{!-- ra:000000003116ea49000000004f584399 --} Daily Commentary, Tuesday, 16 December a.d. 2014
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Daily Commentary
Tuesday, 16 December a.d. 2014 Browse the commentary archive

Gunnar Haid has posted an interview with me on www.guttrade.net. You can download it there as a podcast. I thought it was pretty good, but it might make y'all want to tear your ears off.

Sorry I missed y'all yesterday, but our website had server problems.

Yesterday was a wild day to miss. The ruble lost 19% against the dollar, down some 54% this year. Half of the Russian government budget comes from oil revenues, and with oil plunging the ruble looks like rubble. Add to that western economic sanctions against Russia, and the ruble landed in truble.

Ain't fiat money grand? Russian banks noted that Foreign Exchange demand was three to four times it normal level. That makes it seem Russians fleeing the ruble were responsible for yesterday's weird currency market results: the dollar index rose 0.41%, the euro rose 0.63%, and the yen rose 0.91%! Yen appears to be the greatest beneficiary of ruble flight. Go to http://bit.ly/1urO35L for a year long chart of the ruble. You can adjust it also to shorter periods.

Currencies weren't the only lunatic asylum yesterday, but I'll touch on the others below.

Stocks yesterday avalanched, Dow down 315.51 points (1.79%) & the S&P500 down 33 (1.62%). Today they tumbled again. Dow plunged 111.97 (0.58%) to 17,068.87. S&P fell another 16.89 (0.85%) to 1,972.74. Since the 5 December intraday highs, both indices have fallen 5.1%.

More: both indices have now closed two days below their 50 day moving averages and left their 20 DMAs behind, yea, long, long ago. At the rate they are now falling, both are in a few days' striking distance of their 200 DMAs (Now 16,861.17 & 1,947.44). Gravity is in the driver's seat, & won't be dislodged easily.

I keep on hearing folks repeat the nostrum that "falling oil prices are good for the economy." I invite them, and y'all, to look at a 20 year chart of oil's price charted against the S&P500 and tell me if you still believe that. You can view it at http://scharts.co/1BVwwaY

By the way, West Texas Intermediate Crude closed UP 0.94% today at $55.93/barrel, first half of a key reversal.

Dow in gold fell again today, below and away from its 50 DMA. It lost 0.69% to close at G$295.40, headed much lower.

Not so the Dow in Silver. It rose 2.08% to S$1,401.02 silver dollars (1,083.60 oz) bounding back into the megaphone pattern it had fallen out of, and even above its 20 DMA (S$1,393.04 or 1,077.43 oz). This altereth not the downtrend.

US dollar index fell hard today, 0.67%) to 88.11. Nearing the deadly 87.50 line, but not there yet. It slaps my attention across the jaws that the greatest gainer from the flight from the ruble was not the US dollar yesterday, but the yen. Today the yen gained 1.17% to 85.76 while the US dollar index lost 0.67%. Euro also gained 0.6% to $1.2511.

Euro has broken out of its bullish falling wedge and rallied to its 50 DMA, but it's not moving very fast. On the other hand the Yen, while not above its 50 DMA, looks far peppier and has closed above its downtrend line from the October high.

The Not-So-Invisible hand of the Nice Government men may have been a shadowy presence behind silver & gold in the last two days. Between currency market panic and a crashing stock market, they're liable to get pretty twitchy. In any event, trading in silver and gold was most unusual, just not quite right.

Let me give you both the last days. Here are charts: http://scharts.co/1sxRx38 & http://scharts.co/1sxU4dB

Yesterday gold fell $14.80 (1.2%) to close $1,207.20 on Comex. However, in the aftermarket it plunged to $1,193. Today gold retraced virtually all yesterday's loss on the chart, but closed down $13,30 (1.1%) at $1,193.90 on Comex. All this happened in a range from $1,187.40 to $1,225.

