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Thursday, May 09, 2013

Silver and Gold Prices Stumbled Today Metals are Way Oversold

Gold Price Close Today : 1468.80
Change : -5.90 or -0.40%

Silver Price Close Today : 23.879
Change : -0.013 or -0.05%

Gold Silver Ratio Today : 61.510
Change : -0.213 or -0.35%

Silver Gold Ratio Today : 0.01626
Change : 0.000056 or 0.35%

Platinum Price Close Today : 1516.50
Change : -11.10 or -0.73%

Palladium Price Close Today : 713.65
Change : 16.50 or 2.37%

S&P 500 : 1,626.67
Change : -6.02 or -0.37%

Dow In GOLD$ : $212.27
Change : $ 0.53 or 0.25%

Dow in GOLD oz : 10.269
Change : 0.026 or 0.25%

Dow in SILVER oz : 631.63
Change : -0.60 or -0.09%

Dow Industrial : 15,082.62
Change : -22.50 or -0.15%

US Dollar Index : 82.74
Change : -0.825 or -0.99%

Silver and GOLD PRICES answered yesterday's questions by stumbling again today, $5.10 lower at $1,468.80 for gold with silver scraping off a mere 1.3 cents to 2387.9c.

First, gold day before yesterday broke through the downtrend line that had supported its rise from the $1,321.50 low on 15 April. Next, the gold price follows through lower today. However, it remains above its 20 DMA ($1,443.59). It has tee-tiny support at $1,440, but more at $1,425, and lots at $1,400. At $1,375 monkeys in the trees will be buying.

What's eating at me is this: It is logical, if you watch markets, to expect the gold price to test that 15 April low, probably with a higher low around $1,375 - $1,400. Sounds simple, don't it? Yep, so everybody in the world is probably waiting for the same event, leaving just one hitch: markets seldom do what everybody expects. Besides, when everybody expects it, they tend to act to prevent it -- or might. Thus we do not all live on the Riviera, eating snails and sipping single malt Scotch.

So how would gold MOST surprise markets? By running to $1,500, fiddling there, then blasting through $1,525 and never slowing down. Now I don't reckon that is terribly likely, but it might happen. However, it would need a new crisis suddenly to emerge to propel it there. Shucks, that ain't no problem! Why, the world financial system has more skeleton crises in its closets than a coon hound has ticks and fleas!

Meanwhile, we keep waiting for a test of the low, along with everybody else.

SILVER PRICE, normally as volatile as nitroglycerin, has gone into a coma and all we hear from it is snoring. It has built an uptrend, and didn't fall out of that uptrend today. More, it has built an even-sided triangle it might break out of either way, up or down. But it can't seem to push past that 20 DMA (2395c today), a sure enough black mark.

Add another ingredient to the mystery: the GOLD/SILVER RATIO. If silver and gold intended to fall further, it seems they would telegraph that by a rising ratio, but it riseth not. In fact, it appears to have topped out with a spike.

Now pour in some low sentiment numbers that loudly whisper in a contrarian voice that silver and gold have been way oversold.

None of that bakes a cake for grievously lower prices or another plunge, so I just keep watching to see how silver and gold prices will resolve, and gathering up cash so I'll have plenty when it comes time to buy.

Here's a quotation from Ian McAvity who writes "Deliberations" and has forgotten more about technical analysis than most people will ever know: "The elites running the western world still ignore the elephant in the room, excessive debt overhang and creation of new debt to kick the can down the road. That's the deflationary wall their reflation efforts are running against. The Fed money printing is refueling financial markets but not Jane and Joe Sixpack, US consumers who spend in the real world. . . In my view it’s a Bernanke-driven financial bubble largely aimed at re-loading the banking system, rather than stimulating the job growth and consumer consumption objectives they profess." ($225/18 issues from Box 182, Adelaide St. Stn., Toronto, Ont M5V 2J1)

Meanwhile the yen and euro lost the election for homecoming queen today. The US dollar broke 100c/Y100 and fell 1.66% to Y99.36. That sent shorts and hedgers scurrying to cover. Can you imagine how many stop orders were sitting around 100?

Meanwhile in Euroland, where all the economy is pretty and every country above average, except the ones who are not, a Spanish government debt auction brought less than expected (=interest rate rose) which seemed to remind some of the mindless that Spain, as well as Portugal, Italy, Ireland, Greece, and Cyprus still might have a few sovereign debt problems. Or, to speak with much greater exactitude, the banks holding their bad paper have a problem, for, LO! An economy doth not live by bread alone, but must have banks! That's graven in stone someplace -- ain't it?

Euro sank 0.9% back to support at $1.3038. Closed below its 20 DMA ($1.3079) and hit its 50 DMA ($1.3012) AND closed below its trendline. Honey, this currency ain't even gonna make the homecoming court! Face it: the euro is no longer cool.

US dollar index rose 1.06% or 82.5 basis points, a meaty gain, to close at 82.74. By my reading that cracks the shell on that rounding top the dollar had formed and breaks the dollar out upside (also above its 50 and 20 day moving averages). Now there ruleth a false orthodoxy that believeth a falling dollar benefiteth stocks and the economy. This, y'all will remember, is why the Zimbabwean economy is the envy of the world. Thus a rising dollar today may have been one of those forces weighing on stocks.

On the other hand, stocks have plenty weighing on them without a rising dollar. This "pokey-pokey" trying to punch to a new high typifies tops. Also, the Dow made the first half of a key reversal today (break into new high ground with a close lower than yesterday's). Owch. So did the S&P500. I long ago gave up trying to call a top in a mania/bubble, but today might be one. Then again, might not.

Dow yielded 22.5 (0.15%) to close at 15,082.62. S&P500 misplaced 6.02 (0.37%) to 1,626.67. Both have formed rising wedges, both could fall, but a mania in a bubble driven by inflation can't be forecast.

Dow in gold fidgeted up a bit, up 0.026 oz to 10.269 oz (G$212.27 gold dollars). Needs to drop further below its 20 DMA (10.28 oz) to keep that downtrend running.

Dow in silver also rose, 2.25 oz (0.36%) to 635.06 oz. Still trending down.

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.