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Thursday, May 30, 2013

Gold Price Burst Higher Like a Basketball Held Underwater

Gold Price Close Today : 1411.50
Change : 20.20 or 1.45%

Silver Price Close Today : 22.674
Change : 0.235 or 1.05%

Gold Silver Ratio Today : 62.252
Change : 0.248 or 0.40%

Silver Gold Ratio Today : 0.01606
Change : -0.000064 or -0.40%

Platinum Price Close Today : 1481.50
Change : 29.70 or 2.05%

Palladium Price Close Today : 758.00
Change : 10.20 or 1.36%

S&P 500 : 1,654.41
Change : 6.05 or 0.37%

Dow In GOLD$ : $224.43
Change : $ (2.94) or -1.29%

Dow in GOLD oz : 10.857
Change : -0.142 or -1.29%

Dow in SILVER oz : 675.86
Change : -6.11 or -0.90%

Dow Industrial : 15,324.53
Change : 21.73 or 0.14%

US Dollar Index : 83.03
Change : -0.600 or -0.72%

The GOLD PRICE burst higher like a basketball held underwater. Smashed through that $1,395 resistance and rose $20.20 (1.45%) to end at $1,411.50. Silver was more lethargic, rising only 23.5 cents (1.05%) to 2267.4c.

The five day gold price chart shows a low at $1,373.70 on Tuesday, and a steady rise until today. About 1:00 a.m. New York time gold levitated straight up from $1,395 to $1,410. From that time till New York opened SOMEbody drove gold back down to $1,400, even a few bucks below, but at 9:30 gold gapped from $1,402 to $1,414 in a single bound, then never dipped below $1,410 again.

It was a clean breakout, and touched the 20 DMA at $1,416.05. Yet from here gold faces naught save labor and trouble -- lots of resistance from $1,425 to $1,495. Yet a hint of gold's strength is show in where it closed today: smack on the downtrend line from the April highs. That would lift the spirits of a fat frog in a deep well.

Don't y'all be surprised if a tussle breaks out in the gold market tomorrow and it falls back toward $1,400, but must not close below that. Really ought to close higher within two days if it wants to confirm this breakout.

SILVER PRICE left a bottom behind on Tuesday, too, and confirmed it with another on Wednesday. Today it climbed above the downtrend line from the April highs and even touched its 20 DMA (2308c). It's a quite promising start, but needs to clear 2330c to prove its muscle and wind.

Great start today for the silver and GOLD PRICE. What's the drawback? Just this: they might rally all the way up to their April breakdown points and fall one last time, and Mercy! We won't be able to tell until they close up above those breakdown points, way higher at $1,550 and 2750c. If we wait to then to "be sure," we'll be paying a lot more to buy.

On the balance in favor of buying now is a double bottom in both the silver and gold price.

No doubt exists about the more distant future. The silver and gold prices will regain all their lost ground and advance to prices you and I cannot now imagine. I interviewed James Turk of GoldMoney.com last week, and he expects gold to finish this year higher than it started.

My, my, something knocked the breath out of the dollar today, and that dollar drop ricocheted off every other market and sent ninepins scattering everywhere (that's three mismatched metaphors in a single sentence. Almost good enough to meet "USA Today" or US Government writing standards).

If I were a New York stockbroker, the 5 day Dow chart would be enough to make me puke on my pointy toed shoes. Today's lower close after Tuesday's attempt to rally, and after Wednesday a week ago's key reversal pretty much guarantees that gravity has taken charge.

Dow actually gained 21.73 today (0.14%) and the S&P500 augmented 6.05 (0.37%) to 1,654.41. Not inspiring. Appears that Wednesday a week ago marked the beginning of a down leg, and it's likely to get bloody right soon.

Ahhh, but look at the Dow in Gold and Dow in Silver. Zut alors! The Dow in Gold dropped 0.15 oz (1.4%) to 10.85 oz (G$224.43 gold dollars). Clearly the canoe has nosed over the edge of the waterfall. (20 DMA stands barely below at 10.74 oz).

Tain't quite as dramatic, but the Dow in silver has rolled over, too. Lost 6.11 oz (0.9%) to end the day at 675.86. 20 DMA, first confirmation of a reversal, stands at 659.32.

Here's my broken record again: reason these two indicators is crucial is because they are the most reliable forecasters of the direction of stocks and metals, and help us pinpoint or confirm reversals. You are watching that turnaround now, and will see stocks cheapening against silver and gold for a while. This supports the idea that silver and gold have already seen their price lows.

Somebody sucker punched the US dollar index today (the metaphor lobe of my brain is overactive today). Sank like your mother-in-law's opinion of you when you showed up drunk for her birthday party. Lost 60 basis points (0.77%) after losing 58 basis points yesterday, and landed on 83.025 -- well below the 83.28 twenty day moving average. A close below 82.96, the 50 DMA makes it hard to argue that the dollar has not turned down. Yield on 10 year Treasury rose, too. It appears to have broken out upside. Poor Ben!

The Euro bounded 0.8% higher to $1.3042. That takes it above all its moving averages, which were clustered between $1.2969 and $1.2998. Clean break out also above the downtrend line. If the scabrous euro can close above 1.3010, it should rally at least to $1.3243, maybe lots higher.

The Japanese yen rose 0.52% to 99.34 cents/Y100. Do y'all care? Is it possible the world is so ignorant it doesn't know what tears and pain this will end in?

US$1=Y100.66=E0.7668=0.044 103 oz Ag=0.000 708 oz. Au.

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.