The Moneychanger
Daily Commentary
Tuesday, 30 August a.d. 2011 Browse the commentary archive

With my right forearm in the fiery hot grip of poison ivy or crazed chiggers, I need y'all to share with me your home remedies for PI or chiggers, as long as they don't include chlorine bleach or radiation therapy.

These markets are not suitable for shallow pockets or the impatient.

Stocks stalled today at 11,600, unable to punch through resistance there. Better shoot the general in charge & bring out another. Dow needs some new energy breach 11,600.

Dow closed today up a nothing 20.7, a jiggle, to 11,559.95. S&P waddled right along side, up 2.84 to 1,212.92. Temporarily momentum is up because day before yesterday stocks closed above their 20 day moving average. Still, that needs to be confirmed by a continuing advance and a close over the 50 dma, now at 11,926.

Here's what I don't like about the US Stock Market: a real stock market has an economy behind it. The US stock market doesn't, at least, not one that is anything grander than a filmy veil hiding the ugliest bride you can imagine. Somebody's getting fooled.

Stocks -- they are the sow behind the propaganda lipstick.

Watching currencies -- all of 'em -- is like being dragged to your child's fiddle recital. Some of the children are getting it, but up steps one or two who are wasting their parent's money shamefully & would be better off being taught how to do something useful like changing tires or laying asphalt. Y'all know what this is like. The performance is painfully bad, so bad you don't even lean over to your wife and giggle in her ear, because the spectacle is so embarrassing for everybody you'd be ashamed to do that.

Anyhow, the US dollar index rose 25.6 basis points today, a magnificent 1/3 of 1%, to 73.977. More meaningless movement within a narrow range, before a rally which will probably proceed a drop to 39 [sic] or so. Yesterday the dollar defended & validated support above 73.40. Wow. That leaves me so excited I'm not sure I can stay awake.

Then there's the euro. Yesterday it traded to the top of its narrow range (high 1.4546), then today gapped DOWN to close at 1.4443, down 1/2%. Euro has a great future as an oddity of history. Yen remains close to the top of its range, held down only by the mortification of the Japanese Nice Government Men.

Gold baffled everyone today by rising $38.20 on Comex and closing at $1,826.70. It's now trading at $1,839.10, but nobody -- least of all me -- seems to know why, other than, "Somebody's buying it."

Gold is pounding hard on that $1,850 ceiling, or it is tracing a double top with last Friday at $,1850. First important support stands at $1,780. Overhead silver needs to barrel through $1,850, and soon, or admit to beginning a longer correction.

I am blowing hot & cold out of both sides of my mouth -- like a parricide throwing himself on the mercy of the court because he's an orphan -- because although gold's past 10 days' performance gives it a downward bias, I have been consistently UNDERestimating gold's performance. If it closes higher tomorrow I will admit it is rising again and hop aboard.

Silver has also beaten me up lately. Friday, yesterday, & today silver has traded in a range of roughly 4025c to 4150c. This patter either marks a top or a continuation (a breather before rising higher). Silver actually looks more likely to rise than gold. Last week's correction took it nearly to its 50dma, and set up what might be another move up. Ratio rose today, but remains equivocal.

Down below silver needs to hold 3976c, while up above it must cross 4200c, then 4400c to prove anything at all.

All this is just dithering about what tomorrow might bring, but the long term outlook has not changed. While we have our eye's on one dollar moves, silver is planning to triple, gold to double and more.

ON 30 August 1797 was born Mary Wollstonecraft who later married Percy Bysse Shelley. In 1818 she wrote Frankenstein, the novel about the new Enlightenment science & rationalism creating a "new man." Unfortunately he turned out to be a lot like the old man, with even worse manners. Most likely the book was also a commentary on her husband, whose manners were also not very attractive, or faithful.

On 30 August 1862 Confederate forces at the Second Battle of Bull Run in Manassas, Virginia soundly whipped Union forces. In this battle Stonewall Jackson proved -- if it still needed proving -- that the technological balance of power had shifted very much to the defensive side, thanks to rifles accurate at long ranges. For 50 years military academies around the world, including West Point, has taught Napoleonic tactics. These worked very well, massing bodies of troops and advancing across the field, when troops carried muskets that were scarcely accurate at 100 yards. Rifles accurate at 600 or 800 yards could pretty much discourage those massed troops from drawing nearer to any defensive fortifications. Oddly enough, generals South and north who had been trained at West Point never really caught on. Even Jackson never took the lesson quite to heart, and still ordered charges on entrenched positions. Of all of them, only Confederate Nathan Bedford Forrest refused to participate in suicidal charges. He preferred to bluff 'em out.

You see, often it's not men or materiel that defeats armies, but the conceptual blocks of their leaders.

On 30 August 1905 Ty Cobb made his major league batting debut with the Detroit Tigers. He was one of the greatest all-round players baseball has ever known, and he came from Georgia.

LAST CHANCE: 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
30-Aug-11 Price Change % Change
Gold, $/oz 1,826.70 38.20 2.1
Silver, $/oz 41.40 0.85 2.1
Gold/Silver Ratio 44.130 0.015 0.0
Silver/Gold Ratio 0.0227 -0.0000 -0.0
Platinum 1,855.50 31.50 1.7
Palladium 773.50 17.35 2.3
S&P 500 1,212.92 2.84 0.2
Dow 1,155,995.00 20.67 0.0
Dow in GOLD $s 13,081.81 -277.82 -2.1
Dow in GOLD oz 632.83 -13.44 -2.1
Dow in SILVER oz 27,923.93 -586.26 -2.1
US Dollar Index 73.98 0.26 0.3
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: 1,839.10      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,877.72 1,893.72 1,893.72
1/2 AE 0.50 943.46 965.53 1,931.06
1/4 AE 0.25 474.72 487.36 1,949.45
1/10 AE 0.10 196.78 204.14 2,041.40
Aust. 100 corona 0.98 1,790.07 1,804.07 1,840.51
British sovereign 0.24 432.92 439.92 1,868.84
French 20 franc 0.19 343.36 350.36 1,876.59
Krugerrand 1.00 1,857.49 1,873.49 1,873.49
Maple Leaf 1.00 1,854.10 1,872.10 1,872.10
1/2 Maple Leaf 0.50 963.23 974.72 1,949.45
1/4 Maple Leaf 0.25 482.76 487.36 1,949.45
1/10 Maple Leaf 0.10 187.59 211.50 2,114.97
Mexican 50 peso 1.21 2,199.48 2,216.48 1,838.34
.9999 bar 1.00 1,845.54 1,856.54 1,856.54
SPOT SILVER: 41.40      
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 28,739.43 29,089.43 40.68
US 40% silver 1/2s 0.30 11,739.53 11,964.53 40.56
100 oz .999 bar 100.00 4,129.50 4,179.50 41.80
10 oz .999 bar 10.00 413.95 419.95 42.00
1 oz .999 round 1.00 41.50 42.30 42.30
Am Eagle, 200 oz Min 1.00 43.15 44.05 44.05
SPOT PLATINUM: 1,855.50      
Plat. Am Eagle 1.00 1,855.50 1,955.50 1,955.50
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© 2015 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.

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