Tuesday, June 07, 2011

Silver and Gold Prices Couldn't Make up their Mind Today

Gold Price Close Today : 1543.30
Change : (3.20) or -0.2%

Silver Price Close Today : 37.040
Change : 0.264 or 0.7%

Gold Silver Ratio Today : 41.67
Change : -0.386 or -0.9%

Silver Gold Ratio Today : 0.02400
Change : 0.000220 or 0.9%

Platinum Price Close Today : 1835.30
Change : 24.00 or 1.3%

Palladium Price Close Today : 808.00
Change : 19.65 or 2.5%

S&P 500 : 1,284.94
Change : -1.23 or -0.1%

Dow In GOLD$ : $161.68
Change : $ 0.10 or 0.1%

Dow in GOLD oz : 7.821
Change : 0.005 or 0.1%

Dow in SILVER oz : 325.89
Change : -2.86 or -0.9%

Dow Industrial : 12,070.81
Change : -19.15 or -0.2%

US Dollar Index : 73.55
Change : -0.401 or -0.5%

Following yesterday's breakdown in the Dow in Gold Dollars comes -- ambiguity. Closed yesterday at G$161.60, today at G$161.68, up G$0.08 or 0.004 ounce of gold. It might be trying to catch and reverse here, but odds favor a further fall instead.

Stocks today slowed their rate of descent, but when you are a meteorite plunging through earth's outer atmosphere, that doesn't lower your temperature much. Dow lost 19.15 (0.16%) to end at 12,070.81. You may go to www.stockcharts.com and cast up a chart using "INDU" as symbol for the Dow, or you can cast back in your memory (if you are young enough to retain one still) and see that on 18 May last the Dow bottomed just a wee bit above today's close. Then cast back to 23 March when it bottomed at 11,983. On both occasions much trading also occurred around the 12,050 level. My point? That the Dow hovereth around significant support. A fall through 12,000 would accelerate its plunge through earth's atmosphere.

S&P500 lost 1.23 points (0.1%) to close today at 1,284.94.

Unless the Nice Government Men get their Guccis off their desks and get to work manipulating the stock market, they're liable to have more trouble than they can manage. Stocks are right now the Humpty Dumpty of the Mother Goose Investment book.

Right along with stocks the US DOLLAR INDEX resumed today its meteoric fall toward the earth. It lost a large 0.52% (40.1 basis points) and when the day put a merciful end to its shame, stood at 73.551. For now 73.50 is contributing support, but nothing in the chart paints that as sustainable. Under the brilliant management of Ben Bernancubus it appears the dollar will fall at least to the last low at 72.95, then to the old low around 70.70, and then, as time and Ben's skill ripens, to 40 or so. That's the long term. Short term Dollar Index should catch around 73.

Euro today rose again (yawn) to 1.4688, up 0.61%. Remains far from its 1.4940 peak. Yen appears eager yet ashamed to jump over 125c/Y100 (Y80.11 per dollar). Flatlined today.

SILVER and GOLD PRICES couldn't make up their mind today, and ended up contradicting one another, like husband and wife niggling and disagreeing. Comex gold fell $3.20 to $1,543.30 while silver rose 26.4c to 3704c. Who's right?

Such non confirmations often but not always lead to declines, mirroring confusion in the marketplace. But recall that gold surged from under $1,520 to $1,553 from last Thursday to yesterday. That looked like a completed move, so gold is relaxing, correcting that rise. Most important is that today's low could carry no further than $1,536, where eager buyers unwilling to wait for lower prices jumped in and drove gold back over $1,540. Mayhap gold completed that little correction today and will rise again tomorrow. Range remains bounded by $1,553 above and $1,530 below. A close inbetween contains no new information, a close above or below will carry some distance.

Happy silver jumped up 26.4c today to close Comex at 3704c, above the round-number 3700c. (People lay great weight on those round numbers.) Yet this gained silver no ground, except a slightly higher high today at 3747c. Yet out of the chart jumps a trading range 3560c to 3750c yesterday and today. Momentum indicators favor higher silver prices, but I fear after that will come a low lower than any we have yet seen.

Gold/Silver Ratio closed today 41.666, down a tadge from yesterday, but without any import. 42.50/42.60 has become resistance/support with 39.90 on the downside.

Sometimes you don't trade. Sometimes you just watch.

Back in the days when the law still mattered and people were born with spines, the English parliament on this day in 1628 passed the Petition of Right. They were responding to Charles I's illegal taxation. In 1626 Parliament refused to pass any new taxes for Charles' Spanish war, and threatened to impeach his favorite, the Duke of Buckingham. Charles had to dissolve parliament and got no taxes. Never the bright light of public relations, Charles then began illegally levying forced loans and benevolences, and, to save money, billeting soldiers in civilians' homes.

Five men -- the Five Knights -- refused to pay and were illegally imprisoned. Ultimately they came to trial under a habeas corpus action, that provision of Magna Charta that forbids imprisonment without charges. Charles the Brilliant maintained he could imprison anyone for reasons of state. Under pressure the court left the knights in prison, taking the case "under advisement." Looked like Charles had won.

When parliament assembled in March, Charles tactlessly demanded more money, and warned them to be quick about it, but they shelved that to discuss legislation to overturn the Five Knights case. In the end, they passed the Petition of Right declaring illegal imprisonment without cause shown, "taxation without consent of Parliament," billeting of troops, and use of martial law in peacetime.

Charles tried to avoid assenting to the petition, but finally signed it on 7 June with the ill-graced declaration that the Commons "neither mean nor can hurt my prerogative."

Like all the Stuarts, Charles never learned and never changed. Never intending to abide by the Petition, he kept levying illegal taxes and trying to rule without parliament. The application of the Ship Money tax inland and illegally in 1634 and 1636 provoked the resistance of John Hampden, cousin to Oliver Cromwell. Ultimately Charles tyranny provoked a parliamentary war against him and his execution for treason in 1649. To the end, he never learned, never repented. His equally dull sons followed in his footsteps and brought and end to the Stuart dynasty.

Tyrants never learn, and thus raise up their own opposition, great men such as the Five Knights and John Hampden, willing to take the nation's burden on their own shoulders -- illegal tax protestors all, and God bless them for it!

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.