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Thursday, May 02, 2013

Silver and Gold Prices Up Today Must Provide Proof of Reversal

Gold Price Close Today : 1467.70
Change : 21.40 or 1.48%

Silver Price Close Today : 23.790
Change : 0.485 or 2.08%

Gold Silver Ratio Today : 61.694
Change : -0.366 or -0.59%

Silver Gold Ratio Today : 0.01621
Change : 0.000096 or 0.59%

Platinum Price Close Today : 1497.70
Change : 32.00 or 2.18%

Palladium Price Close Today : 691.40
Change : 8.55 or 1.25%

S&P 500 : 1,597.59
Change : 14.89 or 0.94%

Dow In GOLD$ : $208.90
Change : $ 7.50 or 3.72%

Dow in GOLD oz : 10.105
Change : 0.363 or 3.72%

Dow in SILVER oz : 623.44
Change : -7.37 or -1.17%

Dow Industrial : 14,831.58
Change : 130.63 or 0.89%

US Dollar Index : 82.21
Change : 0.562 or 0.69%

Stay calm, possess your soul in patience, silver and GOLD PRICES must provide us with hard proof they have reversed. That will come before too long.

I believe the worst has passed SILVER PRICE, even though I expect to see a double bottom yet, or a slightly lower low. The GOLD/SILVER RATIO peaked two weeks ago. Pretty solidly. Appears to have no desire to move up further. The ratio doesn't always peak at the price bottom of both metals, but a ratio trending down promises higher silver and gold prices.

Draghi's announcement that the ECB would not limit lending to banks and would lower interest rates below zero put STP in gold's gas tank. It shot up $21.40 (1.48%) to $1,467.70. Passing gold, silver clambered up 48.5 cents (2.08%) to 2379c.

This is good, this is grand, this warms the heart, but look here. Gold's high yesterday was $1,475.00, and today 1,471.88. A lower high. Silver's high yesterday was 2432c, today 2421c. Gold did close above its 20 DMA ($1,465.31) but silver closed still way below its 20 DMA (24.66). Over the past 5-6 days silver and gold prices have established a downtrend -- lower highs, lower lows -- and must close above 2480c and $1,484.80 to gainsay that.

Super Banker Mario Draghi gave us another lesson today in how central banks help stabilize markets. For the ECB's benchmark interest rate setting council he announced that "Zero ain't low enough!"

That's right. They lowered the benchmark rate from 0.75% to 0.5%, and threatened to take the deposit rate below zero if need be. Y'all understand this? Below Zero interest means you will be paying the bank to hold your money.

No surprise to anybody with an IQ higher than a possum's that the Euro fell like a lump in a churn and gold shot up. Gold critics are ever want to point out that gold payeth no interest, so the "opportunity cost" of holding gold is the interest rate income you forgo. (For a moment just let alone that the "realized and not hypothetical cost" of holding fiat money is that it depreciates everyday, sort of an innate negative interest rate). However, with interest rates at, near, or below zero, it costs no interest income at all to hold gold.

Euro fell from a high yesterday at $1.3243 on the open today at $1.3200, then wilted like lettuce in a blast furnace. Dropped through and closed below its 20 DMA ($1.3069). Ended down 0.92% at $1.3064. All that's needed is a close below $1.2974 to nail that coffin shut. Yen fell back 0.63% to 102.04, but clinging on above its 20 DMA.

Mario Draghi boosted the dollar today, up 56.2 basis points (0.72%) to 82.21. That breaks through the rounding formation on the chart, and if confirmed breaks out skyward.

I don't know why stocks react to anything, or what they'll react to, other than trillions of dollars of Quantitative Easing and a timely goose from the Nice Government Men. Today they rose, after falling sharply yesterday.

S&P500 waxed 0.94% (14.89 points) to 1,597.59, a new high by 0.07. Dow mounted 130.63 points (0.89%) and ended 14,831.58. Odd thing is that over the last four days both indices have stopped cold at the same spot. That doesn't promise happiness and chintz curtains tomorrow.

Dow in gold opened lower, below the 20 DMA, but climbed to close 0.21% higher than yesterday at 10.11 oz. (G$208.99 gold dollars). Remains in a downtrend -- do I sound like a broken record?

Dow in silver put in the same performance, rising only 0.08% (about half an ounce) to 622.39 oz. Once again, the downtrend trendeth yet 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.