The Moneychanger
Daily Commentary
Monday, 12 March a.d. 2012 Browse the commentary archive

In the biggest bond writedown in history, the Greek government swapped most of the bonds coming due mid-month for others worth less than half their value. Wow. World is getting better & better, making new records all the time. Ain't that fiat money & fractional reserve banking great! Hey! What about them bankers, huh?! I mean, re-po'ing an entire COUNTRY! That takes some gall, as my grandmama might say. Y'all proud of your banks yet? Your politicians?

'Twas a rough day for silver & gold, but pay it no mind. Higher prices are coming shortly for metals, & lower prices for stocks.

Something will break soon. For too long stocks & metals have been closely tracking each other. Either I am dead wrong & stocks will not lose another 80% of their value against metals & silver & gold do not have most of their bull market gains in front of them, OR stocks will breakdown soon against silver & gold. (Naturally I do NOT think I am wrong about that.)

I've been looking at my superbly reliable indicator, the Dow in Gold Dollars that measures the value of stocks in gold. Soon, soon, it should break down, probably as a consequence of stocks falling AND gold advancing both.

But y'all recall that I am no more than a natural born fool from Tennessee, & I ain't as smart as them fellows who want to sell y'all stocks.

US dollar index gave away 9.8 basis points today, a measly 0.13%, but that carried it below 80 again, a blow to morale. As long as it clings above 79.60 the noxious dollar will keep climbing.

The nasty euro today rose 0.22% to $1.3153. True, it has caught on its 50 & 62 day moving averages (1.3093 & 1.3083), but in the last 5 days it also left behind an island reversal, a pattern that very seldom fails to wreak its vengeance. Expect to see it lower. All the good news (?) about the Greek Debt Deal has come out, and the future holds -- what? What good news? I sure don't know.

The nugatory yen edged up 0.23% today to 121.57c/Y100 (Y82.26/US$1). Maybe Friday's spike down marked the bottom. Hard to fathom who would sell more oversold yen from here. No matter much -- all the fiat currency exchange rates amount to no more than an elaborate kabuki anyway.

Stocks eked out small gains today, but not unanimously. Dow rose, S&P rose barely, while the Nasdaq composite and Russell 2000 fell. Disagreement, non-confirmation, confusion, bewilderment. You couldn't get from here to Tupelo using that roadmap.

Dow rose 37.84 (0.29%) to the same old neighborhood, 12,959.86. S&P500 barely moved, but you could catch it with time-lapse photography. Climbed 0.2% (0.27 points) to 1,371.14.

About as I expected, silver & gold fell today. Gold doesn't have enough steam yet to breach the $1,715 barrier. It will, it will, but first another dip of the toe below $1,700.

Today Gold dropped $11.70 and ended the day on Comex at $1,699.20.

Gold was ailing the whole day, & never reached higher than $1,708.20. Still, it might well catch hold here at the 50 day moving average ($1,694.16) where also some lateral support hides at $1,696. If that gives way, then gold could shoot for $1,674.76, the 200 DMA, or it might peek below $1,650, just to scare all the gold bugs to death.

Matters little, as you are now watching the last leg of the correction from the $1,787 rally.

Silver lost 80.1c today to close at 3337.4c, near the 3333.3c low. I'd prefer silver drop not below today's low, since that would preserve the 5-day uptrend.

Silver's next fight comes at 3300c, if it doesn't hold this line. But I don't much care if it falls to 2900c (now rather unlikely) because I've been looking at a technical measure that implies silver has very little downside left before another wild rally begins, if it hasn't already.

This will probably turn out to be a toilsome week for silver & gold, but this humiliation has not long to run. By March's end 'twill be past. Hence y'all had best keep your eyes peeled for a spot to buy. Once this has ended, you will only be able to spot silver & gold rapidly disappearing toward the stratosphere.

On 12 March 1894 Coca-Cola was first sold in bottles, at Vicksburg, Mississippi. That was the genius act of re-packaging that made Coke's success. Of course, some people might claim it was the cocaine in the recipe, but the company says nothing about that. Cocaine was, by the way, perfectly legal in the 1880s & 1890s, and along with alcohol, morphine, heroin, & cannabis wasn't required to be noted on the product label until the Pure Food & Drug Act in 1906. Here's another Milestone of Success for government "protection" and control. Do y'all reckon there were more drug addicts in 1906, or in 2012? Asking the question answers it.

Who was that Englishman who said that the price of protecting people from their folly was to fill the world with fools?

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
12-Mar-12 Price Change % Change
Gold, $/oz 1,699.20 -11.70 -0.68%
Silver, $/oz 33.37 -0.80 -2.34%
Gold/Silver Ratio 50.914 0.851 1.70%
Silver/Gold Ratio 0.0196 -0.0003 -1.67%
Platinum 1,702.00 12.75 0.75%
Palladium 709.00 -2.25 -0.32%
S&P 500 1,371.14 0.27 0.02%
Dow 12,959.86 37.84 0.29%
Dow in GOLD $s 157.66 1.55 0.99%
Dow in GOLD oz 7.63 0.08 0.99%
Dow in SILVER oz 388.32 10.21 2.70%
US Dollar Index 79.88 -0.10 -0.12%
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: 1,701.50      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,745.74 1,761.74 1,761.74
1/2 AE 0.50 859.26 893.29 1,786.58
1/4 AE 0.25 433.88 450.90 1,803.59
1/10 AE 0.10 180.36 188.87 1,888.67
Aust. 100 corona 0.98 1,656.14 1,671.14 1,704.89
British sovereign 0.24 400.53 407.53 1,731.24
French 20 franc 0.19 317.67 324.67 1,738.99
Krugerrand 1.00 1,708.31 1,724.31 1,724.31
Maple Leaf 1.00 1,713.50 1,734.50 1,734.50
1/2 Maple Leaf 0.50 842.24 884.78 1,769.56
1/4 Maple Leaf 0.25 421.12 450.90 1,803.59
1/10 Maple Leaf 0.10 168.45 183.76 1,837.62
Mexican 50 peso 1.21 2,034.92 2,051.92 1,701.85
.9999 bar 1.00 1,707.46 1,718.46 1,718.46
SPOT SILVER: 33.52      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 26,924.37 28,924.37 37.81
VG+ Peace dollar 0.77 25,924.37 27,924.37 36.50
90% silver coin bags 0.72 23,359.05 23,709.05 33.16
US 40% silver 1/2s 0.30 9,416.40 9,591.40 32.51
100 oz .999 bar 100.00 3,377.00 3,417.00 34.17
10 oz .999 bar 10.00 337.70 341.70 34.17
1 oz .999 round 1.00 33.77 34.37 34.37
Am Eagle, 200 oz Min 1.00 35.27 35.87 35.87
SPOT PLATINUM: 1,702.00      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,727.00 1,770.00 1,770.00
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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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