dow Industrial : 12,279.01
Change : 81.13 or 0.7%

US Dollar Index : 76.17
Change : 0.044 or 0.1%

When I was a kid I never could figure out why we had to wash dishes and make up beds. After all, it was a foregone conclusion we were going to dirty the dishes and mess up the beds again, shortly, right? So why keep washing and making up? Now that I have lasted 63 years, I don't ask that question any longer.

That also explains why we follow a market trend until it changes. Yes, yes, every rise will be followed by a corrective fall. That's a foregone conclusion, BUT it hasn't happened yet, so go with the trend. Thus with trembling I look at the frantic SILVER and GOLD markets, knowing someday they will correct, but I am not going to fight the trend.

Ho-hum, the GOLD PRICE corrected a bit today, but without any meaningful action. Yesterday's low was a smudge above $1,410, as was today's. That's strong action at support, provided gold doesn't return for another visit. Up above that $1,425 level has gold pinned in again, so it needs to smash that gate tomorrow. Comex closed down $3.70 at $1,416.20. Trading now at $1,419.15.

As long as gold refuses to be driven below $1,405, maybe $1,392 in a pinch, it threatens no significant correction. A close below $1,392 sends the gold price tumbling.

The SILVER PRICE appears a mite iffy today, but -- listen to this -- the gold/silver ratio made another new low today at 38.292. Try to wrap your brain around this: silver and gold both dipped, but gold dipped enough more that the ratio dropped. Ratio has now passed the 100 year average and is plunging toward the 200 year average.

Five day chart reveals silver blocked by 3720c, but supported by 3640c. There's the range, and to move silver must break out of it one day or another. Comex silver gave up 10.1c to 3698.4c.

If silver and gold intend to move higher -- and my guess is that the will -- then they'll have to do it soon since a high in May or April is seasonally their last chance before October. No cosmic law decrees they can't top in June - September, but twould be a giant anomaly.

I return to my concern voiced a few days ago: why the strength in metals and stocks? What does the market know? Why does silver keep on pushing to new highs by 2 or 3%? None of this suggests a calm and prosperous future for the dollar or the world economy.

That scrofulous US Dollar index has climbed off its 75.25 low six days ago up to its 20 day moving average, (76.28), first tripwire of a possible upturn. Today the dollar added a nearly invisible 4.4 basis points and is trading at 76.172, but look on the bright side: it's not below 76. The scrofulous euro gained 0.16% today for a 1.4106 close. It has been pushed back from its late peak nearly to its 20 dma (1.4018). That gap it left nine days past has now been filled, leaving the stench of an exhaustion gap in the air. The yen has left two gaps in the last two days as it plunged beneath its 20 and 50 day MAs toward a range where all the world's Nice Government Men will feel comfortable again. Yen not trading at 82.45Y/$ (121.285c/100 yen).

In its own tortuous (?tortious) way the dollar seems to be slowly bottoming.

For all those naïve souls who believe that Comrade Bernanke has lost control of the dollar, I must prick your bubble. Exchange rates are ALL manipulated. If the buck is headed down, as it has been since July 2001 when last it touched 121, there is a reason: the government and Fed decided to let it depreciate.

Wake up, mushrooms! Those two are NOT your friends.

My-yo-my, stocks caught a wave again today. Dow floated up 81.13 points to 12,279.01 while the S&P500 fattened by 9.25 to 1,319.44. Last three days stocks have kept bumping against 12,275. February high was 12,391.29 (S&P500 - 1,344.07), and nothing happens until that is beaten. Don't count on it, but you can always wait for that while you're waiting for the Easter Bunny, Santa Claus, and the Honest Politician.

Wow, talk about conflicted! Stocks are a sham, but silver tends to outperform gold while stocks are strong. Who do I root for in that game?

MILESTONES OF AMERICAN CULTURE: On this day in 1884 John Pemberton introduced Coca-Cola in Atlanta. Since Pemberton was looking for a cure for his morphine addiction after being wounded as a Confederate soldier, the company's later denials that the concoction never really contained cocaine seem somewhat fanciful. Never mind, give it to 'em, but in those days narcotics were available at all drugstores, as in some countries today still, and you could buy laudanum (tincture of opium) over the counter. Pemberton made numerous health claims for his product, and said it was "delicious, refreshing, exhilarating, invigorating" and "a valuable brain tonic." Depending on what was in it, I reckon so.

Nowadays you don't have to worry about any narcotics in soft drinks, because the high fructose corn syrup will kill you far quicker and less kindly than cocaine. Worse yet are the artificial sweeteners, some of which metabolize to formaldehyde in your body. Both HFCS and artificial sweeteners operate the same way on your body: they make you hungrier. If you are fighting a weight problem, you don't want to get any closer to a soft drink than a bloodhound would come to a skunk. I'd just as soon drink a big glass of milk mixed with cat hair and lard.

On this day in 1867 the Dominion of Canada was created by the British North America Act. Confederate Secretary of State, Judah P. Benjamin, fled after the War to England where be became a barrister and Queen's Counsel. I have read but cannot now footnote that Benjamin's advice on that the Act helped guide it toward federalism, such as the United States union was until converted by the genocide revolutionary Lincoln into a monolithic unitary state.

The monthly Moneychanger newsletter for March 2011 has been posted to www.the-moneychanger.com, where paid subscribers can pick it up.

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

- Franklin Sanders, The Moneychanger

© 2011, 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.