The Moneychanger
Daily Commentary
Thursday, 22 March a.d. 2012 Browse the commentary archive

The Yen fulfilled yesterday's promise of a key reversal by adding the second & final ingredient, a higher close today. Y100 closed at 121.18c (Y82.52/US$1), up a seven-league-booted 1.03%.

The euro, on the other hand, fell 0.19% to $1.3188. This carries with it the smell of mackerel past its prime, as the euro touched its 50 day moving average & stands below its 20 DMA. A close below 1.3100 will send a large, green, clawed hand up from the swamps below to pull the euro underwater.

All this jubilating took place while the US dollar tried to climb out of its trading range, but failed. It traded as high as 79.949, but closed at 79.649 a tee-tiny 8/10 of a basis point higher than yesterday. Still, the dollar index is at least knocking on the door of overhead resistance. No resolution yet, but expectation must be biased downward, along with the trend in progress.

Friends & I were talking about Iguaçu Falls today. Two of them had in fact visited the falls, & talked about its several descending levels. Lo, I beheld the Dow's chart the last few days, replete with cataracts flowing down, bouncing up, & falling off again, and I said, "Look! It's Iguaçu!" Have any of y'all ever seen water flow UP hill? At least, water doesn't flow up hill in Tennessee, but maybe in Australia, on the globe's bottom side?

Almost all stock indices fell today. Dow fell 78.48 (0.6%) to 13,046.14, parlously close to the 13,000 line. Breaking that point will also break investors' morale & optimism. S&P500 fell 10.11 (0.72%) to 1,392.78, ALREADY below the morale-busting 1,400 line on the board.

Did I forget to mention that although the Dow did not close below its 20 DMA (13,033.29) today, it cut into it? Did I leave out that crossing that 20 DMA will begin turning momentum definitively earthward, begging gravity to have its way?

Gold has begun its final descent to a landing. Lost $7.70 today to shutter Comex at $1,642.30, but the low reached $1,628.34.

What must we reckon with here? I'm one of those folks who likes to hear the worst first, so I have a feel for the maximum pain that might await me. Right up front, $1,600 jumps off the chart, followed by $1,560. $1,600 might stop it, but today's close took gold through an internal support line that implies -- assuming it falls lower tomorrow -- it must fall further. Just to hedge that call, if gold touches $1,600 tomorrow, then closes above today's low, I would buy it.

Silver cut through 3180 resistance today & fell as low as 3107c. It recovered enough to close 3131.9c, losing "only" 88c. Now one might behold today's chart & say, "Lookey there! A spikey little bottom!" Indeed, said spike appears, but something argues against that establishing any lower boundary to the move, namely, support really was working at the circa 3150/3160c range, and today's close took silver beyond that pale. It would have to turn sharply upward tomorrow to contradict that. Otherwise, start reckoning with 3050c, even 3000c. Soon.

Yet another witness pointing to lower silver is the gold/silver ratio, rising today to 52.438 from yesterday's 51.244. Technically we call that a "right smart higher move." At least, that's what we call it in Tennessee. I don't know what they call it up north. Platinum & palladium were also hammered right hard, not optimistic for silver & gold.

Now before y'all go hide under a galvanized wash tub waiting for your world to end, think a second. The further silver & gold drop, the closer they are coming to that turnaround. Y'all let everybody else whine & moan & scan the horizon for Planet X & Mayan calendars & stuff like that. Straighten up now, silver & gold are not far from the turning point, so stop flinching.

On 22 March 1630 the first legislation prohibiting gambling was passed. I'll bet y'all don't know that was in Boston.

On 22 March 1733 Joseph Priestly invented carbonated water. We need more like him. A year later he added lime flavouring.

Y'all won't believe this, but Thomas Edison also electrocuted Topsy the elephant in 1901, as reader HK showed me. Don't know how edifying it is, but you can watch the YouTube clip at www.youtube.com/watch?v=bowA1xUZpmA I really didn't mean to talk about Thomas Edison's strange ways this frequently, really.

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
22-Mar-12 Price Change % Change
Gold, $/oz 1,642.30 -7.70 -0.47%
Silver, $/oz 31.32 -0.88 -2.73%
Gold/Silver Ratio 52.438 1.194 2.33%
Silver/Gold Ratio 0.0191 -0.0004 -2.28%
Platinum 1,617.80 -20.90 -1.28%
Palladium 651.90 -32.90 -4.80%
S&P 500 1,392.78 -10.11 -0.72%
Dow 13,046.14 -78.48 -0.60%
Dow in GOLD $s 164.21 -0.20 -0.12%
Dow in GOLD oz 7.94 -0.01 -0.12%
Dow in SILVER oz 416.56 8.95 2.20%
US Dollar Index 79.65 0.01 0.01%
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: 1,643.40      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,686.13 1,702.13 1,702.13
1/2 AE 0.50 829.92 862.79 1,725.57
1/4 AE 0.25 419.07 435.50 1,742.00
1/10 AE 0.10 174.20 182.42 1,824.17
Aust. 100 corona 0.98 1,599.58 1,614.58 1,647.20
British sovereign 0.24 386.86 393.86 1,673.14
French 20 franc 0.19 306.82 313.82 1,680.89
Krugerrand 1.00 1,653.26 1,669.26 1,669.26
Maple Leaf 1.00 1,655.40 1,676.40 1,676.40
1/2 Maple Leaf 0.50 813.48 854.57 1,709.14
1/4 Maple Leaf 0.25 406.74 435.50 1,742.00
1/10 Maple Leaf 0.10 162.70 177.49 1,774.87
Mexican 50 peso 1.21 1,965.43 1,982.43 1,644.22
.9999 bar 1.00 1,649.15 1,660.15 1,660.15
SPOT SILVER: 31.44      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 25,315.70 29,000.00 37.91
VG+ Peace dollar 0.77 24,815.70 28,000.00 36.60
90% silver coin bags 0.72 21,979.10 22,329.10 31.23
US 40% silver 1/2s 0.30 8,802.80 8,977.80 30.43
100 oz .999 bar 100.00 3,169.00 3,209.00 32.09
10 oz .999 bar 10.00 316.90 320.90 32.09
1 oz .999 round 1.00 31.69 32.29 32.29
Am Eagle, 200 oz Min 1.00 33.04 33.74 33.74
SPOT PLATINUM: 1,617.80      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,642.80 1,685.80 1,685.80
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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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