What's happened in silver & gold the last two days looks an awful lot like a key reversal. I'll explain later.
Today & yesterday takes place the Election Lottery where people take highly speculative positions anticipating some change arising from the election. For instance, lots of folks are buying stocks, probably anticipating a Romney election which they think will boost stocks. Or they're buying gold anticipating four more years of Obummer. Either way, it's just a bet. The genuine trend will avenge itself come Wednesday.
US Dollar Index fell a squeentch today, 11 basis points (0.14%) to 80.602. Now of all people I would not be suspicious, yea, paranoid enough to suggest that the head of the Federal Reserve, the Bernancubus, would jimmy with international & dollar exchange rates in the run up to an election, any more than I would ever suspect that said Fed-head would announce QE3 to boost somebody's presidential campaign, or that Federal Government bean counters would announce wildly improved employment stats just to further the incumbent's campaign. Nope, not me -- I'd never do that. [The figure of speech is called "praeteritio" or "apophasis," & means to mention by not mentioning. Handy one, that!]
Anyhow, the US dollar index aimeth yet up, & will aim up, as long as it stays above 80.25, whoever gets elected.
Euro filled yesterday's gap and hit its crucial 62 day moving average. Gained 0.14% to $1.2816. I'd as soon own euros as have a root canal done by a diesel mechanic, without anesthesia.
Japanese yen doesn't look much better. It lost 0.14% today to 124.45 cents per 100 yen, not enough to change anything at all on the chart. Remains below its 200 DMA, which resembles drawing to an inside straight at 5 card stud.
Y'all recall that 138.61 points the Dow gained on 1 November and that 139.46 points it lost on 2 November? Well, today it gained 133.24 points, remaining stuck behind the barrier at 13,250. Dow ended at 13,245.68, up 1.02% while the S&P tagged along, adding 11.13 (0.79%) to 1,428.39.
This action is sorry as gully dirt. Both the S&P500 & the Dow remain below the neckline of the Head & Shoulders formed from January to May of this year. Both broke down through the neckline thereof, both made June lows, both formed bearish rising wedges to slightly higher highs for the year.
Back away from that chart a second. Both have formed Broadening Top formations & are hovering a bit above their 200 DMAs. Both now rest right on that old neckline.
I reckon if the Nice Government Men pour buying into the market that might raise it, but nothing in the chart suggests stocks will rise under any other power.
Here's a little guessing game: Which asset has managed the highest total return since Obama's first election in November 2008? Nope, not stocks, not the dollar, not oil, not even gold, but SILVER, with a 200+% return. Gold came in second a little over 110%.
Which brings me to the precious metals today. Gold rose $31.90 to close $1,714.10 while silver leapt 90.6 cents to 3201.9c.
A Key Reversal takes place when a market breaks to a new low for the move, like gold's $1,672.40 yesterday & then closes higher than the day before, like gold's close yesterday at $1,682.20. But the needful other half of the Key Reversal is a higher close the next day, like gold's $1,714.10 close today, up $31.90.
In fact, the same thing happened yesterday in silver as well, with a new low at 3064c and a higher- than-the-day-before close at 3111.3. Today silver wreaked vengeance on the shots by gobbling up 90.6 cents and closing higher at 3201.9c.
Let's clinch this down. Silver hit $1,720.33 today and was stopped only by the Kryptonite rays from $1,725 resistance. Once it jumps that lateral resistance at $1,725, coincidentally also the 20 DMA's location at $1,724.65, 'twill run like a scalded dog.
Shucks, it don't stop there. The MACD & the RSI have both turned up, too, and both silver & gold have broken through, pierced, shattered, & penetrated the downtrend line from the early October highs. And platinum & palladium have both turned up.
And the gold/silver ratio made its high for the move yesterday & dropped today.
Folks, it don't get no better than this. Of course, the risk you're wrong hovers even over the surest thing & closest reasoning, but still, it don't get no better than this. Buy silver & gold tomorrow, & never mind the price. The ONLY contradiction to that would be if gold opened tomorrow below $1,695 -- the ONLY contradiction.
The long correction has ended. Time to jump back into silver & gold. Don't y'all make me have to tell you twice, as my Grandmamma might say.
On 6 November 1861 was elected the first president of the Confederate States of America, Jefferson Davis.
For those of you who want to know more about my daughter-in-law, Shawn Sanders, you can read this article from the Vail Daily about her work founding & running Little Chefs of Vail. Love just overflows out of some people, and must find a stream to run in. bitly.com/SzBh30
Argentum et aurum comparanda sunt —
Silver and gold must be bought.
— Franklin Sanders, The Moneychanger