The Moneychanger
Daily Commentary
Wednesday, 11 January a.d. 2012 Browse the commentary archive

Here's a very good article about sales of US silver American Eagle silver coins. The writer get most http://seekingalpha.com/article/318801-record-breaking-sales-of-bullion-coins-continues?source=cnbc The writer gets it mostly right, but misses the main point: that advertising and ignorance are duping investors into spending far more than they need to. Buying U.S. 90% silver coin rather than Silver Eagles over the last few years has saved investors from $3.25 to $2.25 PER OUNCE. You can buy more than 10% MORE silver by dodging the Eagles & purchasing 90% instead.

And don't let anybody fool you about recapturing the premium when you sell at market peak. I've been there, & you won't. At the peak nobody asks, nobody asks, "What KIND of silver do you have?" They only ask, "How MUCH silver do you have?" Always buying the least expensive (but still liquid) form of silver or gold greatly increases your investment's leverage, because it increases the ounces you own.

TODAY silver & gold kept up their advance, the US dollar resumed its role as Big Bully Of Filthy Fiat, and stocks seem to be hovering at their arc's top preparatory to an earthward plunge.

Some stock indices rose, some fell today, reflecting fear & indecision. Dow fell 13.02 to 12,449.45, S&P500 gained a flea-bite 0.4 to $1,292.48. Charts have look & feel of a dying advance.

US dollar index bellied up to the table & chug-a-lugged another 50.3 basis points (0.65%) to end at 81.308. This takes the buck back to where this bar-fight started over the weekend with a new high at 81.50. Tomorrow the dollar will finish this fight by breaking beer bottles over its opponents heads, pitching them out of the bar, & closing the doors higher.

Dollar rally continues.

Euro & yen both closed lower. Yucky yen closed 130.12c/Y100 (-.04%) & scrofulous euro closed at 1.2709, down 0.52%. For the moment, the dollar has 'em licked, but it's every bit as sorry as they are. Well, that's not quite right, but it's still plenty sorry.

Gold pierced that ($1,630) resistance level & ratcheted to the next resistance level, $1,640. Closed today $8.20 higher at $1,639.20, but high came at $1,646.97. Gapped up on the open & never traded lower than $1,633.49, higher than yesterday's close. Strong, solid gain. Gold has $1,675-$1,680 firmly in its sights & is marching that way with resolute dedication.

SILVER met opposition today that muffled its enthusiasm. It gained only 7.5c to 2985.8c & with at a 3027c high failed to penetrate that resistance. Should do so tomorrow, as today it built an even-sided triangle, which tells us SOMEthing will happen tomorrow. Must-hold level remains 2960c.

Look for silver at 3100c soon, maybe tomorrow. Get out of its way!

Addressing my comment yesterday about "savages," a reader wrote,

"I've been reading your commentary for three years and have admired what you have to say and how you say it. Nothing you've written about in connection to the South and the northern federal government, etc. has been the least bit shocking or disagreeable to me (and I've lived in New England all my life).

"Your use of word "savages" in your recent commentary was first thing I've ever read on your pages in three years that disheartened meâ€" and usually your writing has the opposite effect. I'm very aware how "multiculturalism" and "diversity" as they are pushed everywhere is a hoax to homogenize and standardize as part worldwide domination, but who is the savage â€" a Sioux Sitting Bull or a Hank Paulson? A Chief Joseph or a Timothy Geithner? Who destroyed more lives? No, the Paulsons, the Geithners, they are the savages."

I wrote back, "I couldn't agree more with you, and that is precisely why I used the word. The cultural provincials of our day fancy themselves the most sophisticated pinnacle of human development, but I find them LESS rational and far more cruel and bloodthirsty than Nez Perce or Sioux or even the Apaches.  It's one thing to face your enemy fair and square, risking life and limb, quite another to underhandedly steal his property and his life by manipulating government power.  The Paulsons & Geithners & their ilk add new meaning to the word "merciless."

I should have put "savages" in quotation marks. Thanks for making me toe the line.

On 10 January 1815 ended the Battle of New Orleans when Gen'l. Andy Jackson & his Tennessee Volunteers (and a smattering of Kentuckians) stopped the British and saved y'all's yankee bacon. Had he lost, the consequences for the United States would have been incalculable. Y'all would be mis-calling cookies "biscuits" and elevators "lifts" until this day.

On 10 January 1807 was born Alfred Eugene "Mudwall" Jackson, Brigadier Gen'l. in the Confederate Army, near Jonesborough, Tennessee. Y'all can probably tell from his name that he didn't exactly come up to the boot tops of the Confederate general from Virginia with the other -Wall name. In fact, the less said about Mudwall, the better. "Irritable" was the most repeatable epithet applied to him. Yes, I know he came from Tennessee, but he's the exception that proves the rule. No state is perfect.

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
11-Jan-12 Price Change % Change
Gold, $/oz 1,642.00 8.20 0.5
Silver, $/oz 29.94 0.08 0.3
Gold/Silver Ratio 54.852 0.137 0.3
Silver/Gold Ratio 0.0182 -0.0000 -0.2
Platinum 1,491.90 73.90 5.2
Palladium 644.30 -22.95 -3.4
S&P 500 1,292.48 0.40 0.0
Dow 12,449.45 0.40 0.0
Dow in GOLD $s 156.73 -0.77 -0.5
Dow in GOLD oz 7.58 -0.04 -0.5
Dow in SILVER oz 415.88 -1.03 -0.2
US Dollar Index 81.31 0.50 0.6
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: 1,632.00      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,683.05 1,698.05 1,698.05
1/2 AE 0.50 829.21 862.05 1,724.10
1/4 AE 0.25 418.71 435.13 1,740.52
1/10 AE 0.10 174.05 182.26 1,822.62
Aust. 100 corona 0.98 1,591.78 1,605.78 1,638.22
British sovereign 0.24 386.53 393.53 1,671.74
French 20 franc 0.19 306.56 313.56 1,679.49
Krugerrand 1.00 1,661.70 1,676.70 1,676.70
Maple Leaf 1.00 1,654.00 1,675.00 1,675.00
1/2 Maple Leaf 0.50 812.79 853.84 1,707.68
1/4 Maple Leaf 0.25 406.40 435.13 1,740.52
1/10 Maple Leaf 0.10 162.56 177.34 1,773.36
Mexican 50 peso 1.21 1,965.74 1,981.74 1,643.64
.9999 bar 1.00 1,647.75 1,658.75 1,658.75
SPOT SILVER: 29.85      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 24,151.73 27,500.00 35.95
VG+ Peace dollar 0.77 23,651.73 27,000.00 35.29
90% silver coin bags 0.72 21,153.28 21,478.28 30.04
US 40% silver 1/2s 0.30 8,240.83 8,540.83 28.95
100 oz .999 bar 100.00 3,018.50 3,058.50 30.59
10 oz .999 bar 10.00 299.35 319.35 31.94
1 oz .999 round 1.00 30.04 30.79 30.79
Am Eagle, 200 oz Min 1.00 31.69 32.19 32.19
SPOT PLATINUM: 1,462.20      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Am Eagle 1.00 1,516.90 1,559.90 1,559.90
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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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