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Tuesday, May 15, 2012

The Gold Price Lost $3.80 Here are the Reasons for a Turnaround this Week

Gold Price Close Today : 1556.80
Change : (3.80) or -0.24%

Silver Price Close Today : 28.054
Change : (0.265) cents or -0.94%

Gold Silver Ratio Today : 55.493
Change : 0.385 or 0.70%

Silver Gold Ratio Today : 0.01802
Change : -0.000126 or -0.69%

Platinum Price Close Today : 1430.70
Change : -12.30 or -0.85%

Palladium Price Close Today : 594.25
Change : -0.60 or -0.10%

S&P 500 : 1,330.66
Change : -7.69 or -0.57%

Dow In GOLD$ : $167.73
Change : $ (0.41) or -0.25%

Dow in GOLD oz : 8.114
Change : -0.020 or -0.25%

Dow in SILVER oz : 450.27
Change : 1.98 or 0.44%

Dow Industrial : 12,632.00
Change : -63.35 or -0.50%

US Dollar Index : 81.25
Change : 0.595 or 0.74%

Metals slowed their downward trajectory a bit the GOLD PRICE lost $3.80 (0.24%) to $1,556.80 silver lost 26.5 cents (0.94%) to 2805.4c.

I've been musing and musing on this, trying to take my own medicine and remember not to let a correction cast me down. Here are a few items that point toward it ending:

** Dow in silver double topped today at 450.20, matching its end-December top.

** Dow in Gold Dollars closed slightly over its end-December top.

** Buy-side premium for US 90% silver coin has climbed from an 80 cent per ounce discount to a 50 cent per ounce discount. That premium usually rises at lows.

** On 28 December 2011 silver reached its low against its 300 DMA at 80.2%. Next day, the day it bottomed, that percentage rose. Last two days silver repeated that performance. Seems crazy that the slow moving 300 DMA would pinpoint bottoms, but I reckon silver is so volatile and moves so fast that it works that way. Has in the past.

Let us hear the worst of the matter: the GOLD PRICE might yet drop to $1,525 and silver to 2615c.

But the SILVER PRICE has not been this oversold since last September, and before that since 2008. Gold's RSI is MORE oversold than last September, and you have to stretch back to fall 2008 to find it any more oversold.

Of the last 11 days, gold has declined 9. Silver has fallen 11 out of the last 12 days.

All these things argue for a rally in silver and gold soon. In the aftermarket today silver fell 40 cents and gold $12.50. Is that exhaustion selling? May be.

Today gold's low came at $1,541.53 and silver's at 2756c. Right now they are trading barely above those lows. Watch for more exhaustion and a turnaround this week.

GOLD/SILVER RATIO rose to 55.493 today. Time to swap gold for silver. Don't miss this opportunity. That ratio is notoriously quick to turn.

I've been thinking about this mess -- I mean this long, demoralizing silver and gold correction. You can only know after events prove your judgement, but I think I'm close to an answer.

Greece's feared new elections and possible withdrawal from the euro have markets moiled and sweating. What do they do when they're worried, God have mercy on 'em? They run to US dollars, which they see as "safety." Me, I see that as escaping a lion by running into a bear's den -- with the bear inside. I reckon they'll discover that.

US dollar index not only gained 59.5 basis points (0.77%) today but also cut through 81 like Napoleon through Italy. Shot straight up, and keeps on trying to steal the next base in the aftermarket. Dollar has now passed its last high and is working on passing its March high (80.74), maybe tomorrow. Dollar has risen for 11 days without a break, and as it slices through those resistance zones, bids fair to climb even more.

The euro took a tough beating with a big club. Lost 0.73% to $1.2732. Remember when -- a few days ago -- it seemed that $1.3000 would catch it? After gapping down yesterday, the euro's plunge accelerated today. Euro is more oversold than high heel shoes to women, but fear can make it more oversold still. Watch out for a short-covering rally that catches all those shorts, well, with their shorts down.

Yen lost 0.47% today to end at 124.62 cents (Y08.24/US$1). Yen may have spent all its fuel here. A rise above 126 would disprove that suspicion.

STOCKS tried to rally through 12,750, but when they got near that resistance, it hit 'em like Roundup sprayed on dandelions and knocked em dead. Owch, a lower low today, too (12,608). Is there comfort for stock investors in the S&P500? Well, Dow closed 12,632, down 63.35 (0.5%) and the S&P lost 7.69 (0.57%) to end at 1,330.66. Not as much comfort as a pillow full of two-inch bolts.

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

- Franklin Sanders, The Moneychanger
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© 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.