When you look at gold's End of Day chart, you'll see that the ranges for these two days are nearly identical, but gold closed at the very bottom of the range. Now here's an perplexing question. Wouldn't a fall in the ruble increase some Russian gold buying? Or, is the Russian central bank selling gold reserves to raise dollars or manipulate its exchange rate in the midst of crisis?

During today's trading gold remained below $1,200 until about 5:30 a.m. Eastern, then began to inch up. By 8:30 it had pushed to $1,223.85, but by noon it was below where it started, and flattened the rest of the day.

Net of all this is that gold fell below its 20 & 50 DMA, but remains in the trading channel established off the 6 November low, so its uptrend remains unwounded.

Yesterday silver lost 49.2 cents (3%) to close Comex at 1652.7c. However, it lost another 40 cents in the aftermarket to end the day at 1611.5.

Today was worse. Silver tumbled 81.2 cents (4.9%) to 1571.5c on Comex.

As good as the chart looked on 1 December, it looks that bad today. If I draw a line from that 1 December low to Fridays trading, I come up with a bearish rising wedge, and a breakdown out of the wedge the last two days, far below the 20 & 50 DMAs. If I draw a line from 1 December's low to today's low, it's a little better, but remains a rising wedge.

Silver's relative weakness has driven the gold/silver ratio back to the high, in fact, on the EOD chart to a new intraday high at 77.88 (versus 77.60 at 28 November). However, it didn't close up there, but closed at 76.06.

This ain't right. Either this will turn out very, very bad or it will pass quickly. By very, very bad I mean some sort of panic like 2008, always a possibility in the LFS (Looney Financial System) we suffer under.

On 16 December 1653 General Oliver Cromwell was appointed Lord Protector of England, Scotland, & Ireland. It had taken the English about ten years from killing a king to appoint a new king. Kings must be handy.

On 16 December 1689 as the crown of the Glorious Revolution of 1688 England's parliament passed a Bill of Rights.

On 16 December 1773 Sons of Liberty protestors dressed as "Indians" stormed ships in Boston harbor and threw cases of tea overboard to protest a new British tax on tea.

On 16 December 1811 an earthquake hit New Madrid, Missouri. In a series of earthquakes the Mississippi River actually flowed backwards. Reelfoot Lake was created in Tennessee after the river's course changed.

On 16 December 1811 the battle of Nashville ended. Confederate General John Bell Hood, suffering from pain and perhaps addicted to morphine, had wasted the brave Army of Tennessee in pointless assaults at Franklin and Nashville. In the retreat General Bedford Forrest guarded the army's rear. His men had no shoes, and when he saw their bloody feet, he commandeered wagons to carry them. They would ride the wagons from place to place, get out when they needed to whip yankees, then get back in the wagons & ride on. On those bloody feet they fought still.

On 16 December 1967 in Memphis, Tennessee I married Susan Leavell Askew, and I have been glad of it ever since. She and I were both three years old.

Argentum et aurum comparanda sunt —
Silver and gold must be bought.

