The Moneychanger
Daily Commentary
Thursday, 3 May a.d. 2012 Browse the commentary archive

In a burst of pharisaical arrogance unmatched by the entire history of the Soviet Politburo or the Ancien Regime, the European Central Bank met in Spain today rather than its usual German, "to be better known and closer to the citizens." To Spain, which is in recession & has a 24% unemployment (admitted, at least) and 50% unemployment among young people, ECB El Presidente Mario "Apparatchik of the Big Banks" Draghi said they (and the other governments) ought to get a grip on their "bloated budgets." This resembles cutting a man's legs off, then ridiculing him because he cannot run very fast.

Somewhere, some latter-day Madame is knitting, knitting. Écoutez! The click of the needles.

STOCKS today looked -- well, how can I say it nicely?-- right sick today, having completed a head and shoulders top on the five day market. Dow closed today down 61.98 (0.47%) to 13,206.59. A break below 13,180 starts an avalanche. S&P500 lost its grip on the morale-critical 1400 level to close down 10.74 (0.77%) at 1,391.57.

Yes, I know the entire stock-selling world is chortling over higher prices, but watch out. Look for a sharp rally, followed by a collapse.

CURRENCIES today trod water. Nothing there to talk about, except it's interesting that the euro FELL on news the ECB would not lower interest rates. Interesting because keeping interest rates higher should send the currency's price up, not down. But what do I know? I'm the guy who looks for the pigs and goats when anybody talks about "stock."

It was one more bruising day for silver & gold. Gold dropped $19.20 (1.16%) to close Comex at $1,634.20. That close came near the low of today's range, $1,649.30 - 1,631.16. Gold breaking $1,625 would suck a lot of heart out of the market, but the crucial line in the sand is $1,600.

Look here at this: Bad as gold fell today, it did not fall again beneath the upper boundary of that Falling Wedge y'all are probably tired of hearing about. If it does, it could fall all the way to the lower boundary , now about $1,580.

SILVER hurt more than gold today. It dropped 63.3 cents (2.07%) to close Comex at the Wal-Mart price of 2995.9c.

That's the second trip in a month to 3000c. One more and silver falls through.

Silver DID fall through the upper line of its falling wedge, which argues for a drop to 2950 cents. On the other hand (I sound like an economist) today's close marks a double bottom for silver, & we'll have to see whether that holds.

Some time soon will come a bottom. Just about the time even I was getting down a wonderful person called today to remind me that I had sold her silver & gold in 1998. Her $5,000 spent then would bring about $32,000 right now. The bull market has not ended, and more of those gains will come.

On 3 May 1916 Irish nationalist Padraic Pearse & two others were executed by the British for their part in the abortive Easter Rising to make Ireland independent. Within 5 years, Ireland would be free.

On 3 May 1971 National Proletarian Radio, International Voice of Socialism, began broadcasting, with a few of your tax dollars. Only in America where all other radio is so utterly abysmal, could NPR be a rational choice on the radio dial.

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
3-May-12 Price Change % Change
Gold, $/oz 1,634.20 -19.20 -1.16%
Silver, $/oz 29.96 -0.63 -2.07%
Gold/Silver Ratio 54.548 0.501 0.93%
Silver/Gold Ratio 0.0183 -0.0002 -0.92%
Platinum 1,532.30 -28.20 -1.81%
Palladium 660.40 -6.75 -1.01%
S&P 500 1,391.57 -10.74 -0.77%
Dow 13,206.59 -61.98 -0.47%
Dow in GOLD $s 167.06 1.18 0.71%
Dow in GOLD oz 8.08 0.06 0.71%
Dow in SILVER oz 440.82 7.10 1.64%
US Dollar Index 79.21 0.02 0.02%
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: 1,635.50      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,671.48 1,687.48 1,687.48
1/2 AE 0.50 825.93 858.64 1,717.28
1/4 AE 0.25 417.05 433.41 1,733.63
1/10 AE 0.10 173.36 179.91 1,799.05
Aust. 100 corona 0.98 1,587.09 1,602.09 1,634.45
British sovereign 0.24 385.00 392.00 1,665.24
French 20 franc 0.19 305.35 312.35 1,672.99
Krugerrand 1.00 1,638.77 1,654.77 1,654.77
Maple Leaf 1.00 1,645.50 1,665.50 1,665.50
1/2 Maple Leaf 0.50 809.57 850.46 1,700.92
1/4 Maple Leaf 0.25 404.79 433.41 1,733.63
1/10 Maple Leaf 0.10 161.91 176.63 1,766.34
Mexican 50 peso 1.21 1,952.04 1,969.04 1,633.11
.9999 bar 1.00 1,641.22 1,652.22 1,652.22
SPOT SILVER: 30.02      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 25,713.60 29,000.00 37.91
VG+ Peace dollar 0.77 24,213.60 28,000.00 36.60
90% silver coin bags 0.72 20,888.73 21,138.73 29.56
US 40% silver 1/2s 0.30 8,382.43 8,557.43 29.01
100 oz .999 bar 100.00 2,971.50 3,011.50 30.12
10 oz .999 bar 10.00 302.65 306.65 30.67
1 oz .999 round 1.00 29.77 30.67 30.67
Am Eagle, 200 oz Min 1.00 31.62 32.32 32.32
SPOT PLATINUM: 1,532.30      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,572.30 1,627.30 1,627.30
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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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