Thursday, June 02, 2011

The Silver Price Still Targeting The 200 Day Moving Average, Now at $30

Gold Price Close Today : 1532.00
Change : (10.40) or -0.7%

Silver Price Close Today : 36.200
Change : (1.489) or -4.0%

Gold Silver Ratio Today : 42.32
Change : 1.396 or 3.4%

Silver Gold Ratio Today : 0.02363
Change : -0.000806 or -3.3%

Platinum Price Close Today : 1814.80
Change : -7.70 or -0.4%

Palladium Price Close Today : 772.65
Change : -1.35 or -0.2%

S&P 500 : 1,312.94
Change : -1.61 or -0.1%

Dow In GOLD$ : $165.27
Change : $ 0.57 or 0.3%

Dow in GOLD oz : 7.995
Change : 0.028 or 0.3%

Dow in SILVER oz : 338.36
Change : 12.26 or 3.8%

Dow Industrial : 12,248.55
Change : -41.59 or -0.3%

US Dollar Index : 74.73
Change : 0.087 or 0.1%

ratio today gapped up to 42.32 (basis Comex close), above its 20 DMA at 41.99. Bear in mind that when a market crosses the 20 DMA that flashes our first signal or confirmation that the momentum is up. An upward ratio usually means falling SILVER and GOLD PRICES.

And fall they did, silver and gold. The Mighty Yellow Metal, darling of monometallists everywhere, dropped $10.40 but remained above $1,530 resistance, closing Comex at $1,532. During the day gold came under attack about 11:00 a.m after overnight reaching toward $1,545. From $1,535 it dropped in half an hour to $1,520, like dropping an anvil off a roof. Yet the anvil bounced. Plenty of buyers wanted gold at that price and by Comex close it had risen again over above $1,530.

Gold's uptrend channel rises to meet it at about $1,490 today, so support lies there. More, the 20 DMA at $1,510.30 will encourage more buyers. By no means is it clear yet that gold has abandoned its rally, but a close tomorrow below $1,510.30 or lower leads ineluctably to that conclusion.

No way around it, the SILVER PRICE had a rotten day. Overnight it tried to rally, and even reached 3743c, but when Comex opened the silver price wavered for an hour and a half, then dropped thru 3650c to 3550c. It recovered enough to close down only 148.9c on Comex at 3620c, barely above its 20 DMA (3602c). Recall that the 20 DMA already lies below the 50 DMA, meaning that momentum is rolling silver downhill. 3600c now becomes the line in the sand, but buyers will likely stand back and let gravity take its course before they step in again. The SILVER PRICE is still targeting the 200 day moving average, now at 3000c.

Lift your eyes and listen. Don't miss this. If the present European financial crisis sneaks out from the pen the Nice Government Men presently have it trapped in, then silver will lose badly against gold. and this correction business will drag out a long time. If the NGM and their running dogs do their job and keep the panic penned up, then the gold/silver ratio will bottom sometime by end July, probably end-June. Thus the worse the crisis gets, the further silver will drop. Oh, and stocks, too, but we don't really care about those.

Awww, trying to keep up with these currencies I'm going to wind up like that fool at a ping pong match when somebody told him to "keep his eye on the ball." After all the bouncing you only end up with a crick in your neck.

Let us, however, first philosophically ponder stocks. The Dow slid a bit more, another 41.59 points (0.34%) to 12,248.55 while the S&P500 slid only 0.12% (1.61) to 1,312.94.

A casual and even untrained observer with a pencil, a straight edge -- don't need a fancy metal ruler, just fold a piece of paper a couple of times -- and a Dow chart would draw a descending straight line that connects all the tops since 12,876 on May 2, then connect all the lows since 12,521 on 5 May. Said naïve observer would discover a descending or falling channel. Hark! What's that? Today the Dow toucheth the bottom channel line, about 12,200. Now let the untrained observe picture in his mind a pirate ship, with a plank put out over the sea. Let him picture what happens when the Dow walks that plank and reaches its end at 12,200.

Right. Now y'all understand.

Dow is already flirting with a breakdown against gold. Dow in Gold dollars hit its lowest level since December 2010 and June 2010, in other words, smack on support, below which lies nothing.

Back to those tiresome currencies, foul fiat fiends. The US Dollar Index fell 36.4 basis points or 0.47% to 74.313, thoroughly wrecking any argument that it might turn and resume its rally. Well, I suppose it MIGHT conceivably turn, but it was thrashed today by its 20 Day Moving Average (75.22) and its 50 DMA (74.97), so needs to show more fight. Leave it this way. Possibility for an upside down head and shoulders remains as long as that 74.31 low on the right shoulder is not violated.

Euro, the Frankenstein fiat, surged today 1.23% to 1.4490. Now standing above its 20 and 50 DMAs, so momentum is upward, if confusing. Yen is watching all this inscrutably, barely changing today. Now at Y80.95/$ (123.53c/Y100).

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.