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Friday, May 04, 2012

This Weeks Gold Price Lost $19.30 Closing Comex $1,644.70 Must Not Close Below $1,635

Gold Price Close Today : 1,644.70
Gold Price Close 27-Apr : 1,664.00
Change : -19.30 or -1.2%

Silver Price Close Today : 3038
Silver Price Close 27-Apr : 3134.7
Change : -96.70 or -3.1%

Gold Silver Ratio Today : 54.138
Gold Silver Ratio 27-Apr : 53.083
Change : 1.05 or 2.0%

Silver Gold Ratio : 0.01847
Silver Gold Ratio 27-Apr : 0.01884
Change : -0.00037 or -1.9%

Dow in Gold Dollars : $ 163.87
Dow in Gold Dollars 27-Apr : $ 164.33
Change : $ (0.46) or -0.3%

Dow in Gold Ounces : 7.927
Dow in Gold Ounces 27-Apr : 7.950
Change : -0.02 or -0.3%

Dow in Silver Ounces : 429.17
Dow in Silver Ounces 27-Apr : 422.00
Change : 7.18 or 1.7%

Dow Industrial : 13,038.27
Dow Industrial 27-Apr : 13,228.31
Change : -190.04 or -1.4%

S&P 500 : 1,369.10
S&P 500 27-Apr : 1,403.36
Change : -34.26 or -2.4%

US Dollar Index : 79.505
US Dollar Index 27-Apr : 78.748
Change : 0.757 or 1.0%

Platinum Price Close Today : 1,523.80
Platinum Price Close 27-Apr : 1,570.50
Change : -46.70 or -3.0%

Palladium Price Close Today : 649.90
Palladium Price Close 27-Apr : 681.60
Change : -31.70 or -4.7%

Look at that scoreboard. Silver took a beating, the GOLD PRICE took a leetle whipping, stocks were taken to the woodshed, and the platinum group taken to the woods and beaten with barbed wire.

I was wrong last week when I thought that silver and gold might have seen their final lows. Both went lower this week.

For the week the GOLD PRICE lost $19.30 (1.2%) and closed at $1,644.70. In today's trading it made a low for the week, but found loads of buyers there at $1,626.50 and moved up with a plainly impulsive wave. That dive to a new low followed by a higher close is positive.

But this also sets out requirements for GOLD, namely, it must not close below $1,635. Up above, $1,682 awaiteth still, daring gold to cross that line and rally.

Most optimistic for gold is this: from last week's middle to this week's end, gold pierced the upper boundary of that bullish falling wedge and came back to that boundary line. That famous kiss good-bye? Could be. You'll know when gold crosses above $1,682. This might be a very good time to buy.

That falling wedge line was what gold hit today at $1,626. For now, the odds favor gold rising next week. Watch that $1,626.

The SILVER PRICE closed Comex today at 3038c, up 42.1c.

Friends, at silver's 2974 cent low today it stopped smack on the lower boundary line of that falling wedge, then bounced right back. To this add a vaguely upside-down head and shoulderish or V-bottom pattern. If that was silver's turnaround, then low, it will not again close below 3010c, and next week must speedily trade above 3100c. Otherwise, silver has just been conning us all.

GOLD/SILVER RATIO reached 54.5 this week. If you are sick of waiting for my (perhaps quixotic) 57.5:1 ratio, go ahead and swap gold for silver, quickly.

A great heaviness has fallen on the SILVER and GOLD markets, but don't let it mislead you. 'Tis not the heaviness of a bull market that has turned to bear, but the dolor of a bull market correcting long and hard. The bull loves to wear out its riders so it can throw them off and laugh at them in the dust while it runs away. All the media have soured on silver and gold, the market has gone flat and keeps disappointing. It's just about time for the turnaround.

Before you listen to those croakers, listen here: silver and gold are barely one-third of the way through their price gains. Now is not the time to panic, but to gird up your loins and buy more.

Wall Street was telling us on Tuesday that the millennium had arrived, but doesn't look like it today. Dow puked back 168.32 points (1.27%) to close barely above 13,000 at 13,038.27. S&P500 really took it hard with a 22.47 (1.61%) drop.

I often call it the Potemkin Dow because we know that the US government manipulates that market, and has since 1987 (See President's Working Group on Financial Markets). Of all stock indices in the world, only the Dow and S&P500 have held up. Odd, don't you think? Today we saw that difference emerge as the much broader (500 companies) S&P500 sank 1.6% while the narrow Dow (30 companies) sank only 1.27%. More, the S&P500 also sank through emotional/morale/psychological support at the round number 1,400. Charts don't match, either.

Since February 2011 the S&P500 has formed a clear head and shoulders, which usually signals a top but can sometimes signal only a consolidation. Today it closed nearly slap on the neckline, and stands one and one half gnat's whiskers from breaking down. If it does break through that neckline, support appeareth not before 1,275, where awaiteth the 200 day moving average. HandS is complete.

The Dow has formed a like HandS, but the right shoulder went to a slightly higher high than the head. Does that point to a continuation upward? Today it broke down badly, falling through the 20 and 50 DMAs (13,040 and 13,061). HandS neckline stands at 12,650, so the Dow hovers 400 points above that, but the S&P500's condition flashes bright yellow caution lights on the Dow.

Folks, I don't believe this. I don't believe the phony Dow, I don't believe the stock rally, I don't believe the banks are all just fine and fatter'n October hog, I don't believe the economy is recovering, and I don't believe ne'er a word that falls from the mouths of Federal Reserve and government toadies. The closets are stuffed full of corpses, and some day soon, the doors will begin falling open.

And in the Potemkin currency markets this week, the US dollar index jes' performed mighty miracles. Broke down last week out of a two month forming triangle, and in a rational world would have followed through lower. Not the dollar! It's the World's Reserve Currency, right up there next to grocery coupons. It came back up to the lower boundary of that triangle -- yea, against all odds -- and closed at 79.505, up 31.3 basis points today and 75.7 basis points for the week.

Now I may be foaming at the mouth about nothing. Maybe the dollar index merely has climbed up to that line to give it a final kiss good-bye, but today it closed above the line a tad, and above the 20 and 50 DMAs (79.33 and 79.37).

This week's trading low at 78.60 has a twin in the first of April, so this may very well mark a double bottom for the dollar from which it will launch into the stratosphere. Well, to the tops of small outbuildings at least.

How can you tell which? If the dollar closes above 80.00 it will have sliced clean through the nose of that triangle to the upper side. That will attract more buyers. If the dollar falls below 79, then we will either suffer more of this sideways trading or a lower dollar.

On 4 May 1981 the Federal Reserve raised its interest rate to 19%. That was down from 21.5% in December. Paul Volcker had been appointed as FedHed in 1979 with the brief of wringing inflation out of the monetary system. One thing for sure: raising the interest rate to 21.5% will pull people into dollars. Whatever sense the Fed had back then (and it wasn't much) is long gone now, along with all the serious people and adults.

Y'all enjoy your weekend!

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.