The Moneychanger
Daily Commentary
Monday, 30 January a.d. 2012 Browse the commentary archive

Scariest thing about writing a daily commentary is that buzzard that sits on your shoulder squawking, "What happens when you run out of things to say? Or on the day nothing happens?"

One of the advantages of being a natural born fool is that you never have enough sense to admit that you have nothing to say worth hearing, so that solves the first. But today was one of those days when not much happened. Oh, everybody showed up for work & went thru the motions, but nothing much changed.

The US DOLLAR INDEX rallied a mite, up 13.1 basis points (0.17%) to 79.107. This changes nothing, however. Five day chart might have bottomed late Friday, but dollar will have to burst through 79.50 to prove that. 50 day moving average stands above the Dollar Index at 79.67, and other indicators point unanimously down. Not nearly enough enthusiasm to move much higher.

Greek debt talks are foundering -- come to think of it, they've been foundering since they began -- and the euro, having hit 132.34 Friday and its 62 DMA, backed off today to 1.3130, losing 0.68%. This doesn't near about turn the trend down. Look for higher euro still.

Something's going on with the yen, but I don't know what. It's the sorriest of the three big fiat currencies, worst debt, etc., but it's rising. Monday of last week it gapped down horribly in a move that screamed, Government Manipulation. Stayed down one day, traded back up through the 50 DMA, then Friday gapped UP above the 20 DMA and thru internal resistance about 130.5c. This points to another trip back to the top of the trading range above 132c.

Against both the euro & the yen gold is breaking out toward the sky. Not quite confirmed yet in the euro, but clearly in an uptrend.

Against the other Loser Fiat Currencies, silver also offers a bright outlook. Silver in Euros has broken out of a down trend and traded up to its 200 DMA, standing above its 20 & 50 DMAs. The 20 has just crossed above the 50. Once silver crosses through 26 euros, it will be bye-bye earth. Silver in yen shows a similar set-up, but not quite as fully unfolded.

STOCKS had another sickly day. Dow only fell about 0.5% to 12,653.72, down 6.75 points, far less than the &SP500 that lost 3.32 points or 0.25%. Other indices lost more than the Dow, too, sending the smell of ripe mackerel into the air. A drop through 12,530 will push the Dow's head underwater. RSI & MACD are ripe to drop.

STOCKS -- they may be YOUR chance to buy a ticket on the Titanic this year.

Not surprising the socks off anybody but the unshod, silver & gold both backed away from big resistance today. Gold lost $1.20 to end at $1,731.00 on Comex while silver gave back 26.2c to settle at 3349.7c.

For three days gold has moved sideways across the chart bounded by roughly $1,715 and $1,740. Friday marked the high, so this line is rounding over downward. Today's low came at $1,716.26. If gold violates that low tomorrow, then it might unravel all the way to $1,680. On the other hand, once it breaks through $1,740, next stop will be $1,805. Might as well steel yourselves for it, a correction will come some time, & fairly soon given the strong rise. Won't be the end of the world, or even the end of the larger rally.

Silver's three day range has carried it from 3300c all the way to 3400c. The silver chart shows (as does the gold chart) what might with equal justification be called a continuation pattern or a topping pattern. All we can do is watch the boundaries of the range -- 3400c to 3300c & see what happens.

Once again today I have been examining the Gold/Silver Ratio chart, and again I have to confess that I expect it to make one final push above 57.5. If I'm wrong, y'all can string me up. If you can catch me.

On 30 January 1649 was beheaded Charles Stuart, earlier King Charles I of England. While there are lots of things not to like about the Roundheads that beheaded him, there's not much to like about him. Trying to call in a foreign army to invade his country would pretty much describe treason in anyone. Hard to make out a traitor as a martyr.

On 30 January 1798 the first fist fight broke out on the floor of the US House of Representatives when Rep. Matthew Lyon of Vermont spit in the face of Rep. Roger Griswold (no kin to Clark Griswold) of Connecticut. Now that I think about it, the House might operate better if they DID fight it out man to man on the floor, rather than by throwing our money at each other.

MILESTONES OF AMERICAN CULTURE: On 30 January 1933 "The Lone Ranger" was heard for the first time on radio. The show migrated to TV where Clayton Moore & John Hart played the Lone Ranger and Jay Silverheels played his faithful Indian companion, Tonto. The show forever DIS-enabled American children to think of Rossini's William Tell Overture as anything but the theme song for "The Lone Ranger." Then the announcer would say, "A fiery horse with the speed of light, a cloud of dust, & a hearty Hi-yo, Silver! The Lone Ranger rides again!" You can talk about your cartoons & sit-coms, but listen, Kemo-Sabe, NOTHING could beat the Lone Ranger.

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
30-Jan-12 Price Change % Change
Gold, $/oz 1,731.00 -1.20 -0.07%
Silver, $/oz 33.50 -0.26 -0.78%
Gold/Silver Ratio 51.676 0.366 0.71%
Silver/Gold Ratio 0.0194 -0.0001 -0.71%
Platinum 1,610.70 -11.10 -0.68%
Palladium 686.75 -1.75 -0.25%
S&P 500 1,313.01 -3.32 -0.25%
Dow 12,653.72 -6.74 -0.05%
Dow in GOLD $s 151.11 0.04 0.03%
Dow in GOLD oz 7.31 0.00 0.03%
Dow in SILVER oz 377.76 2.73 0.73%
US Dollar Index 79.11 0.13 0.17%
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GOLD Fine Tr.Oz. BID ASK $/oz
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British sovereign 0.24 407.15 414.15 1,759.34
French 20 franc 0.19 322.92 329.92 1,767.09
Krugerrand 1.00 1,746.90 1,761.90 1,761.90
Maple Leaf 1.00 1,741.60 1,762.60 1,762.60
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1/4 Maple Leaf 0.25 428.08 458.34 1,833.38
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Mexican 50 peso 1.21 2,068.52 2,084.52 1,728.89
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SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 26,731.02 27,500.00 35.95
VG+ Peace dollar 0.77 25,731.02 26,500.00 34.64
90% silver coin bags 0.72 23,430.55 23,780.55 33.26
US 40% silver 1/2s 0.30 9,342.65 9,517.65 32.26
100 oz .999 bar 100.00 3,352.00 3,392.00 33.92
10 oz .999 bar 10.00 335.20 339.20 33.92
1 oz .999 round 1.00 33.52 34.12 34.12
Am Eagle, 200 oz Min 1.00 35.02 35.62 35.62
SPOT PLATINUM: 1,610.70      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Am Eagle 1.00 1,610.70
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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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