Monday, May 14, 2012

Gold Price Lost $23 Ending at $1,560.60 Next Logical Stop is $1,523.90

Gold Price Close Today : 1560.60
Change : (23.00) or -1.45%

Silver Price Close Today : 2831.90
Change : 53.9 cents or -1.87%

Gold Silver Ratio Today : 55.108
Change : 0.232 or 0.42%

Silver Gold Ratio Today : 0.01815
Change : -0.000077 or -0.42%

Platinum Price Close Today : 1443.00
Change : -15.90 or -1.09%

Palladium Price Close Today : 594.85
Change : -4.95 or -0.83%

S&P 500 : 1,338.35
Change : -15.04 or -1.11%

Dow In GOLD$ : $168.16
Change : $ 0.82 or 0.49%

Dow in GOLD oz : 8.135
Change : 0.040 or 0.49%

Dow in SILVER oz : 448.30
Change : 4.03 or 0.91%

Dow Industrial : 12,695.35
Change : -125.25 or -0.98%

US Dollar Index : 80.64
Change : 0.342 or 0.43%

The GOLD PRICE lost $23 today and ended at $1,560.60. The SILVER PRICE lost 53.9 cents to close at 2831.9c. Bloody, as I warned.

The GOLD PRICE high today at $1,582 never even reached Friday's $1,583.6 close. Gold posted a new low for the move, and of course these lower prices have demolished any thought of a rally from that now spoiled falling wedge. Gold stopped today at a $1,556.10 low, about the location ($1,562.50) of its next to the last December low. Ultimate low came at $1,523.90. Most likely this gold decline, which has lasted now 11 weeks, is nearing its completion. Still, that last (December) low at $1,523.90 is the next logical stopping place. RSI is more oversold than it was at the December low.

The SILVER PRICE 2819c low today matched its early December 2312c low. Comparing silver's position against its 300 day moving average today shows it at the same percentage asat the December low. Nothing says it cannot tumble more, but that number and other moving averages suggest silver will find its feet sometime soon. Ultimate December low was 2615c, making that the logical target. Personally I am guessing it will stop around 2800c.

GOLD/SILVER RATIO today inched over 55 to stop at 55.107. If you still have gold to swap for silver and no longer want to wait for my 57.5 target, I wouldn't blame you for swapping here.

Have y'all ever watched a cat staring at a mouse hole in the woodwork? He stares and stares with infinite patience, until at last he snares a mouse. Right now, silver and gold investors have to possess that selfsame patience.

On Friday I warned y'all it could be a bloody week. The bloodletting started early.

US DOLLAR INDEX continues to rise. During the day it added 34.2 basis points (0.44%) to trade at 80.643, and in the last couple of hours in the aftermarket it has risen to 80.696. Dollar strength stabbed the euro today. It lost 0.74% for a new 4-1/2 month low. 'Twas only lower at the bottom it made middle of January ($1.2624). Euro gapped down today and wound up at $1.2824. Watch out! Everybody in the world is short euros, which sets the market up for a sudden, sharp (as in knife in your back) rally. The yen temporized, rose 0.9% to 125.23c (Y79.85/US$1). Trending treetop-ward.

Between the dollar index and 89 stands only thin resistance about 81.75. Of course, who can scope out, much less foretell, what will move the minds of central banking Nice Government Men? Today they're all strong dollar, tomorrow without warning they go weak dollar. This is not a rational undertaking, so we just look at the chart and watch.

Folks are confused about why stocks and silver and gold are moving together. Life is more subtle than you might expect. Inflation drives both stocks and silver and gold as people run to buy real things to escape depreciating currency. At some remove, stocks do represent the brick and mortar of the underlying firm (if they have any bricks or mortar and not merely software and a website), but because stocks' performance is bound to the economy and because inflation wrecks an economy, stocks never perform as well as silver and gold over the life of an inflation. Far less profitable.

However, that's the long term and in the short term investors have convinced themselves that the dollar (in the teeth of the European crisis) is "low risk" and everything else is "high risk," and they are running for cover. This will pass, and stocks and metals again decouple when inflation perceptions again rise.

Proof that stocks underperform is found on the Dow/Gold or Dow/Silver chart. So far stocks have lost about 80% of their value against metals. They will lose another 80% or more before this inflationary episode or Depression ends.

Look at the five-day Dow chart at You can plainly see that it breached support put in place from Wednesday to Thursday around 12,800. Thence it fell nearly to 12,650, so 12,800 now becomes resistance to any Dow rally.

Dow closed today at 12,695.35, down 125.25 or 0.98%. S&P 500 lost 15.4 (1.11%) to 1,338.35.

Dow in Gold Dollars offers the only question mark here. It has NOT been falling. That is, both stocks and gold have fallen, but gold has fallen minutely more. This sends the DiG$ bumping against its last high. Why doesn't that signal it is about to break higher? Because it has formed a diamond, a topping formation, and these frustrating patterns, especially in slow turning stocks, can take a long time to finish.

Please note that I will be traveling from 19 May through 1 June, and will not be publishing commentaries during that time. I will, however, have prices sent to y'all daily. Yes, I am taking a vacation with my wife, doing something we never before have done: taking a cruise.

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.