— Franklin Sanders, The Moneychanger

At Home in Dogwood Mudhole
Market Snapshot See more charts and market data
16-Dec-14 Price Change % Change
Gold, $/oz 1,193.90 -13.30 -1.10%
Silver, $/oz 15.72 -0.81 -4.91%
Gold/Silver Ratio 75.972 2.928 4.01%
Silver/Gold Ratio 0.0132 -0.0005 -3.85%
Platinum 1,196.00 -18.40 -1.52%
Palladium 784.00 -17.75 -2.21%
S&P 500 1,972.74 -16.89 -0.85%
Dow 17,068.87 -111.97 -0.65%
Dow in GOLD $s 295.54 1.34 0.46%
Dow in GOLD oz 14.30 0.06 0.46%
Dow in SILVER oz 1,086.15 46.59 4.48%
US Dollar Index 88.11 -0.59 -0.67%
IMPORTANT NOTE: The following are wholesale, not retail, prices. To figure our retail selling price, multiply the "ask" price by 1.035. To figure our retail buying price, multiple the "bid" price by 0.97. Lower commissions apply to larger orders, higher commissions to very small orders.
SPOT GOLD: 1,193.70      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,225.93 1,235.48 1,235.48
1/2 AE 0.50 614.24 629.68 1,259.35
1/4 AE 0.25 307.12 320.81 1,283.23
1/10 AE 0.10 125.23 130.71 1,307.10
Aust. 100 corona 0.98 1,159.53 1,171.53 1,195.20
British sovereign 0.24 282.68 294.68 1,251.84
French 20 franc 0.19 224.54 227.66 1,219.41
Krugerrand 1.00 1,208.02 1,218.02 1,218.02
Maple Leaf 1.00 1,208.70 1,223.70 1,223.70
1/2 Maple Leaf 0.50 686.38 626.69 1,253.39
1/4 Maple Leaf 0.25 304.39 319.31 1,277.26
1/10 Maple Leaf 0.10 126.53 130.11 1,301.13
Mexican 50 peso 1.21 1,431.93 1,455.93 1,207.54
.9999 bar 1.00 1,197.88 1,209.70 1,209.70
SPOT SILVER: 15.71      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 22.75 26.50 34.64
VG+ Peace dollar 0.77 19.00 22.00 28.76
90% silver coin bags 0.72 12,090.65 12,448.15 17.41
US 40% silver 1/2s 0.30 4,442.70 4,592.70 15.57
100 oz .999 bar 100.00 1,561.00 1,621.00 16.21
10 oz .999 bar 10.00 162.10 163.10 16.31
1 oz .999 round 1.00 15.81 16.36 16.36
Am Eagle, 200 oz Min 1.00 17.46 18.11 18.11
SPOT PLATINUM: 1,196.00      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,221.00 1,261.00 1,261.00
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© 2013 Little Mountain Corporation, d.b.a. The Moneychanger. All rights reserved. May not be republished in any form, including electronically, without our express permission.

Warnings and Disclaimers

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 trend is up, targeting 16:1 gold/silver ratio or $195.66; stock's primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold or 16 ounces of silver. US$ and US$-denominated assets, primary trend down; real estate bubble has burst, primary trend down.

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 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. For additional information, please see our Ten Commandments for Buying Gold and Silver.
  • One final warning: NEVER insert a 747 Jumbo Jet up your nose.

Explanation of Terms

The US DOLLAR INDEX is the average exchange rate for the US dollar against the Euro, Yen, Pound sterling, Canadian Dollar, Swiss Franc, and Swedish Krona, weighted for each country's trade with the US. It gives a general measure of the US dollar's performance against all other currencies.

The DOW IN GOLD DOLLARS measures the Dow Jones Industrial Average in gold dollars (0.048375 troy oz. by law). The DiG$ depicts the Primary (20 year) Trend of stocks against gold. When the DiG$ is dropping, gold is gaining value against stocks in a trend that should last 15-20 years. The DiG$'s chart is identical to the Dow in ounces of gold, but gives us one unvarying measure all the way back to 1896. Because it shows the primary trend ("tide") of gold against stocks, for investors it is the single most important financial chart in the world today. Since its August 1999 high at G$925.42 (44.8 ounces), the DiG$ has trended down, targeting a G$80-G$20 (4-1 oz. of gold will buy the whole Dow).

The DOW IN SILVER OUNCES shows how many ounces of silver are needed to buy the entire Dow. The DiSoz is trending down with a target of under 36 ounces.

The GOLD/SILVER RATIO is the gold price divided by the silver price, and shows how many ounces of silver it takes to buy one ounce of gold. The Ratio shows us the Primary (20 year) Trend of gold's value against silver. When the Ratio's trend is dropping, silver is gaining value against gold. This trend targets a gold/silver ratio of 16 ounces of silver to one of gold within the next 5-10 years. That implies that silver will massively, vastly outperform gold before this bull market ends. When both metals are rallying, the ratio often (but not always) drops, confirming the rally.

Other Important Information

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