Thursday, March 10, 2011

Gold Price Took a Wound Today, As Yet There's No Reason To Believe it's the Start of a Larger Correction

Gold Price Close Today : 1412.20
Change : (17.10) or -1.2%

Silver Price Close Today : 35.003
Change : 98.5 cents or -2.7%

Gold Silver Ratio Today : 40.35
Change : 0.629 or 1.6%

Silver Gold Ratio Today : 0.02479
Change : -0.000393 or -1.6%

Platinum Price Close Today : 1766.00
Change : -39.00 or -2.2%

Palladium Price Close Today : 771.00
Change : -12.50 or -1.6%

S&P 500 : 1,295.11
Change : -24.91 or -1.9%

Dow In GOLD$ : $175.43
Change : $ (1.19) or -0.7%

Dow in GOLD oz : 8.486
Change : -0.057 or -0.7%

Dow in SILVER oz : 342.39
Change : -6.43 or -1.8%

Dow Industrial : 11,984.61
Change : -228.48 or -1.9%

US Dollar Index : 77.26
Change : 0.537 or 0.7%

The GOLD PRICE dropped clean through $1,425, $1,422, and $1,415 like they weren't even there, like a tenth story safe dropping through canvas awnings. But it slowed at $1,405, and stopped at $1,403.85. By the time Comex closed it had recovered to $1,412.20, down only $17.10 (1.1%) from yesterday. "Bad" would have been a break through $1,400.

As yet, there's no reason to believe that gold's correction today marks the beginning of a larger-degree correction. As yet, that is.

What can we expect? Well, if this move is correcting only the last short-term upmove, you might have seen the bottom of it today. More likely is that it will labour here a few days, perhaps sink below $1,400 as low as $1,490-$1,392.

More serious still would be a drop through $1,380, which surely would be accompanied by more toppling to $1,360.

It would, however, be a rash error to jump immediately to the conclusion that the GOLD PRICE has finished its upmove. Yes, it failed at the last high (never reached old high + 2%), but that's not terminal. It could come roaring back.

Watch that $1,400 level. How gold behaves there tomorrow and Monday will foreshadow the next weeks.

Mercy! The SILVER PRICE got tangled in barbed wire at 36.19 and fell off the cliff. All that happened before New York ever opened this morning. By then silver had already reached 3520c. It rose its head feebly at the open, then swooned away until 10:30 and 3466.5c. After 1:00 silver traded range bound between 3500c and 3540c. Comex closed down 98.5c at 3500.3c, and the aftermarket added about 20c to that.

While gold's low brought it near its 20 DMA (1402.23), silver came nowhere near that point. Yet the 3500c support has been broken, and that points the market down, unless it can rise and cross above 3670c, last intraday high.

Not much trading has taken place at these levels, so there's not much to call support. Round numbers always chip in some moral support, so 3500c and 3400c will offer some solace as will 3175c. 20 DMA stands at 3322c, and for months and months that has served as silver's backstop. Thus it might catch and comfort silver again, but if not it will signal much more downside to come.

SILVER and GOLD took a wound today, but so far the market has not told us enough to guess whether this is merely a minor correction lasting a few days, or the start of something lasting much longer and bringing more pain.

NEVER let these short term moves shake your resolution or your firm grip on the one dispositive fact: silver and gold remain in a primary uptrend (bull market) that has another 3 to 10 years to run.

Mercy. How many mistakes can a fellow make in a single day? Yesterday, for me it was two. First, I knew that the month was March, and not April. I knew that. Second, I know very well that the .45 caliber automatic pistol was the Model M1911, later modified to M1911A1, so why I wrote M1A1 mystifies me, too. One thing I know for SURE: I will never, no, never try to mug any one of y'all in a dark alley, since the number of corrections I got about this pistol, along with detailed technical histories and footnotes, makes me purtee sure every last one of you is packing, and probably more than one whatever it is.

If y'all like silver and gold when they are rising, y'all better like 'em when they're falling, too. Might as well learn to step up there and take your licks like a man, 'cause it happens from time to time, even in Bull Market.

The scrofulous US Dollar, Mother of Parasites, confirmed Monday's V-bottom as a bottom by crashing up through the 77 barrier today. Along the way it added 53.7 basis points (0.69%) and is trading now at 77.258.

'T'ain't over by a long sight yet. Dollar has merely reached its 20 DMA (77.38). Before anybody much is going to believe a currency that has proven itself a diehard liar, it will have to clear more resistance levels: 77.5, 78, 78.8. Dollar will have to march johnny-quick-smart to find any sponsors.

Oh, Oh, but lookee what we have on the euro chart. Day before yesterday's gap down was paired today with yet another gap down. Euro at 1.3799 (down 0.77%) today is floating, barely floating, above its 20 DMA (1.374) and a first signal of a trend change. Don't know what changed everybody'd mind all at once, but that euro is draining toward the sewer, fast. Exactly how much that benefits the scrofulous dollar remains to be seen, but for now we can say the dollar has turned up (subject to being contradicted and exposed as a fool any time in the next ten minutes).

Stocks were plumb delighted by the rising dollar, and showed it by hurtling off the cliff of yesterday's close like a bad drunk diving off a high bluff. When the waves settled, the Dow had tumbled 228.48 points (1.87%), crushed support at 12,060 - 12,000, and closed at 11,984.61. S&P500 pitched even more, 2.64% (24.91 points) to close below 1,300 at 1,295.11.

All them shiny Wall St. boys with the Harvard MBAs and the latest ties and pointy shoes can chatter all they want, but stocks are fixing to drop for several weeks. Step out of their way, it's Bear Market Vengeance time!

In the Investment Green Grocery, stocks remain the basket of apples polished by Snow White's step-mother.

This morning I woke up with a notion itching in my head, and that notion suggested that if today did not mark the end of this wave up, it might reach 4400c. Against that rank today's performance, and RSI and MACD momentum indicators that look look more overbought than chocolate covered cherries at Christmastide.

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.