The Moneychanger
Daily Commentary
Wednesday, 1 February a.d. 2012 Browse the commentary archive

Good thing about writing these commentaries is that every day that dawns brings a new chance to be wrong.

I was not, however, wrong to suspect silver & gold were about to jump, based on that one-slightly- down-other-slightly-up rule. But more below.

Okay, y'all, a Greek Debt Deal Is Near. Don't forget that. What kind of person would I be if I didn't remind y'all?

The US dollar, Laughingstock Of Fiat Currencies, only slightly less ridiculous than the euro & yen, shed 35.6 basis points (0.46%) today to land at 78.932. Yesterday's Big W resolved into a triple top, and obligingly fell lower than Friday's lows, to 78.623, relieving our minds of the worry that it might suddenly rally. Still, give the devil his due. Until the dollar clearly violates that 78.60 level, it's liable to do anything. Well, we all know that over time it can only do one thing -- slowly evaporate -- but I mean in the short run.

The scruffy and disgusting euro is flagging at the 62 day moving average, today 1.3209. Euro closed up 0.58% at 1.3158. Looks like it won't punch through, but will fall again for some sort of double bottom.

Did I mention that a Greek Debt Deal Is Near? Don't forget that. That will really help the euro by, uh, by, uh, well, I'm sure it will help Greece, at least. We won't talk about all the other bankrupt countries because one of them begins with an F.

On the other side of the globe pretty much nobody knows what they're doing, because they bid up the doomed yen 0.07% to 131.32c/Y100 (Y76.20/US$1). It's still rallying -- why is anybody's guess, given the fundamentals. Never mind, don't expect anything to make sense in a fiat money world.

Okay, stocks hung me on my own words, & sure's this world did manage to peck through 12,700. Dow rose 83.55 (0.66%) today and closed at 12,716.46. S&P500 rose through my strict 1,320 to 1,324.08, gaining 11.67 (0.89%).

As that notorious wit & indefatigable wag, Queen Victoria, used to quip, "We are not amused." Nor are we enthused. Stocks may simply be setting up for a little double top below 12,850, whence they will sink like your car keys when they were in your shirt pocket and you leaned over to get a better view of Hoover Dam. BICBW.

Anyway, who would want to own stocks & undergo all that fatigue of trying to pick the right one & do all that worrying when you can just buy gold or silver, stick it in the safe, & wait until Ben Bernancubus & the US Gov do what they do best: destroy the dollar.

Silver & gold both enjoyed a profitable day. Gold busted clean thru the $1,740 barrier & closed at a new high for the move, $1,747.10, up $9.30. Gold also posted a new intraday high, $1,750.77, but couldn't clear that $1,750 wall.

Gold's Relative Strength Indicator has now reached the "Shur-nuff Overbought" level, but little else hints this rally will end any time soon. Above stands $1,800, which without question will pull out a big knobkerrie and pound gold about the head & shoulders. But that's $50 higher.

Y'all ought to read the article "What About Silver?" by Alf Field at http://goldswitzerland.com/index.php/what-about-silver-alf-field-febr-2012/. I respect his work. In this case, he points to the top of the present Major 3 Wave as $4,500 for gold and a silver price of $160 (my figure, assuming a 28:1 ratio). Reading that y'all will get a better flavor of why I keep saying that these little $25 questions in gold and 300c questions in silver simply don't matter in view of a double, triple, or five-fold increase before us.

But what do I know? I'm just a natural born fool from Tennessee. I don't even believe the yankee government when they say they're going to take care of me.

Silver gained 54.5c today & closed Comex at a new high, barely, 3377.8c, but it didn't manage to clear the next resistance, 3400c. That hurdle just stands there, rock solid for the moment.

Thus although today silver encouraged us, it didn't reach in its pocket and put any real money on the table. We are left looking at the same range, 3300c to 3400c, & until silver breaks out of that prison, nothing has happened.

Y'all are going to look back one of these days & tell your children, "You know, once upon a time I had a chance to buy silver at thirty-four dollars!" They'll look at you in wonderment, and then ask, "Grandpappy, what's a dollar?"

On 1 February 1865 the war-criminal & genocide William T. Sherman & his invading army marched on South Carolina. Before the rape ended, he would burn out, rape, & kill civilians and the open city of Columbia. He probably just had an eye to his future, where undoubtedly lay a lot of fire for a long time.

On 1 February 1862 Julia Ward Howe first published the bloodthirsty war propaganda song, "The Battle Hymn of the Republic." Pardon me if I share not the enthusiasm of ignorant Christians who still sing this abomination that calls for washing your feet in the blood of Southerners. Not my idea of a hymn, or patriotism. But maybe Bill Sherman still likes it.

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
1-Feb-12 Price Change % Change
Gold, $/oz 1,747.10 9.30 0.54%
Silver, $/oz 33.78 0.55 1.64%
Gold/Silver Ratio 51.723 -0.568 -1.09%
Silver/Gold Ratio 0.0193 0.0002 1.10%
Platinum 1,617.20 35.40 2.24%
Palladium 697.75 12.40 1.81%
S&P 500 1,324.09 11.67 0.89%
Dow 12,716.46 83.55 0.66%
Dow in GOLD $s 150.46 0.20 0.14%
Dow in GOLD oz 7.28 0.01 0.14%
Dow in SILVER oz 376.47 -3.66 -0.96%
US Dollar Index 78.93 -0.36 -0.45%
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SPOT GOLD: 1,744.10      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,784.21 1,799.21 1,799.21
1/2 AE 0.50 880.77 915.65 1,831.31
1/4 AE 0.25 444.75 462.19 1,848.75
1/10 AE 0.10 184.87 193.60 1,935.95
Aust. 100 corona 0.98 1,697.60 1,711.60 1,746.17
British sovereign 0.24 410.56 417.56 1,773.84
French 20 franc 0.19 325.62 332.62 1,781.59
Krugerrand 1.00 1,761.54 1,776.54 1,776.54
Maple Leaf 1.00 1,756.10 1,777.10 1,777.10
1/2 Maple Leaf 0.50 863.33 906.93 1,813.86
1/4 Maple Leaf 0.25 431.66 462.19 1,848.75
1/10 Maple Leaf 0.10 172.67 188.36 1,883.63
Mexican 50 peso 1.21 2,085.87 2,101.87 1,743.27
.9999 bar 1.00 1,750.20 1,761.20 1,761.20
SPOT SILVER: 33.71      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 27,067.45 27,500.00 35.95
VG+ Peace dollar 0.77 26,067.45 26,500.00 34.64
90% silver coin bags 0.72 23,634.33 23,984.33 33.54
US 40% silver 1/2s 0.30 9,470.98 9,645.98 32.70
100 oz .999 bar 100.00 3,395.50 3,435.50 34.36
10 oz .999 bar 10.00 339.55 343.55 34.36
1 oz .999 round 1.00 33.96 34.56 34.56
Am Eagle, 200 oz Min 1.00 35.46 36.06 36.06
SPOT PLATINUM: 1,617.20      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,642.20 1,685.20 1,685.20
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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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