Thursday, March 24, 2011

Silver Price Must Hold Above 36.50 and Gold Price Above 1420

Gold Price Close Today : 1427.50
Change : 1.30 or 0.1%

Silver Price Close Today : 37.388
Change : 18.6 cents or 0.5%

Gold Silver Ratio Today : 38.18
Change : -0.156 or -0.4%

Silver Gold Ratio Today : 0.02619
Change : 0.000107 or 0.4%

Platinum Price Close Today : 1754.30
Change : -3.00 or -0.2%

Palladium Price Close Today : 751.95
Change : 3.70 or 0.5%

S&P 500 : 1,309.66
Change : 5.86 or 0.4%

Dow In GOLD$ : $176.24
Change : $ 1.08 or 0.6%

Dow in GOLD oz : 8.526
Change : 0.052 or 0.6%

Dow in SILVER oz : 325.52
Change : 2.25 or 0.7%

Dow Industrial : 12,170.56
Change : 84.54 or 0.7%

US Dollar Index : 75.65
Change : -0.142 or -0.2%

Before he became sophisticated, before he even became sheriff of Mayberry, Andy Griffin was a comedian. In a priceless monolog entitled, "What It Was, Was Football" he plays a hick who had never before seen a football game. Imagine his confusion. Well, staring at these markets, I fell a lot the same way.

STOCKS, the absinthe of investment cocktails, gained popularity today. The Dow gained 0.93%, 84.54 points, to 12,170.56. S&P performed almost as well, up 0.72% (5.86 points) to 1,309.66. My jaw dropped. Well, here's the thing: there are people who think that Joan Rivers is funny, and people who think heavy metal is music. Likewise, there are folks who buy stocks and think they're an investment. What can I say?

I tell y'all, these currencies are more fun than a bucket of cockroaches, or a nail barrel full of scorpions. I love 'em.

Were I long euros, I would be shucking 'em faster than a politician saying good-bye to his girlfriend when a Washington Post photographer shows up. The chart shows that the euro has reached its November high, and like that November high has made a jumpy, sketchy Island reversal pattern. What is that? Market's headed up, then gaps up, leaving a space behind. Trades sideways a day or few, then falls, leaving a gap behind. This ain't island paradise, I promise, but a virtual guarantee of vastly lower prices. BUT I COULD BE WRONG. In fact, that is so often the case that instead of writing it out every time, from now on I'll just use the initials: BICBW.

The Japanese yen, is thanks to a multinational love-fest among Nice Government Men, behaving itself instead of flying to the moon and hamstringing the Japanese economy. Closed today at 80.936 yen to the dollar (123.55 cents/100 yen). Virtually unchanged.

Meanwhile the scrofulous US DOLLAR INDEX stubbed its itty toe today, and dropped 14.2 basis points to 75.652. I'm inclined to believe the dollar is forming a bottom here, but not on enough evidence to convict a dog of liking T-bones.

One should never underestimate the stupidity and arrogance of those in power. The morons running the European countries in 1914 allowed themselves to be drawn into a war that would kill millions and overthrow most of them. Why assume that Ben Bernanke and Co. are not prideful enough to stumble into destroying the dollar? They've got a good leg up on it.

Y'all thought silver and gold were going to make it easy for you, didn't you? Well, today slapped that notion out of all of us.

In an interview today with Jim Puplava of (aired tomorrow) he told me that silver margin requirements had been raised again. I can't find a press release on that, but it certainly would explain why silver and gold advanced, then hit a wall and slid down.

Overnight the GOLD PRICE bulged through $1,440 resistance than in New York hit a $1,447.15 high about 11:00. Around 12:30 somebody dropped a piano on gold's head, and it slid down as low as $1,424 in the after- market. On Comex it closed down $3.10 at $1,434.80. It has traded as low as $1,430 since then. You can get all sweaty about that, or view it merely as another validation of $1,425 support. And I don't want to become the sort of slouch who instead of thinking always blames everything on the Nice Government Men and their manipulations, but were I them (O, thank God, I am not!) I wouldn't want gold to close over $1,450 and confirm another breakout to attract more investors.

The gold price has no problems as long as it hovers higher than $1,420. Technically a break of that would be troublesome, but not fatal. On the upside the gold price still must beat $1,445 resistance and climb that $1,451 mountain. For now, all the momentum remains on gold's side, notwithstanding today's gyrations.

By the time Comex closed SILVER had digested another 18.6c to close at another -- yawn! -- new all time high of 3738.8c. Another new ratio low of 38.376 oz of silver to one ounce of gold. In the aftermarket silver has continued falling to 3718c.

Aww, come on! The silver price has risen 5 straight days. Today is no disaster. Still, to maintain respectability the silver price must remain above 3650c and in no case fall lower than 3600c.

Sure, this rise is longer in the tooth than Methuselah's dog, and sure, it will sometime end, but I'm beginning to wonder when. Struggling to fix some upside target, I saw that silver had closed well above its 2006 - 2008 - 2011 top channel line. When that happens, you flip the bottom line of the channel over, effectively doubling the channel width. Silver's channel is about 1200c wide, so if you flip the channel and add 1200c to 3109c where it broke out, you get close enough to 4200c to scare it to death.

I remind y'all that all this depends on the silver price holding above 3650c and the gold price above $1,420.

Over and over people keep asking me, "Should I buy silver now or wait for a correction?" Listen, I SELL silver and gold, so I am not likely to tell you not to buy it. Pass everything I say through that filter.

But the question has the wrong goal in mind. When you buy silver or gold you are not trying to hit a price POINT, but to take a long, large piece out of a primary trend upward move. Even if your timing is the worst, the upward trend will bail you out, so stop trying to look perfect to your sneering brother-in-law. Buy the primary trend and it WILL be profitable.

Otherwise here's what will happen: you will be tortured between fear and greed, fearful it will fall, greedy for it to fall further. You'll dilate and hesitate and finally not buy anything. So for all your cogitating and perspiration, you will only get to wave bye-bye to the Silver and Gold Train and brag to your brother-in-law how you ALMOST bought it.

On this day in 1882 in Berlin Robert Koch announced the discovery of the germ that "caused" tuberculosis. In line, however, with my policy of never accepting the official explanation, I demur to the germ theory of disease, as, it is rumoured, even Pasteur did in his latter days. Reason is simple: I have on my skin a zillion copies of say, the tuberculosis bacillus, but I don't get it. You have same, and get the disease. If it causes the disease, why don't I get it? Answer: it doesn't cause the disease. The weak immune system fails to fight off the attack of the opportunistic bacillus, which moves in and commandeers the surrounding countryside. Is it not more likely, as Pasteur's contemporary Antoine Bechamp argued, that bacteria change forms (pleomorphism) and that their forms are not constant but change with their environment? That throws the cause back onto the immune system failure.

Whoa, y'all don't let me slow you down. Just keep on dousing your hands and bodies with those anti- bacterial soaps and other poisons. BICBW, so don't worry even a little bit!

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.