Wednesday, June 01, 2011

Silver and Gold Prices Remain in a Long Term Bull Market with Another 3 to 10 Years to Run Wild

Gold Price Close Today : 1542.40
Change : 6.50 or 0.4%

Silver Price Close Today : 37.689
Change : (0.614) or -1.6%

Gold Silver Ratio Today : 40.92
Change : 0.826 or 2.1%

Silver Gold Ratio Today : 0.02444
Change : -0.000503 or -2.0%

Platinum Price Close Today : 1822.50
Change : -10.40 or -0.6%

Palladium Price Close Today : 774.00
Change : -3.55 or -0.5%

S&P 500 : 1,314.55
Change : 30.65 or 2.4%

Dow In GOLD$ : $164.72
Change : $ 3.08 or 1.9%

Dow in GOLD oz : 7.968
Change : 0.149 or 1.9%

Dow in SILVER oz : 326.09
Change : 12.53 or 4.0%

Dow Industrial : 12,290.14
Change : 279.65 or 2.3%

US Dollar Index : 74.73
Change : 0.087 or 0.1%

What bothers me about SILVER and GOLD PRICES today-- no, wait, let me start at the beginning.

The GOLD PRICE touched its toes back to $1,530, just to feel where the bottom was, then about New York opening today blasted through $1,535 and clambered the peak to $1,550. The GOLD PRICE then backed steadily off, and by the time Comex closed (12:30 Eastern) was at $1,542.40, up only $6.50 from yesterday.

Meanwhile, the SILVER PRICE slid down the opposite slope. Stayed above 3750c support, even rallied once nearly to 3844c, then fainted. That's not bright-obvious from the Comex close, down only 61.4c to 3768.9c, but after the close it lost another 80c. That took the ratio from a closing of 40.924 to 41.804 quick as a cat can shinny up a tree. Happened all at once, not on any news I saw.

Today's Comex close rubbed silver's nose in the 20 DMA (3618c) and beyond. Now silver must reckon with lower prices, specifically 3600c and lower. Now the action of the last 3 weeks appears as only a failed rally.

So it seems the European financial turmoil is driving gold up and stocks and silver down. That is consistent with what past corrections to gold/silver ratio extreme moves have done. A ratio top (price low for silver) should hit in 30 to 60 days, barring, that is, a financial panic like 2008 that drives prices crazy.

Here's how I might be wrong: silver is only correcting its first little move up in a rally, and after a small correction, maybe to 3600c, it resumes its rally. You'll know I'm wrong if silver clears 3881c.

Silver and gold prices remain in a long term bull market with another 3 to 10 years to run wild.

For a currency that appeared yesterday to strengthen the euro spent an awful lot of time today puking up what it had spent so long gobbling down. It climbed to 1.4450, then fainted, breaking support at 1.438 and lurching toward next support at 1.4300. More, today's push into new high territory, with a lower close than yesterday's and a close a gnat's eyelash below the 50 day moving average. That feels like a key reversal, and will be if it closes lower tomorrow.

The yen, on the other hand, shot up today thru its 20 DMA to day before yesterday's high. Trading now at Y80.938/$ (123.55c/Y100).

Meanwhile the US dollar index, after gapping down yesterday below its 20 and 50 DMAs jumped back to 74.725, up 8.7 basis points.

Let imagination run riot. Yesterday's low matches April's 74.61 intraday low, then the dollar index fell down to an early May low at 72.69 (bottom of head), then rose to 76.37 in May to match 1 April's 76.61. This looks like an upside down head and shoulders, and that will remain a valid interpretation as long as it falleth not lower than 74.50. If so, then the dollar index is targetting 80. But keep in mind that phrase "as long as it falleth not lower than 74.50."

Ponder for a moment the great gears of the cosmos: euro cracks apart, panickers flee to dollars and gold and out of stocks and silver. Seems logical, at least. I can't get the chicken bone of European defaults out of my throat, and the ensuing flight to safety. Is that driving the gold market today, and sucking down silver? Something sure whacked stocks today, too.

The Dow collapsed today from a high at 12,570 to a low at 12,282.42, and closed at 12,290.14, down 279.65 points or 2.22%, losing more than twice what it gained yesterday. S&P500 closed at 1,314.55, down 30.65 or 2.28%.

Main monument here is crashing through small support just above 12,300, wiping out four day's work in one binge. Ooooo, it hurts worse because the Dow today hit its 20 DMA (12,543), then sliced through that AND the 50 DMA (12,456) like a Hollywood samurai with road rage. Not stopping there, it doubled its fall and closed BELOW support formed so laboriously above 12,300.

I'm just a natural born fool form Tennessee, but it appears to me that stocks are now ready to jump off a cliff in earnest. BICBW.

Stocks remain the Lucretia Borgia listed on Y'all better flee them while you're still able to walk.

On this day in 1796 the American union was spruced up remarkably when Tennessee joined as the 16th state.

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.