Friday, May 13, 2011

The Best Silver and Gold Buying Opportunity of the Next 10 years in the Next Three Months

Gold Price Close Today : 1,493.40
Gold Price Close 6-May : 1,491.20
Change : 2.20 or 0.1%

Silver Price Close Today : 3501.1
Silver Price Close 6-May : 3528.3
Change : -27.20 cents or -0.8%

Gold Silver Ratio Today : 42.655
Gold Silver Ratio 6-May : 42.264
Change : 0.39 or 0.9%

Silver Gold Ratio : 0.02344
Silver Gold Ratio 6-May : 0.02366
Change : -0.00022 or -0.9%

Dow in Gold Dollars : $ 174.35
Dow in Gold Dollars 6-May : $ 175.21
Change : $ (0.85) or -0.5%

Dow in Gold Ounces : 8.434
Dow in Gold Ounces 6-May : 8.476
Change : -0.04 or -0.5%

Dow in Silver Ounces : 359.77
Dow in Silver Ounces 6-May : 358.21
Change : 1.56 or 0.4%

Dow Industrial : 12,595.75
Dow Industrial 6-May : 12,638.74
Change : -42.99 or -0.3%

S&P 500 : 1,337.77
S&P 500 6-May : 1,340.20
Change : -2.43 or -0.2%

US Dollar Index : 75.723
US Dollar Index 6-May : 74.652
Change : 1.071 or 1.4%

Platinum Price Close Today : 1,765.00
Platinum Price Close 6-May : 1,777.00
Change : -12.00 or -0.7%

Palladium Price Close Today : 709.00
Palladium Price Close 6-May : 706.10
Change : 2.90 or 0.4%

When you stand back and look at markets from a longer term view, sometimes odd things appear. Take this week: after all the huge volatility, especially in SILVER (253c range today alone!), markets barely moved. Okay, silver lost 27.2c, who's about to open a vein over that? GOLD gained 0.1%, etc., etc., all across the board. Only the much despised scrofulous US dollar gained much this week, 1.4%.

GOLD is fiddling around forming a sort of even-sided triangle bounded by successively higher lows and lower highs. These patterns break out either way, but more downside seems certain. We could, however, see one of those correction uplegs that are so cocky and muscular that they leave you believing the worst must be over, just before they collapse, evaporate, and zero your account.

Market moves, rises or falls, fulfill a fate of time and price. Both must be fulfilled. In silver and gold these corrections usually last 30 - 90 days before they find a bottom. Could happen faster, because strange forces are loose here, but gold has not even broken its 50 DMA yet (now $1,464.16). Not much of a rabid correction, that.

The GOLD PRICE today ranged from $1,516.40 to $1,483.50, a fat band for gold. Comex closed down $13.20 at $1,493.40.

The SILVER PRICE, on the other hand, rose 21.8c to close Comex at 3501.1c. Most of the week it's been the other way round, gold rising, silver dropping. Picture painted betrays deep confusion. Internal indicator of Gold/Silver Ratio I watch went from extreme oversold to history's most overbought in eight days! How do you make sense of that? It's a market in complete turmoil.

SILVER posted what appears to be a sort of upside-down head and shoulders, with the bottom of the head at 3232c on Thursday. Any close above 3600c, or even a sally above that intraday, will send silver rollicking off on a rally. However, I believe it has one more leg down, probably to the 200 DMA (now 2876c, at bottom maybe 2900c or higher). It is so terribly oversold it's tough not to expect some sort of rally. Yet I am caught: chart does not yet look complete. Needs another push down.

Y'all better be breaking up those piggy banks and digging the change out of your couches, because y'all are about to taste the best buying opportunity of the next 10 years here in the next three months. I mean, of course, SILVER and GOLD at bottom of this correction.

Thursday and half of Friday the US Dollar Index spent in ashes and sackcloth, tracing out a perfect three wave correction that hit bottom at 74.80 about 4:00 a.m. Then it turned and began to climb, slowly at first, then faster when it rose above 75.20. High was struck at 75.949, but it settled back to 75.723, up 48.3 basis points (0.62%). To be closely observed is that the Dollar Index has now left a 75.60 peak below as support. 'Twill clear 76 next week as momentum favors it: dollar's now flying above the 20 day moving average and 50 dma. There are roadblocks in the way, but the dollar has time and will probably reach 78.88 or the 200 DMA at 78.33.

One reason the dollars liable to reach those heights lies with the Frankenstein currency, the euro (you can still see the scars and suture tracks where it was stitched together). As it was the best thing since bottled Coke and sliced bread two weeks ago, now it is bubonic plague and athlete's foot. Nobody wants it, and that shows in a slide from 1.4940 eight days ago to 1.4116 today. Lost another 1/2 percent today, has crept beneath its 50 dma, and not much support appears before 138.40.

Nor does the Yen offer much competition. Today at Y80.77/$ (123.81c/Y100), not much changed. Seems as if the Nipponese NGM are caught in the jaws of a trap: need yen repatriated to rebuild, but let yen rise and export-dependent economy tanks.

Portentous. Foreboding. Ominous. Ill-boding. In the wood you can hear the crows caw as the cold dampness of the mist pours over the ground before the leafless claw of a tree. Can you hear and see all that in your mind's eye when the Dow closed closer and closer to 12,500 and doom? Today it lost a thumping 100.17 points (0.71%), stumbling to 12,595.75. S&P500 lost 10.88 (0.81%) to 1,337.77. Momentum has been pointing down since May 1.

Stocks remain the "Eight Days In An Albanian Prison" on the list of Fun Investment Ideas.

Y'all enjoy your weekend.

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.