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Friday, April 05, 2013

The Gold Price Must Jump Over $1,600 and it's 50 DMA at $1,612.62 Next Week to Confirm Today's Reversal

Gold Price Close Today : 1,575.40
Gold Price Close 28-Mar-13 : 1,594.80
Change : -19.40 or -1.2%

Silver Price Close Today : 27.201
Silver Price Close 28-Mar-13 : 28.292
Change : -1.091 or -3.9%

Gold Silver Ratio Today : 57.917
Gold Silver Ratio 28-Mar-13 : 56.369
Change : 1.55 or 2.7%

Silver Gold Ratio : 0.01727
Silver Gold Ratio 28-Mar-13 : 0.01774
Change : -0.00047 or -2.7%

Dow in Gold Dollars : $ 191.12
Dow in Gold Dollars 28-Mar-13 : $ 188.97
Change : $2.15 or 1.1%

Dow in Gold Ounces : 9.245
Dow in Gold Ounces 28-Mar-13 : 9.141
Change : 0.10 or 1.1%

Dow in Silver Ounces : 535.47
Dow in Silver Ounces 28-Mar-13 : 515.29
Change : 20.18 or 3.9%

Dow Industrial : 14,565.25
Dow Industrial 28-Mar-13 : 14,578.54
Change : -13.29 or -0.1%

S&P 500 : 1,553.28
S&P 500 28-Mar-13 : 1,569.19
Change : -15.91 or -1.0%

US Dollar Index : 82.494
US Dollar Index 28-Mar-13 : 82.980
Change : -0.486 or -0.6%

Platinum Price Close Today : 1,534.40
Platinum Price Close 28-Mar-13 : 1,571.20
Change : -36.80 or -2.3%

Palladium Price Close Today : 722.75
Palladium Price Close 28-Mar-13 : 767.10
Change : -44.35 or -5.8%

The GOLD PRICE began getting frisky as soon as the US market opened and never looked back. Range was $1,549.88 - $1,580.64.

On a four month chart gold stretched its neck like a giraffe and closed near the top of the range (and above, on the End Of Day chart). This takes it back above the support/resistance where it broke down.

Hovering above gold is the 20 DMA at $1,591.66, coincidentally resistance. To confirm today's reversal as genuine and lasting, the GOLD PRICE must jump over $1,600 and the 50 DMA at $1,612.62 next week.

A reversal this week after a three day breakdown conforms to gold's (and silver's) behavior in the last few month, where breakdowns have spiked down only a day or two. This week was two days down below support, and one day back up.

The SILVER PRICE was already rising when the New York market opened and just kept at it after quickly leaving 2700c behind.

This week silver broke down through the bottom channel line that had contained it since last August. Low this week came at 2658c yesterday. Silver spent two days below that support, then punched back into the channel today.

Silver has created a falling wedge, which usually resolves by turning upward. However, silver must close above 2850c to prove a rally has begun, and could handily do that next week.

Once again, today's reversals must be validated by ongoing rises above overhead resistance, but it appears that silver and gold bottomed yesterday.

GOLD/SILVER RATIO today closed at 57.917. If you still want to swap silver for gold, you have very little time to do it. Ratio peaks don't hang around a long time.

Bull market (Primary Uptrend) remains intact. Won't give you much more chance to buy at these bargain prices, so y'all had better buy soon.

What last week promised, this week made good.

Last week the Dow in Silver and Dow in Gold looked toppy, silver and gold seemed at the correction's end, and it seemed the world couldn't get no better for the US dollar and stocks. Well, if it can't get no better, it won't. Today showed the first signs of turnarounds.

Out of 13 weeks since the year began, Dow has fallen only four. This week was, ominously, one of them. Dow today lost 40.86 -- great tape-painting at day's end, Nice Government Men! -- or 0.28% to close 14,565.25. S&P500 lost 0.43% (6.70) to 1,553.28.

Today was not kind to stocks. Day opened with a bad unemployment report which whispered that Bogus Ben's money flood might not be turning the tide against joblessness. Stocks did not like that, and sank like your future when you crash into the back of a cop car at a stop light, spilling your beer and dropping your joint.

Today's close took the S&P500 waaay below its 20 DMA (now 1,557.35), although it didn't close at the bottom of its range (1,539.50). Chart looks like a windshield with hoar frost a cat slid down. 50 DMA lieth not far below at 1,531.11.

To remind y'all, the 20 day moving average is the first trip wire of a decline. Each close below each successive moving average confirms a cross of the one above. (A 20 DMA takes the last 20 days' prices and averages them. Tomorrow you drop the oldest price, pick up the newest, and re-average -- thus it "moves." Mathematically, a rising market should remain above that MA if it is to continue rising.)

Dow Industrial Average pierced its 20 DMA (14,511.24) but didn't close beneath it. Yet like the S&P500 it has been trending downward for the last four days.

More to the point are the Dow in Silver and Dow in Gold. Both gapped down today, leaving an "island reversal" behind. That's a few days of trading at the top of a rally, isolated by gaps going into it and coming out. Gaps are usually filled, but this one is not, so filling this gap negates the island reversal. Dow/Silver today fell 1.94% to 534.11 oz. Dow/Gold slid 2.01% to 9.21 oz (G$190.39 gold dollars). For comparison's sake, the Dow in 1929 peaked at G$381.17, and in August 1999 at G$925. So much for the so-called bull market in stocks.

Durn, I get distracted too easily. My point is that it appears (confirmation is always needful) stocks have peaked against silver and gold. That, in turn, whispers that silver and gold have turned up.

Whoo! That dollar index posted first half of a key reversal yesterday, reaching a new high intraday but closing lower than the day before. Today the dollar obligingly filled in the SECOND half of that key reversal by closing lower, and sharply lower. Dollar lost 22.9 basis points (0.29%) to end at 82.494, below both the 20 DMA (82.85) and 50 DMA (81.54). Dollar has left behind a big old rounding top.

Yesterday the new governor of the Bank of Japan announced the BOJ would add $1.2 trillion (with a T) to the money supply by end-2014. That tanked the yen and today it hit a new low, closing down 1.29% at 102.45 cents/Y100. Now I reckon the world will be treated to a demonstration of the question, "Can a nation reach prosperity by depreciating its currency?" I already know the answer, and would give it to the Japanese for a lot less than $1.2 Trillion, but they, like their central bank counterparts around the world, are such stone-cold Keynesian goofs they won't listen and will screw up their economy anyway.

Euro rose 0.46% to $1.2992, above its 1.2925 20 DMA, above its 200 DMA, very strongly rising. Try to riddle that riddle, how the 2nd ugliest of three ugly currencies could be asked to dance?

I reckon every dog has his day, and this day belonged to silver and gold. Silver gained 45.3 cents (1.7%) to 2720.1c and gold shot up $23.60 (1.5%) to $1,575.40. That carries them above the levels I wanted to see to mark a turnaround (I had previously said $1,580 but since it closed above $1,575 and traded at $1,580 in the aftermarket, I'll call that a win.)

Y'all enjoy your weekend!

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

- Franklin Sanders, The Moneychanger
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© 2013, 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.