Tuesday, May 17, 2011

Prepare to Load up on Silver and Gold

Gold Price Close Today : 1479.80
Change : (10.60) or -0.7%

Silver Price Close Today : 33.488
Change : (0.641) or -1.9%

Gold Silver Ratio Today : 44.19
Change : 0.519 or 1.2%

Silver Gold Ratio Today : 0.02263
Change : -0.000269 or -1.2%

Platinum Price Close Today : 1764.80
Change : 3.60 or 0.2%

Palladium Price Close Today : 720.45
Change : 9.45 or 1.3%

S&P 500 : 1,328.98
Change : -0.49 or 0.0%

Dow In GOLD$ : $178.10
Change : $ 0.33 or 0.2%

Dow in GOLD oz : 8.616
Change : 0.016 or 0.2%

Dow in SILVER oz : 380.72
Change : 5.13 or 1.4%

Dow Industrial : 12,749.58
Change : -68.79 or -0.5%

US Dollar Index : 75.41
Change : -0.640 or -0.8%

It is rotten cold here. What's the matter? It's May, and last night we went to our grandsons' ball games and like to froze to death. Nature isn't living up to our expectations, or maybe it's global warming. The gummint needs to do something, pass a law or arrest Jack Frost or something.

Here's another red herring y'all will hear more of: the "crash" in silver and gold and commodities signals that the US is about to enter a "deflationary" depression. Folks who believe this haven't been paying close attention the last 11 years, or they might have noticed the Fed printing money like a mangy dog scratching fleas every time any financial crisis dared raise even the pate of its head. If I'm wrong, we'll all sink together, but in one thing I trust the Fed: they WILL inflate.


GOLD did little to encourage its partisans today. Support had been coalescing around $1,488 - $1,490 but when New York opened this morning even the cockroaches in the woodwork were selling. A waterfalling price poured down until it hit the pool at $1,475.80 about 11:30. Then began a modest and restrained bounce that splashed on $1,485. Final score on Comex was down $10.60 to $1,479.80, but trading now at $1,482.30.

Y'all have to learn to be realists looking at charts. As my friend Bob the Technical Genius says, tear the top of the chart and tell me how it looks then. Can't let your position do the talking for you. Today's descent blasted any potential even-sided triangle from which gold might stage a rally. The $1,475.80 low didn't touch the $1,466.44 fifty DMA, but it scared it pretty badly. Market like this will follow thru downside, pierce that 50 DMA and take another tumble as that milestone terrifies the bettors. $1,380 is looking closer, BICBW.

Nothing encouraging about SILVER'S chart, either. Imprisoned in a downtrend channel from Friday's high, silver vibrated from one side of the channel to the other like a canary trying to beat its way out of a jug.

Silver's chart resembles gold's, without the quota of drama. Opened in New York at 3396c, then fell to 9:30, bounced, and fell more to a 3312c low. Recovery from there wouldn't inspire you to light fireworks. Climbed as high as 3400c, but not thru. Last on Comex showed down 64.1c to 3348.8c. Rose in the aftermarket to 3380 - 3360c.

The SILVER PRICE now approacheth a congested area from 3121c to 2638c where on the way up it struggled to break free and spread its wings. Astraddle that region is the 200 DMA at 2900c today. Why mention the 200 DMA? Because it has so often in this bull market marked the limit, or nearabout, of silver's corrections. Of course the 300 dma (now 25.36) has more often marked the maximum limit of silver's dives.

Yet as puny as silver now appears, a sudden, vicious rally wouldn't surprise me, since momentum indicators suggest silver today has as many enemies as two weeks ago it had friends. If all those adversaries are short, they have set themselves up for a bad, if temporary, surprise.

Silver and gold prices are wallowing in a passing correction in a long term primary uptrend (bull market). That uptrend will persist another 3 to 10 years, so listen not neither heed the croakers and naysayers who squeek that the precious metals have been in a bubble. Tain't so. Prepare thyself to load up.

At the low today the Dow had sunk 169.53 points but by closing time had risen to only 68.79 down (0.55%) at 12,479.58. The S&P 500 took no such beating, dropping only 0.49 (0.04%) to 1,328.98. Odd disagreement.

Dow fell parlously close to its 50 day moving average at 12,357. That may signal a turnaround into one more rally. Or perhaps the mere nearness of the 50 DMA Kryptonite was enough to drive it up. S&P500 punched through its 50 DMA, but didn't close below it. 50 DMA has limited three of the past four corrections. That is, they reached that point and turned around.

That said, stocks remain the greasy brown ring around the Great Investment Bathtub.

US DOLLAR INDEX held on today, with a low of 75.38. Like some tomcat, the dollar has marked out its territory above 75.40, but whether it's mean enough and tough enough to hold it asks another question. Up above 75.80 blocks the dollar's climb. Looks like a market consolidating for another jump up.

Howbeit, just above 76 the dollar strikes the uptrend line running back to July 2008 which it ruptured on its way to the recent 72.69 low. Worse, it's also bumping against the downtrend line from the June 2010 high, for a second barrier. Unless the dollar can jump 76 and run like a scalded dog, we have to look for a garden-variety Final Kiss Good-bye wherein a broken market rises back to its breakdown point, busses it with a final kiss good-bye, then sinks out of sight.

Yet just like shooting craps in a back alley, never forget that currencies are a rigged game. Yea, clearly the Fed chose to let the dollar drop some years ago and cleaves still to its weak dollar policy, but for some transitory cause (a crisis in the yen or euro) might let the buck rise. This is known as the "Heads we win, tails you lose phenomenon."

The euro gained about 6/10% today to lodge at 1.4237, way below its 50 and 20 DMA and offering only little wiggles of promise it might one day come back. Must have been earthquakes in Japan today or everybody had a flat tire or something because the Yen gapped down by 0.7%. Now at Y81.42/$ (122.82c/Y100). Whate'er it be utimately, right now it's posing as a firm downturn.

At 10:00 a.m. on this day in 1792 the New York Stock Exchange was founded under the trees at 70 Wall Street by 24 brokers. By 10:02 they had successfully worked out how they would rig the market.

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.