Monday, May 02, 2011

Waterfalls Showed up in Silver and Gold Prices Today

Gold Price Close Today : 1556.70
Change : 0.70 or 0.0%

Silver Price Close Today : 46.078
Change : (2.500) cents or -5.1%

Gold Silver Ratio Today : 33.78
Change : 1.753 or 5.5%

Silver Gold Ratio Today : 0.02960
Change : -0.001620 or -5.2%

Platinum Price Close Today : 1861.00
Change : 38.00 or 2.1%

Palladium Price Close Today : 773.50
Change : 8.50 or 1.1%

S&P 500 : 1,361.22
Change : -2.39 or -0.2%

Dow In GOLD$ : $170.07
Change : $ (0.10) or -0.1%

Dow in GOLD oz : 8.227
Change : -0.005 or -0.1%

Dow in SILVER oz : 277.95
Change : 14.24 or 5.4%

Dow Industrial : 12,807.36
Change : -3.18 or 0.0%

US Dollar Index : 73.06
Change : -0.029 or 0.0%

Must make this fast as tornado spawning storms are headed in from the west and my wife is kidnapping me for two days to go look at waterfalls.

Speaking of waterfalls, they showed up in SILVER and GOLD PRICES today. It appears to be the break we have been awaiting. May have been some catalyst, but I saw no news story. At tops, any old catalyst will do.

On Comex GOLD closed 70 cents higher at $1,556.70 but that tells no story, and surely not today's. From a high of $1,578.05 the gold price fell as low as $1,523.50. Now trading at $1,545.30 in the aftermarket, that $15 lower than the close. Remember the key reversal pattern: break into new high ground with a lower close on the day, confirmed by another lower close the next day. Both halves make the whole.

Gold's 5 day chart shows a double peak about $1,575 over the weekend, with another matching peak today. The gold price climbed from $1,550 at the open to $1,575, then steadily lost ground all day. When it hit $1,555, waterfall gushed over the precipice. Only thing holding it up is $1,540. If that ledge holdeth not, and probably won't, look for $1,505 in short order.

Silver chart differs from gold's wholly. The SILVER PRICE was trading on a plateau supported at 4800c. In early trading between Sunday and today, in Europe I reckon, waterfall ran over the cliff at 4800c and didn't splash until it hit 4400c, an 8.3% drop. Yet from midnight Eastern time to NY open, the silver price had recovered to 4550c, then kept on climbing to 4736c.

But water runs downhill. From that high about 11:30 a.m. the silver price ran downhill to 4350c at its lowest. Now at 4394.5c. Comex closed down 250c at 4607.80, but the silver price lost another 200c in the aftermarket.

Truth be told, this acts like a very overbought market breaking. The Gold Silver Ratio geysered today to 33.784, and now at 35.164. That offers the surest sign of a break.

Key reversal must put second piece in place tomorrow by closing lower. If so, you have your reversal and the correction has begun.

Interestingly, both the Dow and S&P500 posted the first half of key reversals today, not the enthusiastic kind but the lethargic kind. There, nonetheless.

What pushed all the water off the escarpment? Not the US dollar. Dollar index close 73.064, down 2.9 basis points and not threatening anybody. Euro closed up again, yen not much changed. Dollar could turn around at any moment, though.

Or maybe the catalyst was the alleged killing of Obama ben Ladin, errr, make that Osama Ben Laden. I can't tell one enemy of America from another. Anyhow, maybe the threat of peace and all the damage that would do to the Warfare/Welfare state's economy broke stocks. Who knows any more?

Remember that if silver or gold close above previous highs, that invalidates any reversal. On the other hand, gold has a safety net about $1,445, although $1,505 might catch it for a small kiss. Beyond that lieth $1,380.

Silver's longer term chart shows a magnificent waterfall, falling clean from 4800c thru the 20 DMA at 43.16, and closing a bit above the 20dma. Damage is done. First support after 4400c appears at 4200, but 'tis faint. Stronger lurks at 3800c, then 3360c, latter being most likely target.

Don't bother throwing any tantrums or scorching emails my way. I call 'em as I see 'em, whether you like it or I like it or any of those fuzzy-brained internet gurus like it. Res ipsa loquitur.

Have to run -- my wife is taking me to the waterfall. Sorry, no commentaries for the next two days.

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.