The Moneychanger
Daily Commentary
Wednesday, 3 August a.d. 2011 Browse the commentary archive

Today's question is, why did palladium drop 3.9% on a day that silver rose 4.2%? Those contradictions unappreciated can come back to leave you puking in the wastebasket.

Been cogitating, & am beginning to conclude that markets did --after an initial misapprehension -- react properly to raising the debt ceiling & the Greek bailout. What do both events promise, nay, guarantee? Much more inflation. What will inflation do to stocks? Wreck them. What will inflation do to silver & gold? Drive them wild.

I reckon logic sometimes triumphs, even if it takes a few days.

Stocks recovered just enough to pull their tattered rags about their naked, bruised body and hide their shame. Raggedy, raggedy day for stocks, most of it spent underwater, slapped back when they tried to rally, then eeking out a close 29.82 points higher or 1/4 of 1% at 11,896.44.

Way down below 10,700 has a target painted on it. Maybe lower.

S&P 500 today gained 6.29 points or 1/2 of 1% to close at 1,260.34.

If you are one of those procrastinating putter-offers still clutching the delusion of a come-back to your breast, now would be a good time to drop the delusion, stamp on its face with your brogans, sell those stocks, and get out of harm's way.

Stocks -- to the investment question of, "How do you feel today?" they are the answer, "Flu, food poisoning, & chiggers."

US DOLLAR INDEX fell thru 74 a bit -- down 53.3 basis points to 73.98 -- but remains in this protracted bottoming process. Won't resume its downward progress for a while.

Euro rose today to close at 1.4322, up 0.91% and thru its 20 & 50 dmas. I'd buy shares in a lottery ticket before I'd buy euros. Japanese NGM are trying to edge the yen down off its uppity new high.

GOLD reached another new all-time high today, touching intraday $1,675 and closing the doors at Comex up $21.50 to $1,663.40. Gold has reached the top of its trading channel so will probably bounce off that & correct a few days. Yet it will return to batter at the ceiling again. Point & Figure chart gives a $2,060 (Two thousand Sixty U.S. dollars) target.

SILVER is nearing the top of its long term trading channel which it will strike about 4350c. Today it gained 4.2% or 166.6c to end its day on Comex at 4174.7c. Merciful heavens! Probably a little correction will ensue with silver, too, having run up two dollars in two days. New support is now 4100c. New resistance 4200c.

Any breakout thru the top trading channels, long standing trends like these, leads to an explosion. You literally have to double the channel when that happens. A little more likely here is at least a temporary rebound downward off those lines, even if silver & gold intend to penetrate them soon.

A gold close above $1,675 would whisper that some huge crisis is brewing behind the scenes, huge on the scale of fall 2008.

You will make a big mistake waiting to buy silver or gold. Huge. Yes, we may see a sizeable correction, but we have entered the wild stage of a bull market. Y'all can't even imagine how much wilder it will get.

On 3 August 1745 Bonnie Prince Charlie Stuart landed in the Hebrides Islands of Scotland to begin his attempt to overthrow the Hanovers & reclaim the English throne for the Stupids -- errr, sorry, make that Stuarts. Thousands of Highlanders flocked to his banner in the "Rising of '45" and drove the English before them, penetrating to Carlisle then Derby. There in confused council his supporters lost their nerve and retreated. Eventually on 16 April of the next year the Jacobite army was destroyed at the Battle of Culloden.

The kind Hanoverian kings killed as many of the Scots as they could, and shipped the balance overseas as slaves. They removed Scottish lords and proscribe traditional Highland dress. Wearing a tartan became a crime.

Between 1720 and 1776 most of the immigration into British North America was Scottish, either Scots, Highland Scots, or their cousins in Northern Ireland, the Scotch Irish. When 1775 came, they proved that 30 years, or 70 years, was not enough to erase the crimes against them from their ancestral memory. Nemo me impune lacessit-- Nobody injures me and gets away with it. There's a reason the thistle is the national flower of Scotland.

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

— Franklin Sanders, The Moneychanger

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Market Snapshot See more charts and market data
3-Aug-11 Price Change % Change
Gold, $/oz 1,663.40 21.50 1.3
Silver, $/oz 41.75 1.67 4.2
Gold/Silver Ratio 39.840 -1.120 -2.7
Silver/Gold Ratio 0.0251 0.0007 2.8
Platinum 1,781.80 -13.70 -0.8
Palladium 795.50 -31.90 -3.9
S&P 500 1,260.34 6.29 0.5
Dow 11,896.44 29.82 0.3
Dow in GOLD $s 147.84 -1.55 -1.0
Dow in GOLD oz 7.15 -0.07 -1.0
Dow in SILVER oz 284.97 -11.10 -3.7
US Dollar Index 73.98 -0.53 -0.7
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: 1,660.60      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,697.13 1,711.13 1,711.13
1/2 AE 0.50 851.89 871.82 1,743.63
1/4 AE 0.25 428.64 440.06 1,760.24
1/10 AE 0.10 177.68 184.33 1,843.27
Aust. 100 corona 0.98 1,616.33 1,629.33 1,662.24
British sovereign 0.24 388.95 393.95 1,673.54
French 20 franc 0.19 308.48 313.48 1,679.08
Krugerrand 1.00 1,673.88 1,687.88 1,687.88
Maple Leaf 1.00 1,675.60 1,693.60 1,693.60
1/2 Maple Leaf 0.50 869.74 880.12 1,760.24
1/4 Maple Leaf 0.25 435.91 440.06 1,760.24
1/10 Maple Leaf 0.10 169.38 190.97 1,909.69
Mexican 50 peso 1.21 1,986.00 2,001.00 1,659.62
.9999 bar 1.00 1,666.41 1,677.41 1,677.41
SPOT SILVER: 41.73      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 31,000.00 33,000.00 43.14
VG+ Peace dollar 0.77 30,000.00 32,000.00 41.83
90% silver coin bags 0.72 28,903.88 29,228.88 40.88
US 40% silver 1/2s 0.30 11,836.88 12,061.88 40.89
100 oz .999 bar 100.00 4,147.50 4,192.50 41.93
10 oz .999 bar 10.00 417.25 424.75 42.48
1 oz .999 round 1.00 41.83 42.63 42.63
Am Eagle, 200 oz Min 1.00 43.48 44.38 44.38
SPOT PLATINUM: 1,781.80      
Plat. Am Eagle 1.00 1,781.80 1,881.80 1,881.80
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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.

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