Tuesday, May 10, 2011

Today the Gold Price Closed Above its 20 Day Moving Average

Gold Price Close Today : 1516.60
Change : 13.70 or 0.9%

Silver Price Close Today : 38.480
Change : 1.370 cents or 3.7%

Gold Silver Ratio Today : 39.41
Change : -1.086 or -2.7%

Silver Gold Ratio Today : 0.02537
Change : 0.000680 or 2.8%

Platinum Price Close Today : 1799.80
Change : 5.80 or 0.3%

Palladium Price Close Today : 735.15
Change : 4.65 or 0.6%

S&P 500 : 1,357.38
Change : 11.09 or 0.8%

Dow In GOLD$ : $173.99
Change : $ (0.47) or -0.3%

Dow in GOLD oz : 8.417
Change : -0.023 or -0.3%

Dow in SILVER oz : 331.72
Change : -10.09 or -3.0%

Dow Industrial : 12,764.52
Change : 79.84 or 0.6%

US Dollar Index : 74.58
Change : -0.103 or -0.1%

Many have pointed to the multiplied times the exchange raised margin levels on silver contracts -- at last to $25,000 per contract -- as the straw that broke silver's back. It didn't work all the other times they raised it earlier, but that is what an exchange will always do to protect itself in a fast-rising market. It's more a coincident indicator of a top than a cause.

GOLD'S day was quite impressive on a 5 day chart, but not so much on a longer term chart. The GOLD PRICE has made a steady advance from the $1,462 low, and tried to break today twice but was caught by $1,506 after falling $10. No secret, then, $1,506 forms the cover of the well. Break through that, and, it's a long fall.

Overhead the gold price keeps bumping against the $1,519 ceiling. Today the gold price closed above its 20 day moving average, first tripwire of a rise or fall. Still that top at $1,575.10 (intraday) looks awfully high from here. When Comex locked up, the gold price had gained $13.70 to end at $1,516.60.

Should the gold price batter through $1,525, 'twill make a run towards the last high at $1,575.

That SILVER took its vitamins last night. Rose 137c today to 3848c on Comex. That pulled the gold/silver ratio down to 39.413. 3800c marks important support/resistance for the silver price, not surprising since we have been here, tho briefly, before. For a feel of where the silver price is, look at the 20 DMA at 4271c, a long ways off. Never mind, if silver price lacked enthusiastic buyers and supporters, it wouldn't have gained 137c today. This reaction rally has not ended yet.

The gold/silver ratio chart shows the ratio skying from 31.44 to 43.89 (intraday). I know that many of y'all MISSED the silver to gold swap when it was lower, and have been calling now to make that trade, which at these levels makes no sense. However, if the ratio reaches 37.6, you have another shot at it, targeting a swap back at 47.5 or higher. I don't believe the ratio will stop that low, but if you do the numbers, it offers over a 20% profit even with a 6.3% slip from the spot ratio.

And an alert reader found the probable cause of yesterday's up-spurt in stocks: about 10:15 the New York Fed announced another POMO (Permanent Open Market Operation, or Printing Out Money Obscenely) that it would buy $7.2 billion in US government securities. See http://www.newyorkfed.org/markets/pomo/display/index.cfm?showmore=1andopertype=orig for the obscure and obtuse details. Thus once again we see that when the stock market flounders, the Nice Government Men get busy cranking out more demand, even if they have to buy the stocks themselves.

Count Potemkin was the Russian Tsarina Catherine the Great's lover and Governor General of the southern provinces. Supposedly when Catherine came to visit the region, left poverty stricken and wretched by his maladministration, he built painted facades of houses to appear as real villages. He would trot out a crowd of healthy, red-cheeked peasants to cheer Catherine as her carriage drove by, then quickly have his crew tear down the village and move it to the next site. Instant villages with instant populations.

Now some of y'all, I'll bet, will spend several minutes wondering why I told this story right after the story about the POMO.

The US DOLLAR INDEX worked sideways in a correction, edging out on the limb of 74.50. Might take off upside tomorrow or even break that 74.50 and work all the way down to 74, 74.20. Long as the dollar index remains above 74 'tis still in rally gear.

On renewed worries that Greece might default on its sovereign debt Gold in euros climbed towards its all time high of E1079. Closed at E1052. Euro itself rose a little on the day, to 1.4400.

Now ain't this strange. A mere 5 days ago the euro was stronger than a garlic milkshake and every speculator, hedge fund, and taxi driver was buying it. Today, alas, it hath no friends as it bumps along its 50 DMA. One must ask, if one is sane, how the Euro today differeth from the euro five days ago, and the answer comes back: not a whit. Same piece of . . . trash. Yet then it was hot as a fritter and today cold as kraut. Y'all beginning to see that fundamentals have nothing in the world to do with currency markets. Well, a little, but not much.

Japanese yen today moved down a tad, to Y80.86/$ (123.67c/Y100), continuing its retreat from an atmosphere too scant of oxygen for easy breathing.

My, O, My, stocks today added 75.68 (0.60%) to approach yet again the 12,800 level. Specifically, the Dow flew up 75.68 to roost at 12,760.36. S&P flew to a higher perch at 1,357.16, up 10.87 (0.81%). I only hope somebody remembers to shut the door of the coop so no possum or fox or skunk gets in and carries them away. Weasels, we all know, already thrive on Wall Street.

News from Nashville this morning was welcome. Miss Caroline's heart is working just fine. Only plausible explanation for her fainting spell is dehydration. Please accept my sincere thanks for your prayers and many comforting emails. Psalm 9:10

Explanations always emerge, you just can't always identify them at the time.

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.