Wednesday, April 25, 2012

Gold Price Must Stay Above $1,623 Has it Already Bottomed?

Gold Price Close Today : 1641.40
Change : (1.60) or -0.10%

Silver Price Close Today : 3035.6
Change : 39.0 cents or -1.27%

Gold Silver Ratio Today : 54.072
Change : 0.634 or 1.19%

Silver Gold Ratio Today : 0.01849
Change : -0.000219 or -1.17%

Platinum Price Close Today : 1544.40
Change : 1.50 or 0.10%

Palladium Price Close Today : 658.25
Change : -6.75 or -1.02%

S&P 500 : 1,390.69
Change : 18.72 or 1.36%

Dow In GOLD$ : $164.86
Change : $ 1.30 or 0.79%

Dow in GOLD oz : 7.975
Change : 0.063 or 0.79%

Dow in SILVER oz : 431.24
Change : 8.37 or 1.98%

Dow Industrial : 13,090.72
Change : 89.16 or 0.69%

US Dollar Index : 79.03
Change : -0.168 or -0.21%

Today the
GOLD PRICE made a low ($1,623.40) equal to Monday's low. Market was flat above $1,635, then suddenly woke up at 12:30 (on the dot) to fall to $1,623. About 1:00 p.m., it shot up higher than the shelf it had fallen off of, to $1,646.60, then closed down $1.60 on the day at $1,641.40.

Now that's not a key reversal, but it is strong action. The GOLD PRICE fell to its previous low and refused to break -- no more sellers waiting there to be spooked out of gold. Worse yet for the gold short universe (which encompasses pretty much every government and central bank on the globe), crowds of buyers were waiting there, enough to drive the price above $1,640.

Okay, this isn't by any means a runaway bull rally, but it does suggest a bottom and a market running out of sellers.

Here's a little more. With a double bottom, GOLD has now established support at $1,623, so we can say "as long as gold stays above $1,623, 'twill be out of danger of great declines." However, y'all ought also bear in mind that the falling wedge on gold's chart has a lower boundary that could stand a drop to $1,575 without violation.

Mirroring gold's performance, the SILVER PRICE, too, dropped mid-day, but to a lower low at 2998.7 cents. Just as quickly it jumped up out of that hold, and closed Comex only 39c lower at 3035.6c.

On a longer term chart, the one with that falling wedge, this took silver only to the bottom of that falling wedge, whence it bounced back. This is splendid behavior, but silver must keep it up by not falling through 3000c. Today, with its bad/good/indifferent news announcement from the FOMC that didn't break silver, constitutes positive news. Now SILVER needs a higher close above 3100c to prove that.

Well, the Great Ones of The Frittering Open Market Committee met, and their announcement leads one to suspect they were scared of doing anything to disrupt markets. We're going to keep on doing what we have been doing, they said.

How did the markets take that? Me, I want to know not what people say, but what the canny ones do with their money. No cannier exist than bond investors, and the yield on 10 year and 30 year bonds rose a little. That represents a discount on the bonds for more expected inflation, which would explain why stocks also rose, because markets insanely (or should I say "Keynesianly") think more inflation will help the economy, and idea on a par with the notion that putting a knife under a laboring woman's bed will cut the pain.

The mighty US Dollar Index fell a little, 16.8 basis points (0.22%) to 79.034. In any other market this would be fatal, but you have to allow a lot of "slop" for currencies, manipulated as they are. Today's lower close marks a new low for the dollar for this move, and brings it much closer to The Line That Must Not Be Crossed, namely, 79 (bottom of the long even-sided triangle). Dollar could stumble badly here.

After a drop lower today, the Yen recovered to close higher by a gnat's eyebrow -- 122.98c against yesterday's 122.96c. Remains above the 50 DMA and 20 DMA, so momentum is positive but until it can climb above the 200 DMA (127.74) yen remains in a downtrend. Euro rose to US$1.3225, up 0.23% but still scruffing along without any resolution. Meanwhile, not only Spain but not Holland also appears ready to unravel. Doesn't really make the euro attractive.

Stocks rose today, proving that P.T. Barnum was right about the frequency of certain births. Dow rose 89.16 (0.69%) to 13,090.72 and S&P500 did better rising 18.72 (1.36%) to 1,390.69.

Dow is trapped below 13,100 resistance, and above that more resistance at 13,300. This unrolleth against a backdrop of a head and shoulders top finishing out a right and last shoulder. Buying a market that looks like that is like drawing to an A-K-J-10 inside straight flush in 5 card draw.

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

- Franklin Sanders, The Moneychanger
10:00am-5:00pm CST, Monday-Friday

© 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. No, I don't.