|Gold Price, $/oz||1,226.90||-8.90||-0.72%|
|Silver Price, $/oz||15.21||-0.01||-0.09%|
|Dow in GOLD $s||298.50||3.55||1.20%|
|Dow in GOLD oz||14.44||0.17||1.20%|
|Dow in SILVER oz||1,165.11||6.56||0.57%|
|US Dollar Index||94.82||-0.33||-0.35%|
On Tuesday the Fed's answer to the Wicked Witch of the East, Janet Yellen, cooked up a spell to help Wall Street. In a speech in New York she waffled (I know that's redundant, "Fed" and "Waffle") on raising interest rates soon. Signal to the market was, "Party animals! Stock party's still on!" Also, "Dollar will get no help from the Fed." Stocks jumped, gold & silver jumped, dollar tanked, and hedge & mutual fund managers get to make better reports for the first quarter. See how easy that was? A simple spell: "N-o-R-a-t-e-R-i-s-e."
No doubt she always wanted to throw a bone to oil producers. Just drop it off her broom in a fly-by, as it were, knocking down the US dollar. Whoa! Watch out for them wanged monkeys! Them thangs bite!
Stocks today kept rising, but without much inspiration. Dow climbed 83.55 (0.47%) to 17,716.66. S&P500 chugged along at its side, 8.94 (0.44%) higher at 2,063.95.
Dow approacheth its last high close at 17,721 (29 December 2015). Yeah, won't they be jubilatin' on Wall Street if it can pass that mark. 2,078.36 is the S&P500's comparable close. I'm not counting on seeing that. Dow in Silver & Dow in Gold appear to be nearing the end of their rallies, so that puts a limit on how much higher stocks can climb.
By the way, y'all do understand that raw number gains are meaningless, right? Only thing that counts is PURCHASING POWER GAINS. During the 1921-23 German hyperinflation, for example, stocks soared hugely but lost purchasing power. Raw numbers mean nothing, only purchasing power. Raw number for the Dow look great, until you adjust them for inflation or compare them to gold or silver.
US dollar index plunged 33 basis points (0.34%). Chart's here, http://schrts.co/ZhjJhK
Come to think of it, all the trouble the Dollar Index has suffered these last 9 months has come from central banks. All those waterfalls you see on the chart were loosed by some central bank's announcement, including the latest one precipitated by Mother Yellen. Dollar has now reached the downtrend line from its March 2015 peak. It's below all its moving averages, and ain't got a friend in the world. Only important thing to watch is 92.50. If the dollar breaks down there, we have a whole new game, because it will sink much further.
Euro rose 0.45% to $1.1342, pursuing a reluctant rally. Yen rose 0.22% to 88.95, above its 20 DMA again but indecisive twixt rallying and plunging.
Gold tumbled $8.90 (0.72%) to $1,226.90 while silver barely moved, down 1.4¢ (0.09%) at 1520.6¢.
Yesterday gold leapt $15.70 (1.3%) on Mother Yellen's broom, but although it climbed over $1,240, its fingers were too slippery to hold on there. What interest me more than yesterday's bound is the limit of the fall. Day before yesterday gold hit $1,206.10, yesterday $1,215.30, today $1,223.40. Hasn't closed below $1,220, so clearly there are enthusiastic buyers below $1,220. Chart: http://schrts.co/kGImYK
That $1,206 low came awfully close to the 50 DMA, a frequent target in bull market corrections. My mind is now fermenting (you there! Stifle that smart remark!) on the possibility that gold won't drop any further. That instead of returning to $1,170 it will take off from here and blow past $1,308. I am not yet saying it will, but that idea is invading my mind.
One reason it's invading is found on silver's chart. http://schrts.co/kY9doO I've drawn a green uptrend line from the January low, and it has caught every fall since then. It's tautological, but silver would have to break that uptrend in order to make that 1460¢ low I have been anticipating.
What if it don't? The low so far, 1506¢, came right close to the 200 dma (1492¢). Might be correction enough.
Tomorrow silver needs to close below 1517¢ to break that line. If it does, well, that ends the fermentation in my brain. If it don't, then maybe we ought to start making other plans, cause that chart is preening a flat-topped rising triangle, which forecasts an upside breakout.
Not sure yet. Just musing.
- Franklin Sanders, The Moneychanger
© 2016, 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 or 18 ounces of silver. US $ and 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.