The Moneychanger
Daily Commentary
Monday, 29 August a.d. 2011 Browse the commentary archive

I hope all y'all on the east coast survived the hurricane well and sound. Meanwhile, storms continue to blow through markets.

Dow today broke through 11,300 resistance to close at 11,539.25, up 254.71 or 2.26%. S&P500 rose more, 33.28 points (4.75%) to 1,210.08. This brings the Dow up to the mid-August intraday high at 11,529.67, and clears the 20 day moving average at 11,260, but remains far below the 200 DMA at 11,988. Next resistance comes at 11,862.53, intraday low in June. But greater resistance lurks between 11,900 & 12,100. By no means am I convinced that stocks are about to shoot for the moon. Rather, the Dow might just as easily collapse again at 11,550/11,600 & resume its fall. Either it is now bumping up along the bottom of the Jaws of Death megaphone formation, or it will rise to the neckline of the Head & Shoulders top around 12,000. Either way, bodacious new prices lie not in its future.

Stocks -- the Ghost of Christmas Past visiting you in your sleep.

US DOLLAR INDEX dropped a nothing 10.1 basis points (0.13%), & remains in its tight trading range. Must violate 73.40 to move lower.

In Europe today they were smoking more crack. How do I know? The Euro rose to a new high for the move at 1.4506, up 0.06%, but remains range bound. If it ever breaks out upside, it might be tomorrow. Nothing has changed in the Hall of Illusions. Yen finally dropped a bit, down 0.28% at 130.09c/Y100 (Y76.87/$).

Gold backed off last Friday's panic/euphoria and fell $5.70 on Comex to close at $1,788.40, still above crucial $1,750 support.

Last week's double key reversals still scream that very strong pockets are ready to buy gold anywhere under $1,750, and the closer it gets to $1,700, the deeper they dig in their pockets. Short term support now stands at $1,775: any nose-poke below that will carry gold to $1,750. Up above $1,800, $1,825, & $1,850 place barriers to any rise.

Maybe that tumble last Wednesday marked the top of gold's rally- or maybe NOT. Gold will tell us this week.

What you are watching is the Nice Government Men trying to transmogrify a raging panic into a "slow burn panic." Not as exciting, but lasts longer.

Today silver traded in a range between 4135c & 4028c. Comex dropped off 40.6c. Silver has traced out a range between 4150c and 4000c. It may be rolling over to the downside, but has to break 4000c first, & fight a tough battle to sink through all that support between 4000c and 3880c

In both silver & gold we may be entering another frustrating trading range period like the one from 1 May through mid-July. If we are watching a correction, then gold will target its 50 DMA ($1,644) and silver it's 200 DMA (now 3488c). This week will instruct us. Gold/Silver ratio rose again to 44.108, near the range top. That whispers trouble for silver, but rising stocks (rising risk appetite) whispers sweet dreams for silver. Picture simply isn't clear yet.

On 29 August 1991 the Supreme Soviet, parliament of the USSR, suspended all activities of the Communist Party, ending the party's 75-year stranglehold on the Russian people. Or did it? Anatoly Golitsyn, a Russian intelligence operative who defected to the west, maintained in Perestroika Deception that the entire "collapse of the Communist Party" was a deception, a dodge sending the party of international socialism underground, only to emerge later with even tighter control as a consequence of the deception.

That might be true, but it still isn't clear to me what difference it would make because socialism, for all the hogwash about its collapse & disappearance, sits firmly on the throne in the United States, Europe, and everyplace else I know of. Were there some country where that was NOT the case, I would already have moved there.

Of course there are no communists in Moscow -- they're all in power in Washington & Brussels.

On Saturday, 3 September we will celebrate our annual Bodacious Hoedown again at the Top of the World farm. Starts at 1:00 p.m. with an afternoon of games like raw egg toss, dunking booth which my children have set up for me, and lots of others. Or you can sit bring a stringed instrument & sit under the trees jamming with others (do NOT bring a grand piano. It has strings, but won't fit in.) After that come supper with barbecued pork raised on our own farm, slaw, beans, tomatoes, and dessert. Then comes the fun: an Old Time Band and dance caller. This year we are not charging admission, as a thank-you to all our customers. If you're interested, email me with "Hoedown Directions" in the subject line & I'll send you directions and a list of local motels -- or you can camp out, if you like rustic camping.

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

— Franklin Sanders, The Moneychanger

Your source for gold and silver. Read our latest reviews and testimonials.
Market Snapshot See more charts and market data
29-Aug-11 Price Change % Change
Gold, $/oz 1,788.40 -5.70 -0.3
Silver, $/oz 40.55 -0.41 -1.0
Gold/Silver Ratio 44.110 0.298 0.7
Silver/Gold Ratio 0.0227 -0.0002 -0.7
Platinum 1,824.00 -8.70 -0.5
Palladium 756.15 -5.85 -0.8
S&P 500 1,210.08 33.28 2.8
Dow 11,539.25 254.71 2.3
Dow in GOLD $s 133.38 3.37 2.6
Dow in GOLD oz 6.45 0.16 2.6
Dow in SILVER oz 284.60 9.04 3.3
US Dollar Index 73.69 -1.01 -1.4
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: 1,787.40      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,824.94 1,840.94 1,840.94
1/2 AE 0.50 916.94 938.39 1,876.77
1/4 AE 0.25 461.37 473.66 1,894.64
1/10 AE 0.10 191.25 198.40 1,984.01
Aust. 100 corona 0.98 1,739.75 1,753.75 1,789.17
British sovereign 0.24 420.75 427.75 1,817.14
French 20 franc 0.19 333.71 340.71 1,824.89
Krugerrand 1.00 1,805.27 1,821.27 1,821.27
Maple Leaf 1.00 1,802.40 1,820.40 1,820.40
1/2 Maple Leaf 0.50 936.15 947.32 1,894.64
1/4 Maple Leaf 0.25 469.19 473.66 1,894.64
1/10 Maple Leaf 0.10 182.31 205.55 2,055.51
Mexican 50 peso 1.21 2,137.65 2,154.65 1,787.05
.9999 bar 1.00 1,793.66 1,804.66 1,804.66
SPOT SILVER: 40.89      
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 28,378.35 28,728.35 40.18
US 40% silver 1/2s 0.30 11,590.55 11,815.55 40.05
100 oz .999 bar 100.00 4,079.00 4,129.00 41.29
10 oz .999 bar 10.00 408.90 414.90 41.49
1 oz .999 round 1.00 40.99 41.79 41.79
Am Eagle, 200 oz Min 1.00 42.64 43.54 43.54
SPOT PLATINUM: 1,824.00      
Plat. Am Eagle 1.00 1,824.00 1,924.00 1,924.00
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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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