My, my, something knocked the breath out of the dollar today, & that dollar drop ricocheted off every other market & 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%) & 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 & 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, & help us pinpoint or confirm reversals. You are watching that turnaround now, and will see stocks cheapening against silver & gold for a while. This supports the idea that silver & 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 & $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 & pain this will end in?
US$1=Y100.66=E0.7668=0.044 103 oz Ag=0.000 708 oz. Au.
Gold 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 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 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 & wind.
Great start today for silver & gold. What's the drawback? Just this: they might rally all the way up to their April breakdown points & 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 & 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 silver & gold.
No doubt exists about the more distant future. Silver & gold will regain all their lost ground & advance to prices you & 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.
On 30 May 1967 the Igbo state of Biafra proclaimed its independence from Nigeria. Col. Odumegwu Ojukwu led his country. Whether Nigeria committed genocide against the Igbo depends on which side you are on, but after two and a half years a great people's brave bid for independence & freedom was overpowered.
On 30 May 1539 Spanish explorer Hernando de Soto landed in Florida.
Argentum et aurum comparanda sunt —
Silver and gold must be bought.
— Franklin Sanders, The Moneychanger