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Thursday, May 17, 2012

The Gold Price Rose $38.30 Can it Climb Above $1,580 Tomorrow to Confirm Reversal?

Gold Price Close Today : 1574.50
Change : 38.30 or 2.49%

Silver Price Close Today : 2799.60
Change : 82.6 cents or 3.04%

Gold Silver Ratio Today : 56.240
Change : -0.300 or -0.53%

Silver Gold Ratio Today : 0.01778
Change : 0.000094 or 0.53%

Platinum Price Close Today : 1449.30
Change : 26.40 or 1.86%

Palladium Price Close Today : 601.65
Change : 12.35 or 2.10%

S&P 500 : 1,304.86
Change : -19.94 or -1.51%

Dow In GOLD$ : $163.36
Change : $ (6.16) or -3.63%

Dow in GOLD oz : 7.903
Change : -0.298 or -3.63%

Dow in SILVER oz : 444.44
Change : -19.26 or -4.15%

Dow Industrial : 12,442.49
Change : -156.06 or -1.24%

US Dollar Index : 81.52
Change : 0.174 or 0.21%

The GOLD PRICE rose 38.30 (up 2.5%) to end at $1,574.50. It left behind a double bottom on Wednesday at $1,527.7 and worked its way up to $1,550. In Europe it danced just under $1,550, then at 8:00 a.m. jumped to $1,557, traded sideways, then gapped up at $1,557 levitated, gapped again ($1,563-$1,566) and shot for $1,580. Closed near the top of the range.

Folks, metals are strong as a garlic milkshake. To preserve that spike bottom for posterity, gold needs to climb above $1,580 tomorrow and confirm its intent. Milestones of success after that are $1,600, then $1,630. The GOLD PRICE must overcome these quickly, and that I expect to see.

The SILVER PRICE has made an upside down head and shoulders reversal, forming the head Wednesday. Before New York opened silver temporized between 2770c and 2738, then about 8:00 followed gold up in the same pattern. Ended the day up 82.6c (3%) at 2799.6c.

2800c will become the new floor for silver. Past three weeks of silver show a cascading blow-off bottom. Today reversed that. Silver will rapidly jump over 2900c to 3000c. Odd to say it because summer is seasonally the metals' sleepy season, but silver could stand at 3400c by end-June.

Whatever evil spell the Central Banking Wizards had cast over silver and gold was broken today. Enough realizers grasped all at once that a bodacious wave of inflation is inevitable, and ran to buy silver and gold. Now the magic is gone, and the Wizards only look like silly bureaucrats in pointed hats, waving little wands like conductors without a symphony.

I will ice this cake by noting that three days ago silver reached its low percentage for this correction against its 300 day moving average. That often pinpoints a reversal.

Better swap GOLD for SILVER now. Ratio may have topped yesterday. Confirming a reversal in gold and silver, premiums on physical silver and gold are rising rapidly, and that will hurt our realized ratio in a swap. If you plan to swap gold for silver, you'd better do it quickly.

That's it. Silver and gold might once bend backward again toward their lows, but evidently the lows were posted yesterday. More about that below.

The euro continues to crumble before the US dollar. The Dollar index today rose another 17.4 basis points (0.22%) to end at 81.516. First barrier to further rise appears at 81.78, the January high. Euro lost 0.18% today to close at $1.2692, not far from the January low at $1.2609. Monstrously oversold, so watch out for a sudden rally. The NGM like to snare currency traders that way.

Making good on the promise of that head and shoulders that's been forming since January, the Dow today sliced through its neckline to lose 156.06 (1.24%) and ended at 12,442.49. (S&P lost 19.94 or 1.51% to 1,304.86. It has lost 100 points in ten days.)

Yesterday the Dow in Gold dollars, which has been forming a diamond, well, really a megaphone, yesterday made a marginal new high at G$169.53 (8.201 oz) and today crumpled to G$163.36 (7.903 oz). Dow in silver ounces plunged from 463.69 oz yesterday to 444.44 oz today. Both have topped. That's your turn of metals against stocks. They have unlatched themselves from stocks, and from currencies, too.

That silver and gold strength in the face of a blooming dollar and withering euro loudly confirms metals' strength.

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.