Friday, May 06, 2011

Silver Price Lost 27.4% this Week the Gold Price Lost 4.2%

Gold Price Close Today : 1,491.20
Gold Price Close 29-Apr : 1,556.00
Change : -64.80 or -4.2%

Silver Price Close Today : 3528.3
Silver Price Close 29-Apr : 4858.4
Change : -1330.10 or -27.4%

Gold Silver Ratio Today : 42.264
Gold Silver Ratio 29-Apr : 32.027
Change : 10.24 or 32.0%

Silver Gold Ratio : 0.02366
Silver Gold Ratio 29-Apr : 0.03122
Change : -0.00756 or -24.2%

Dow in Gold Dollars : $ 175.21
Dow in Gold Dollars 29-Apr : $ 170.19
Change : $ 5.01 or 2.9%

Dow in Gold Ounces : 8.476
Dow in Gold Ounces 29-Apr : 8.233
Change : 0.24 or 2.9%

Dow in Silver Ounces : 358.21
Dow in Silver Ounces 29-Apr : 263.68
Change : 94.53 or 35.9%

Dow Industrial : 12,638.74
Dow Industrial 29-Apr : 12,810.54
Change : -171.80 or -1.3%

S&P 500 : 1,340.20
S&P 500 29-Apr : 1,363.61
Change : -23.41 or -1.7%

US Dollar Index : 74.652
US Dollar Index 29-Apr : 73.050
Change : 1.602 or 2.2%

Platinum Price Close Today : 1,777.00
Platinum Price Close 29-Apr : 1,874.90
Change : -97.90 or -5.2%

Palladium Price Close Today : 706.10
Palladium Price Close 29-Apr : 794.45
Change : -88.35 or -11.1%

This week the market taught everyone a lesson that must never be forgotten: markets fall faster than they rise. No exceptions. And markets also taught us a corollary lesson: the four words you are most likely to hear just before you lose copious amounts of money are, "It's different this time."

Wherefore, the SILVER PRICE lost 27.4% this week, the GOLD PRICE lost 4.2%, the PLATINUM PRICE 5.2%, the PALLADIUM PRICE 11.1%, and stocks 1.3%. As you might have guessed, the US dollar index rose this week. What better time for the central bankers to spring their trap than when dollar sentiment was universally bearish and euro sentiment universally bullish? How better to punish those fleeing to silver, gold, and commodities from inflation?

Let's look at the US DOLLAR first because that's the catalyst for these other markets.

The US DOLLAR INDEX traced out an upside down head and shoulders with a neckline at 73.30. First target for a breakout over that neckline was 73.90. Sure enough, on Wednesday the dollar index jumped from 73.13 to 74.084. Today it made good its gains and confirmed its reversal by ending the day at 74.652, up 45.8 basis points or 0.59%.

For its part the euro poured in a waterfall from its 1.4940 intraday high on Tuesday to 1.4339 today, sinking 1.39% today alone. This smasheth the 20 dma (1.4569) and neareth the 50 dma (1.4254). The Yen today reversed as well, closing at Y80.43/$ (124.33c/Y100). I told y'all that currencies are treacherous, and here you see it. You can trust fiat currencies and central banks exactly as you can trust a rattlesnake -- to bite you every time.

STOCKS took sick most of the week. Today the Dow managed to lift its head off the pillow by 54.57 points to close at 12,638.74. S&P500 rose 5.1 to 1,340.20. More interesting is that for all gold has lost, stocks have gained little against gold. Dow in Gold Dollars this week rose by G$5.01 to G$175.21 (8.476 oz), remaining in the same range that has prevailed since February. No change there. I am so tried of this charade in stocks I can hardly work up enough energy to insult it. Well, I will try. Investing in stocks remains the Phrenology in the College of Investment Sciences.

The GOLD PRICE lost $64.80 (4.2%) from its high on Monday at $1,475. Low yesterday fell on $1,460. Not surprising anybody much, gold rebounded today $10.30 to $1,491.20. Not surprising because the five day chart shows a completed down move.

However, the SILVER PRICE fell 94.8c to 3528.3c, non-confirming gold's rise. Question is, which is non-confirming which? Is the silver gainsaying gold's rise, or is gold's rise contradicting silver's fall? I don't know, but I do remember a market proverb, "Never try to catch a falling knife." That means, don't pick a bottom too quickly. Give the market time to work itself out.

Against that I have to balance the still-stinging memory of that January silver and gold price correction which refused to carry nearly as far as I thought (in my arrogance) that they ought. Yet for now, DOWN is the leading direction.

The silver price has sliced with such speed and gravity through its 20 DMA and 50 DMA (38.88) that I begin to remember how often during this bull market the silver price has revisited its 200 DMA, now 2838c. Certainly possible.

today hit 42.264 at closing, up 10.2 points from its close on 29 April (32%). That correction falls nearly within the the range of 2004 - 2008 corrections, namely, from 33 to 38%. Yet don't forget 2008's terror, when the ratio rose 77% from its low.

Silver's low today came at 3305c, so technically it has fulfilled my first target, and, yes, that might be the end of it. If not, watch for 3120c or even 2638c.

Gold nearly fulfilled my first target at $1,445 by hitting $1,462 yesterday. That also nearly touched the 50 dma ($1,455.49), an often- witnessed reaction target. If gold doesn't stop there, it might find footing only at $1,382.

Blusterers will bluster, and bubblers will bubble, but never mind all that. Keep your eyes fixed on the horizon, on the long term trend. Silver and gold's recent moves were NOTHING compared to their blow-off tops in 1980.

More than that, ask yourself why you bought silver and gold, and what's driving the market: monetary demand born of central bank inflation. Ask yourself which of the fundamentals have changed: has the US government announced it will suddenly pull its troops home and cut spending? Has Ben Bernancubus appeared teary-eyed on TV, repenting of the evil he has done the country, begging forgiveness, and resigning his Fed-head-ship? Has congress abolished the Federal Reserve? Until some or all of this appears, you can relax and hold on to your silver and gold. No matter how the media terrorize you talking of silver and gold bubbles, calm yourself and fix your eyes on the horizon.

And LO! A Reminder: a seasoned investor NEVER sells his bull market position during a correction. He knows that he can never make as much money trading as he can make WAITING.

I understand that many of y'all call and want to talk to nobody but me. I don't recommend that, since you might wait two or three days to hear from me. Truth is, everybody here is kin, and we all sing the same tune. They're probably all smarter than I am anyway. I'm pretty sure they think that, at least.

Please do not email me for personal trading advice. It would wholly inappropriate for me to advise you without knowing anything of your whole situation. Everything I have to say to the world is said here in public every day, so I will not answer these emails. If, however, you are interested in buying physical silver or gold from us, we will be glad to help you. Just don't ask me how to trade your precious metals stock or ETF or futures position.

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.