Friday, May 27, 2011

Gold Price Above its Last Intraday High at $1,526.20, Sets it up for a Further Rise

Gold Price Close Today : 1,536.30
Gold Price Close 20-May : 1,508.80
Change : 27.50 or 1.8%

Silver Price Close Today : 3785.7
Silver Price Close 20-May : 3508.2
Change : 277.50 or 7.9%

Gold Silver Ratio Today : 40.582
Gold Silver Ratio 20-May : 43.008
Change : -2.43 or -5.6%

Silver Gold Ratio : 0.02464
Silver Gold Ratio 20-May : 0.02325
Change : 0.00139 or 6.0%

Dow in Gold Dollars : $ 167.41
Dow in Gold Dollars 20-May : $ 171.43
Change : $ (4.02) or -2.3%

Dow in Gold Ounces : 8.098
Dow in Gold Ounces 20-May : 8.293
Change : -0.19 or -2.3%

Dow in Silver Ounces : 328.65
Dow in Silver Ounces 20-May : 356.65
Change : -28.00 or -7.9%

Dow Industrial : 12,441.58
Dow Industrial 20-May : 12,512.04
Change : -70.46 or -0.6%

S&P 500 : 1,331.10
S&P 500 20-May : 1,333.27
Change : -2.17 or -0.2%

US Dollar Index : 74.940
US Dollar Index 20-May : 75.493
Change : -0.553 or -0.7%

Platinum Price Close Today : 1,798.50
Platinum Price Close 20-May : 1,771.10
Change : 27.40 or 1.5%

Palladium Price Close Today : 757.50
Palladium Price Close 20-May : 736.30
Change : 21.20 or 2.9%

Sorry I missed sending a commentary yesterday, but a storm sent a tree crashing into the side of our house and (I thought) intended to sweep us away to glory, too. Power went down Wednesday night and has been dark since. Worse, we are at the end of the utility company's line, and aren't expected to have power until tomorrow. Got a few computers up on a generator, and by the grace of God are still alive and present for duty.

At the end of the week, the SILVER PRICE scored big, the GOLD PRICE gained a significant leg over resistance, stocks went nowhere, and the dollar index is betraying its friends again.

Right now GOLD is the stronger of the precious metals, so we watch it instead of SILVER. Today gold smashed $1,525 resistance , cleared $1,530 which stopped it yesterday, then raced to a high at $1,538.1. Comex rose $13.50 to $1,536.30.

That close pushes gold above its last intraday high at $1,526.20, and sets it up for a further rise. Logical target is the last intraday high at $1,575.10. That's the optimistic outlook. The pessimistic outlook sees the last two weeks' rally as only the up leg of an A-down, B-up, C-down correction that, for all its muscularity, will fade and fall to a lower low than the bottom of A-down.

Because past corrections have left a strong patter of bottoming 33 days or more after a peak, I have to expect to see lower prices yet, but feel very nervous on that side of a bullish gold market.

Yesterday silver was taken to the woodshed. After a 3875c overnight high it fell to a 3625c low, but spent 2/3 of the day climbing, recouping lost ground. In the early overnight trading it hit 3800+, and a high for the day at 3817c. However, silver was chained in a range today between 3817 and 3748c. It did close up 53.7c on Comex at 3785.7c, but the last three days' trading has also issued silver's marching orders: beat 3875c, or retreat.

Silver's chart seems not nearly as enthusiastic as gold's. Silver has crossed above it 20 DMA (3668c), but not been able to climb over its 50 DMA (3919c), although certainly it has been rolling over and outside the previous downtrend line. Silver could rally to 3946c (last intraday high) and quit, or or could pass that. Ahh, but the crystal ball darkens. On the one hand we have silver's present strength, on the other the risk that it might be merely tracing out a B-wave in a correction bound to take another plunge. For now momentum sides with silver rising. I would remain, however, a tad leery of full commitment. Y'all know what "full commitment" means, right? The chicken and the cow are committed to breakfast, but the pig is FULLY committed.

MILE MARKERS: The SILVER PRICE above 3950c brings a longer, higher rally. The silver price below 3650c will drop to a new low, perhaps to the 200 DMA (now 2972c).

Bear in mind that June and July bring in their fragrant hands silver's lows for the year, and that lows remain due from that top on 29 April.

US DOLLAR INDEX passed a rough week. After last Friday's intraday peak at 76.37, it trended lower all week, finally today punching through the 50 day moving average (75.02) and the 20 day (74.970). Stinks. Why? Because that 75 level has been the fish-or-cut-bait resistance/support level for some time. If the dollar sinks through that, well, its rally has probably been foiled.

Euro jumped up today to 1.4292, up 1.08%. Maybe news happened, maybe not, but technically this did no more than push the euro toward, not all the way to, its 50 dma (1.4345). One might guess the euro is trying to turn up, but it would be an anticipatory guess. Yen closed up 0.6% and is now trading at 80.857 (123.65c/Y100).

Stocks wrestled today with resistance from 12,400 - 12,450, and closed toward the top of the range. Tear the top off the chart and tell us what it says: a series of lower highs and lower lows, below its 20 DMA (12,580) and has just spent 5 days dancing with the 50 DMA (12,436.91), today barely closed above 50 DMA. No breakout above downtrend line, momentum indicators down or MIGHT be turning up. Diagnosis: headed much further down until an upward break through the downtrend line confirms a change, followed by a close above 12,600.

Dow today closed at 12,441.58, up 38.82, joined by the S&P500 at 1,331.10, up 5.41.

The one thing most in favor of buying stocks is that it puts you into partnership with the US government, who thru its ever vigilant Nice Government Men stands always ready to fight the pull of gravity and try to levitate the market. So, if you want to partner up with the ever-trustworthy US government and their manipulations, buy stocks. That's sort of like going into the cleaning business with Al Capone, when you own the dry cleaner shop and he's furnishing "protection."

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.