Tuesday, March 13, 2012

The Gold Price Remains Bullish as Ever Despite Drops

Gold Price Close Today : 1693.70
Change : (5.50) or -0.32%

Silver Price Close Today : 3354.40
Change : 17.0 cents or 0.51%

Gold Silver Ratio Today : 50.492
Change : -0.422 or -0.83%

Silver Gold Ratio Today : 0.01981
Change : 0.000164 or 0.84%

Platinum Price Close Today : 1683.00
Change : -19.00 or -1.12%

Palladium Price Close Today : 701.90
Change : -7.10 or -1.00%

S&P 500 : 1,395.96
Change : 24.87 or 1.81%

Dow In GOLD$ : $160.84
Change : $ 3.19 or 2.02%

Dow in GOLD oz : 7.780
Change : 0.154 or 2.02%

Dow in SILVER oz : 392.85
Change : 4.53 or 1.17%

Dow Industrial : 13,177.68
Change : 217.97 or 1.68%

US Dollar Index : 80.22
Change : 0.330 or 0.41%

I reckon after big drops today in the silver and
GOLD PRICE I'll have to re-examine all that optimism I sported yesterday. Let's see . . . Yep, I've re-examined and I am as bullish as ever on silver and gold. I will even explain how, a little later. However, bear in mind that I warned yesterday this would be a toilsome week for silver and gold.

Apparently somebody sent out a world-wide announcement today saying "Buy stocks and sell silver and GOLD at 3:00 p.m. Eastern Daylight Time." That's about when the panic hit the gold market.

The GOLD PRICE had closed at $1,693.70, not bad after a $1,685 low, but at a little after 3:00 the bottom dropped plumb out, taking gold from $1,680 to $1,665 faster than a car window will suck a $100 bill out a window when you're doing 80 miles an hour on the interstate.

Gold bounced on that right cheerily, about like Play-dough bounces, up to $1,675-ish. Fess up, it's a new low for the week, which will suck gold down toward $1,640. If that breaks, chart offers no comfort and support before $1,550 - $1,525. One more push down is in the deck, to finish the correction off the February 29 high. This shouldn't last more than a week, 10 days.

The SILVER PRICE chart doesn't quite match gold's, although it also shows a fast drop after 3:00 pm.. Low came later as it fell fast in the aftermarket, as low as 3296c. Comex actually closed UP 17c at 3354.4c, so it appeared we'd have another of those one-metal-up/ other-metal-down days that lately presages an up day for both following. Not today. Silver reeled like an punchy old boxer hit with brass knucks. This is getting serious today -- if silver lets go of its hold on 3300c, then look for 3183c, maybe 3150c.

Now y'all are scratching your heads wondering what possible Ace in the Hole I might be holding to support my bullish outlook. I believe that silver and gold are putting the finishing touches on upside- down head and shoulders pattern that foretell LARGE rallies. Also, I have been pondering silver's 300 day moving average, checking that against the ancient days of this bull market, and it is flashing a green light.

But what do I know? I'm the Tennessee fool who thought yesterday that stocks were about to drop against gold and silver. Now I am not, I promise going to dredge up all the fundamentals -- the inflation, the bad investment not yet liquidated, all the debt, the Moe-Rons running things -- that doom stocks and smile on silver and gold. I'm not even going to say, as I usually do, that the news for stocks is about as good as it gets. Naw, if I said any of that it would just sound like exculpation or self-justification, and I personally would rather wait for events to unfold and show y'all that all by themselves.

Shucks, I don't know hardly anything. When you talk about buying stock, all I can think of is rare pigs.

One thing you learn from studying history is that DISCONTINUOUS EVENTS -- those great rifts that divide ages and forever change the world from the bottom up -- don't happen very often. Most of the time, today passes about like yesterday did, but every once in a while, something happens, at first perhaps insignificant, that changes everything.

Keep trudging, O Weary Americans, the gate to Schlaraffenland, the land where nobody has to work, the beer is free, and the roast chickens fly into your mouth under their own power, lies right around the bend, our Leaders and Gurus assure us.

Markets certainly can keep you humble -- several times a day. Hard on the heels of my expectation that stocks would begin underperforming gold and silver, stocks rose mightily and silver and gold fell sharply. I reckon I DO look like a natural born fool.

But only for a little while. Veritas temporis filia.

Stocks broke through the 13,000 barrier like thirsty longhorns stampeding to an alkali pond. Couldn't stop em if you tried. Dow gained 217.97 points or 1.68%. (I can't remember -- one of y'all remind me -- what day was it the Dow FELL 203.66 points. Was that 6 March?) S&P500 rose 1.81% or 24.87 points to end at 1,395.96.

About 100 points of today's rally came after 3:00 p.m. From 10:00 to 3:00 the Dow gained from 13,000 to 13,100. Tail end of the day, the last hour, it jumped another one hundred points.

News says stocks had been buoyed by good retail sales reports (government numbers -- need I say more?), then the Bernancubus' open market committee voted to keep interest rates near zero, yakka-yakka-yakka. Today some say the market interpreted all this as meaning more liquidity, a.k.a., printing more money, but if the market's expecting more inflation out of the Fed, why did the dollar rise and silver and gold sink all while stocks rose? Blub, splutter, I don't know, they have to say.

Well, at least charts don't prevaricate much, so let's look at them. The Dow traced out a bearish rising wedge, fell out of it downside as the pattern foretells, then against all expectation turned and crossed above its 20 DMA and broke out above last May's high. What can I say? The chart lied. It's headed higher, maybe to 14,000, floating on a sea of fresh money. Besides, if it reaches 14,000, it will almost reach the inflation-adjusted value of January 2000.

Friends, I'm going to snatch victory out of the jaws of defeat, or die trying.

US dollar index ought to have surprised no one today when it gained 33 basis points (0.42%) to 80.22. 79.90 now will pitch in with strong support while the dollar heads for 82 and above. Higher close tomorrow confirms that upward intention, as it will close above the last high for two days.

The yen and euro bowed courteously to the dollar and fell 0.52% to $1.3086 and 0.81% to 120.56 cents (Y82.95). New low for the yen, with no discernible bottom. At least the euro probably won't fall much below $1.2900.

Argentum et aurum comparenda sunt -- -- Gold and silver must be bought.

- Franklin Sanders, The Moneychanger

© 2012, 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 bubble has burst, primary trend down.

WARNING AND DISCLAIMER. Be advised and warned:

Do NOT use these commentaries to trade futures contracts. I don't intend them for that or write them with that short term trading outlook. I write them for long-term investors in physical metals. Take them as entertainment, but not as a timing service for futures.

NOR do I recommend investing in gold or silver Exchange Trade Funds (ETFs). Those are NOT physical metal and I fear one day one or another may go up in smoke. Unless you can breathe smoke, stay away. Call me paranoid, but the surviving rabbit is wary of traps.

NOR do I recommend trading futures options or other leveraged paper gold and silver products. These are not for the inexperienced.

NOR do I recommend buying gold and silver on margin or with debt.

What DO I recommend? Physical gold and silver coins and bars in your own hands.

One final warning: NEVER insert a 747 Jumbo Jet up your nose.