The Moneychanger
Daily Commentary
Tuesday, 27 December a.d. 2011 Browse the commentary archive

I drove down nearly to Birmingham today to swap four shoats for two Great Pyrenees pups, and it was COLD. I think I got the better part of that bargain, but then again, you can't eat dogs. Leastways, better not in Tennessee. Most people will shoot you if you eat their dog, hot dogs excepted.

For all the crowing about stocks ending the year in "positive territory," 'tain't much to brag about. Dow closed 2010 at 11,573.42, so today's price brings it up by a not-very-remarkable 6.2% -- not since it has had almost 365 days to do something. S&P500 is up by only 0.63% (yes, the decimal point IS in the right spot).

Now why do you reckon that the broader measure of the stock market, the S&P500, would have risen a slight less-than-two-thirds-of-one-percent while the Dow with only 30 stocks rose 6.2%? As Yogurt said in the movie, Space Balls, "Moichendizing!" My guess is the Nice Government Men wanted the widely-watched Dow to look good for the year, but what do I know? Nothing. I'm just a natural born fool from Tennessee.

Today the Dow dropped 2.65 (0.02%) to 12,291.35. I have repeatedly said I didn't expect the Dow to beat 12,200 -- so call it 12,300. It's all the same resistance level. S&P500 closed 1,265.43, up -- get this -- 0.1. Big day on the trading floor.

Here's a little ditty for 2012:

Eschew stocks

In 2012

Or buy a shovel

And learn to delve.

Scrofulous US dollar index dropped 0.06% today, 44 basis points, to land at 79.796. Looks like NGM trying to square their books at year end with last year's 79.173 close. Makes no never mind. Dollar remains above the sharply rising uptrend line that began off the late October bottom. Unless it closes below 79.25, buck remains in an uptrend.

Scurvy euro profited from the dollar's stumble to rise 0.15% to 1.3068. It headeth still for 1.2000.

Scruffy yen gained 0.32% today, hopping off its bottom support line to perch on the 20 DMA. Look at the chart. It's being managed.

Interpreting silver & gold's moves here lately is a work in progress. Gold gave back much of last week's gains by falling below $1,600 again. Lost $10.50 today to $1,594.20. Before you roll up your shirtsleeve and look for a razor blade, hang on. Last week gold punched thru its 200 day moving average (now $1,621.83). It bounced off that, a wholly normal move. Let's guess it might even touch $1,570, then turn around and head for $1,680. Unless it closes below $1,562.50, that's what I expect, a move higher before the week ends.

Silver stands nearly on top of its uptrend line connecting the end-September and December lows. It's time to fish or cut bait. Should silver fall below 2800c, it will signal further falls coming, at least to 2600c.

Today on Comex silver fell 34.9c to 2869.7.

As it now stands, though, I expect silver to turn around from here and rise again. It's a roll of the dice, however.

Ain't this a great country? First Barack Obama gets elected, proving that anybody really can get elected president. Now that old re-tread Newt Gingrich is trying to get elected by claiming he isn't part of the Republican establishment. And while he's not as boring as Barack Obama, he IS fatter, & just as dangerous. But not as boring as Mitt Romney (first name "Catchers"), who can put thousands to sleep just by opening his mouth. And yet he is not the boringest of all. John Huntsman makes him look lively. These characters have all the charm and seriousness of the Seven Dwarves, but none of their intellectual stature.

And how about that Ron Paul? Only presidential candidate that can turn invisible -- to the media?

Ain't this a great country?

Today is the feast of St. John, Apostle & Evangelist.

On 27 December 1703 England & Portugal signed the Methuen treaty giving preference to Portuguese wines imported into England. Hence you drink Port from Oporto, Portugal, instead of some slushy redwine from someplace else.

On 27 December 1845 Dr. Crawford Long, a Georgian, used anesthesia for the first time in childbirth when he delivered his own child in Jefferson, Georgia, CSA. Another Southern First.

On 27 December 1900 militant prohibitionist Carry Nation smashed her first public bar at the Carey Hotel in Wichita, Kansas. Her motto was, "Let us do Evil, that Good may come." The US did away with prohibition later, but kept the motto. It's pretty catchy for most people.

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
27-Dec-11 Price Change % Change
Gold, $/oz 1,594.20 -10.50 -0.7
Silver, $/oz 28.70 -0.35 -1.2
Gold/Silver Ratio 55.553 0.306 0.6
Silver/Gold Ratio 0.0180 -0.0001 -0.6
Platinum 1,437.10 5.10 0.4
Palladium 663.50 38.05 6.1
S&P 500 1,265.43 0.01 0.0
Dow 12,291.35 -2.65 -0.0
Dow in GOLD $s 159.38 1.03 0.6
Dow in GOLD oz 7.71 0.05 0.6
Dow in SILVER oz 428.31 5.06 1.2
US Dollar Index 79.80 -0.44 -0.5
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: 1,593.00      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,640.79 1,656.79 1,656.79
1/2 AE 0.50 804.47 836.33 1,672.65
1/4 AE 0.25 406.22 422.15 1,688.58
1/10 AE 0.10 168.86 176.82 1,768.23
Aust. 100 corona 0.98 1,544.28 1,559.28 1,590.78
British sovereign 0.24 374.99 381.99 1,622.74
French 20 franc 0.19 297.41 304.41 1,630.49
Krugerrand 1.00 1,616.90 1,632.90 1,632.90
Maple Leaf 1.00 1,605.00 1,626.00 1,626.00
1/2 Maple Leaf 0.50 788.54 828.36 1,656.72
1/4 Maple Leaf 0.25 394.27 422.15 1,688.58
1/10 Maple Leaf 0.10 157.71 172.04 1,720.44
Mexican 50 peso 1.21 1,907.08 1,924.08 1,595.82
.9999 bar 1.00 1,598.58 1,609.58 1,609.58
SPOT SILVER: 28.65      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 23,154.04 24,654.04 32.23
VG+ Peace dollar 0.77 22,654.04 28,800.00 37.65
90% silver coin bags 0.72 20,159.43 20,509.43 28.68
US 40% silver 1/2s 0.30 7,860.28 8,160.28 27.66
100 oz .999 bar 100.00 2,889.50 2,949.50 29.50
10 oz .999 bar 10.00 286.45 292.45 29.25
1 oz .999 round 1.00 28.75 29.50 29.50
Am Eagle, 200 oz Min 1.00 30.40 30.90 30.90
SPOT PLATINUM: 1,437.10      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Am Eagle 1.00 1,437.10 1,537.10 1,537.10
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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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