Tuesday, March 15, 2011

The Gold Price Fell Clean Through Three Supports, Further Than I Expected to Close at $1,392.60

Gold Price Close Today : 1392.60
Change : (32.00) or -2.2%

Silver Price Close Today : 34.116
Change : (170.00) cents or -4.7%

Gold Silver Ratio Today : 40.82
Change : 1.044 or 2.6%

Silver Gold Ratio Today : 0.02450
Change : -0.000643 or -2.6%

Platinum Price Close Today : 1705.60
Change : -46.70 or -2.7%

Palladium Price Close Today : 703.30
Change : -43.50 or -5.8%

S&P 500 : 1,281.87
Change : -14.52 or -1.1%

Dow In GOLD$ : $175.98
Change : $ 1.97 or 1.1%

Dow in GOLD oz : 8.513
Change : 0.095 or 1.1%

Dow in SILVER oz : 347.50
Change : -3.86 or -1.1%

Dow Industrial : 11,855.42
Change : -137.74 or -1.1%

US Dollar Index : 76.34
Change : -0.013 or 0.0%

On one fell swoop the GOLD PRICE fell $32 (Comex closed $1,392.60), clean through support at $1,415, $1,405, $1,400, and as low as $1,382.50, even further than my expected $1,393.

Bear in mind that $1,380 is strong support for gold, and co-incidentally the 50 DMA stands at $1,378.92. Below that ask whether $1,355 will catch it, or whether gold must drop lower still in a major correction.

In other currencies, markets did not smile on gold today. In Euros the GOLD PRICE fell to 997, touching but not breaking through its 200 DMA and extending a downtrend begun after the December 2010 top.

Gold's yen chart has swooned, falling from 11,880 to 11,270 today, below its 20 and 50 DMAs and hovering above the 200 DMA. Perhaps a blind optimist might deny that gold will fall further in yen, but he would be alone.

Since May of 2009 gold's 150 [sic] day moving average has served as the unyielding safety net of every gold decline, yes, every one. Whether that will prove true for this decline remains to be seen, but the 150 DMA marks time now at $1,345.32, so that becomes a reasonable target. For a larger-degree correction, reckon with $1,250.

My misgivings about platinum and palladium bore sad fruit today. Palladium dropped 4.75% ($46.70) to $1.705.60. Palladium lost more than any market except the Japanese Nikkei, down 5.8% ($43.50) to 703.30. Owch.

Ever more volatile SILVER PRICE took a mighty whipping today, with rods, bullwhips, and barbed wire. It smashed resistance at 3400c from last Friday and fell to 33.54 on the New York open. Not the world's end, however, as buyers carried silver back to 3460c. But the nose-dive had wounded morale too deeply for a strong comeback. Comex closed 170c shy of yesterday's close, and stopped at 3411.6c. Gold dropped 2.25% while silver dropped 4.75%.

What I said about the Dow above applieth also to silver: when you climb straight up, you don't leave footholds behind for the way down. Silver's first appears about 3200c, then 3120c.

The SILVER PRICE could lose as much as 35% from its 3671c peak, falling to 2385c. If gold lost 12% it would hit $1,264, call it $1,250. Don't y'all bother sending me those smoking e-mails bawling me out for "betraying" precious metals. Am I your enemy because I tell you the truth? I don't swallow humiliating corrections any better than y'all, but I remember the great H.L. Hunt's words, "Never get down in defeat, and never get elated in victory."

Rather, sleep well, knowing that SILVER and GOLD remain in a primary uptrend (bull market) that will run another three to 10 years, and that you own a bunch of it. Kiss your wife or husband, your children, enjoy your supper, and thank God for peace.

No pleasure dwells in reporting a day like today. Too much pain, too many proud struck in their pride.

The goofy US DOLLAR INDEX is holding on at that 76.40-ish low it made eight days ago. High today was 77.04, low came at 76.272, and right now it's trading down 1.3 basis points at 76.336.

Chart plainly shows a double bottom with yesterday. Dollar tried to rise today, but met strong fire at 77 and retreated to yesterday's low. Looking at the 3 month chart we notice that the dollar yesterday fell beneath its ten day moving average (76.63) and tried to climb above it again today, but without any success.

Should the dollar fail at 76.25, some support remains at 76.125, the 7 March intraday low. If it breaks 76.125, then 75.60 is the next target, and much, much lower..

Don't underestimate the stakes: the buck is straddling its uptrend line from the 2008 low (70.70). If it cannot walk that tightrope, it dives for 70.

Meanwhile the euro has stalled at 1.3999 (up 0.51%). about the locale of its last high. It's a gappy, jumpy chart, but I have to admit an uptrend, as little as I trust it.

The yen gapped up today to 123.85 yen to the dollar (80.74 cents to the yen). Not far overhead lies the last (October) high at 124.48. Yesterday I laid off the levitating yen to my suspicions that Nice Government Men from all countries were working together to keep the yen from melting down. Alternative explanation is that as with the 1995 Japanese Earthquake, markets expect Japanese will have to bring yen home for rebuilding, increasing demand for yen from other currencies. Take your pick.

The Japanese stock market fell off a cliff with the earthquake. From Friday a week ago at 10,768.43 the Nikkei fell as low as 8,227 today, and closed at 8,605.15, down 20% in 7 days.

STOCKS in the US didn't do much better. At one point today the Dow touched 11,696.25, down 297 points from yesterday's close. It rose from that low early in the day to close at 11,855.42, down only 137.74 (1.15%). andP500 lost 14,52 (1.12%) and closed at 1,281.87.

The Dow is falling down steps like a Slinky in a hurry. Today from the open with its great long slide the Dow broke the 11,900 support of the past two days. Now 11,700 is support, but no lateral support stands there for purchase. That's the trouble with climbing straight up: you don't leave any footholds for the way down.

Dow's first serious support comes at the November high of 11,450, and after that at 10,900. And this downleg the Dow is presently enjoying is a third leg down, the Serious One. Adding woe to wailing, the Dow crashed through its 50 DMA 3 days ago, so all its momentum pulls toward the earth's core, AND volume is rising.

Stocks will fall much further before they find a safe and chastened place to roost. Stocks remain the out-of-date Cornish Game Hen in the Great Investment Poultry Market.

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

- Franklin Sanders, The Moneychanger
Phone: (888) 218-9226 or (931) 766-6066

© 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.