Thursday, May 12, 2011

Gold and Silver Prices Were Extraordinarily Bloody Today

Gold Price Close Today : 1506.60
Change : 5.50 or 0.4%

Silver Price Close Today : 34.793
Change : (0.716) or -2.0%

Gold Silver Ratio Today : 43.30
Change : 1.028 or 2.4%

Silver Gold Ratio Today : 0.02309
Change : -0.000562 or -2.4%

Platinum Price Close Today : 1771.40
Change : -6.20 or -0.3%

Palladium Price Close Today : 718.60
Change : 1.05 or 0.1%

S&P 500 : 1,348.65
Change : 6.57 or 0.5%

Dow In GOLD$ : $174.20
Change : $ 0.29 or 0.2%

Dow in GOLD oz : 8.427
Change : 0.014 or 0.2%

Dow in SILVER oz : 364.90
Change : 9.21 or 2.6%

Dow Industrial : 12,695.92
Change : 65.89 or 0.5%

US Dollar Index : 75.21
Change : -0.118 or -0.2%

Editors Note: Due to an issue with we were not able to publish Franklin Sanders Commentary, we apologies for any trouble caused. Details of the Blogger downtime here

What a rotten shame, to be forced to stay inside on a day like this! Outside the honeysuckle, privet, rambling roses, and even tulip poplars are pouring themselves in the air, and I'm stuck here in front of an antiseptic, dyspeptic, cataleptic computer.

US DOLLAR INDEX is temporizing. It dropped 11.8 basis points today (0.15%) to 75.209, but as long as it floats above 75, maybe 74.80, its upward course is not re-set. Euro rose today imperceptibly, to 1.4235, plainly still descending, and will for some time to come. Yen continues to edge sideways. Today at Y80.897/$ (123.65c/Y100).

This almost beats watching red paint dry. You know, the red dries faster than the green. Or at least, it seems that way. It will change shortly. Dollar Index is pushing its way through the 50 day moving average (now 75.22) and will sprint toward 79 once it disentangles itself from that hedge.

On a five day chart, stocks peaked Tuesday about 12,775, hit a new low today at 12,537.17, then rallied off that low to close up 65.89 at 12,695.92 (S&P500 rose 6.57 to 1,348.65). Brutal truth is that this creates a series of lower lows and lower highs, also called a downtrend. Might go higher still, but to me it's just a boat for a vacation in rural Albania. Naw, naw, that's okay -- y'all go ahead without me. I'll be fine right here.

Speaking of brutal, gold and silver prices were extraordinarily bloody today. Gold had a range of 2% and silver ranged from low to high 10.6%!

Overnight gold lost its grip on $1,505 and sank like a stone -- not a light one, a heavy one -- through $1,500. Once that panic began, it couldn't stop until it thudded up against $1,477.85, where. previously almost no support existed -- more consoling than dropping to or past the previous low at $1,462.40. Coincidentally, the 50 DMA lies there at the last low as well.

Gold is shouting that it has lots of friends at any price below $1,500. It reached today's low about 7:00 a.m. Eastern time, and once it opened on Comex climbed steadily throughout the day.

Comex gold ended up $5.50 at $1,506.60. this doesn't amount to much. Sure, it was a splendid recovery, but the end is only mired there in support/resistance around $1,505. Gold needed to close above that, clearly above that, to send a warning of higher prices.

Mercy! Yesterday I made a fairly significant typographical error. High was $1,526.20, NOT $1,562.20. But y'all knew that anyway, right?

Long and short remains that gold is correcting, and almost never completes a correction in under 30 days. That's quick time, too, and takes us to the Season of Weakness and Sloth for silver and gold. What, then, can be expected but more erosion and a sideways move across June and July?

BICBW. Bunglin' Ben Bernancubus (think "incubus") might wake up tomorrow with the notion to print another couple of trillion bucks, and send silver and gold skyward again. Leave it at this: As long as gold remains below $1,526.20, points lower, not higher.

Gold in Euros is working its way toward the last intraday high at 1079. Must exceed that or risk being labelled a double top.

By the way, Steve Forbes has forecast that the US will go back on a gold standard in the next five years. You wonder where these fellows get these notions. Remember Joe Stalin's few words of wisdom: "Ruling classes never leave the stage of history voluntarily." Why would the Tapeworm presently feeding on us suddenly submit to its own execution by re-instituting a gold standard? No reason given, since none exists.

Forget not that the Fed tail wags the US government dog, not vice versa, and who knows who wags the Fed.

Forbes also overlooks how pervasively the Fed and its fiat money have deformed and crippled the once athletic US economy. To talk about government spending too much money, to act as if a single measure (restoring the gold standard) will answer, is to blind yourself to the truth. Over one-half of every state's income comes from government spending, 20-25% from state and local government, 30 - 40% from Federal. Right, go ahead, now that government policy has exported all the jobs, cut that government spending and end income for all those folks. Wait and see how long it takes them to decorate a lamppost with your hanging carcass.

Asserting that one change -- resuming a gold standard -- can fix the US economy is like walking into a patient's room who has liver cancer, and claiming he will recover if we just put some make-up on his face to cover the yellow jaundice.

Listen: nothing economic will improve, no hope for a just and lasting prosperity will ever appear until the Federal Reserve is abolished, its buildings demolished, and the ground they stood on sown with salt. Then we have to demolish the idea that the imperial government owes a living to everybody, which works out to be not the genuinely poor, but the rich who own the corporations. Face it: prosperity cannot exist without production. No amount of debt can raise us, like levitating by our own bootstraps, to prosperity. Somebody has to make, grow, or dig something out of the ground first. No work, no prosperity.

Speech ended, now back to today's markets.

SILVER posted an astounding 10.2% range from its 3232c low to its 3575c high. Wears me out merely to think of it.

Overnight silver broke below 3500c and waterfalled from there. Time Comex opened this morning it had reached the low, and spent most of the rest of the day climbing, peaked about 2:00, then backed off to the mid 3450s. Comex dropped 71.6c to 3479.3, but it rose over 35 after that, then backed off.

Obviously, silver has loads of friends below 3500c, but not enough to lift it above its 50 DMA (3907c). Clearly also, the downward pressure rests heaviest on silver's volatile shoulders. Break through old low overnight hints strongly that silver will drop again tomorrow.

Gold/Silver ratio at closing was 43.302, up 2.4% from yesterday. 'Twill rise further. Internal measurements in the ratio have become so wild they are incomprehensible. Silver has not yet stabilized.

Platinum may have double-topped and palladium looks to have rolled over to the downside. No immediate comfort there.

Y'all are witnessing a correction in an on-going precious metals bull market. Compose yourself, kiss your wife and children, enjoy your supper, knowing your silver and gold will come roaring back.

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.