The Moneychanger
Daily Commentary
Monday, 9 July a.d. 2012 Browse the commentary archive

The Tennessee mouse was away, but the RATS kept on playing overtime -- gummit rats, that is.

Let's start with what is most painful to the truthful and fastidious mind, the filthy, low white-trash scrofulous US dollar index. It rallied last week & has reached the ceiling, defined as the last (1 June) high at 83.54. Friday it hit 83.40, but today those high numbers hit it like Kryptonite hits Superman. Fell off 25.6 basis points (0.33%), but let's face it: the dollar's trend (nasty & untouchable as it is) points up. It must, however, break through that 83.54 to continue. Odds are stacked higher against that, because the dollar hasn't seen prices higher than that since, oh, June 2010.

More than technicals stacked against it are the needs of those needy central bankers, who like everything to stay on an even keel. Rather than an even keel, the euro is sinking out of sight against the dollar & the yen. This cannot please The Mighty Charged With Managing The World. I doubt that criminal Bernanke wants to see the euro plunge deeper, let alone that criminal in charge of the ECB, Draghi. And what the Nice Government Men want, they generally manipulate to get.

The euro's chart grows weaker daily. Now there's a chance that Friday's intraday low at $1.2260 makes a double bottom with 1 June's $1.2288. It was the lowest euro price since July 2010.

It's amusing in sort of a wry, "The Whole Universe is Looney" way that the yen remains buoyant. It is, after all, the worst of the three big currencies, by a couple of parsecs. But who ever said fiat currency values were based on anything but government moonbeams anyway? Yen closed today up 0.1%at 125.68c/Y100 (Y79.6/US$1). Yen's 50 day moving average stands at 125.71, 20 DMA at 125.7, with the 20 headed down. Other indicators are neutral. Technically the trend is down.

Stocks took a beating last week. On Tuesday, stocks' only gainful day, the Dow closed at 12,943.66, but in punishment was whipped and beaten the rest of the week, closing today 200 points lower at 12,740.87 (down 31.6 or 0.25% for the day). S&P500 followed right along, closing today down 2.22 at 1,352.77. RSI has turned down and the MACD is rolling over, not signs to cheer a stock investor's heart.

Later in the summer some very painful times are coming for stock owners.

Today gold gained $10.20 to close at $1,588.60.

I'm just a natural born fool from Tennessee & I don't know nothin' at all, but I can still look at that gold chart and see the Invisible Hand just a-working away. What do you say when a market spikes up, then in 15 minutes or so is slammed down below resistance? Every day. It's just not a pattern one sees often in nature, but then, I am notoriously suspicious, I confess.

Never mind, I'd like to point y'all's attention to the longer term gold chart, where gold has scratched out an even-sided triangle, harbinger of a big break but silent as to which way. From the May $1,526.70 intraday low through the end-June $1,547.60 low draw your bottom boundary. From the June highs at $1,642.40 and $1,635.40 to July's $1,625.70 draw your upper boundary. You'll see that Friday's low didn't even come close to that bottom boundary, then about $1,550.

As long as gold remains in that triangle it is merely coiling up for a big move, & since this is a bull market, that will most likely be a move up. Meanwhile, as exciting as all the up & down may be, it doesn't say anything really until gold breaks above that upper boundary or below the lower.

Silver has formed a similar but not identical triangle. Inside a large declining triangle silver formed a downward-pointing or falling wedge. Normally these resolve with an upside breakout. Lower boundary today is about 2600c, upper boundary is about 2800c.

Silver today gained 52.2c to close 2741.1c. This came in a very tight range between 2704c and 2749c.

A reader rebuked me for crediting my wife's speedy recovery to the grace of God and the prayers of his people. Ahh, I should also have mentioned by name her surgeon, Dr. Michael Petracek, who also was a means of God's grace to Susan. Sorry I didn't make myself clear.

Speaking of God's grace, on 9 July 1991, twenty-one years ago today, my wife Susan and I along with 14 others were acquitted in Federal court on charges of conspiracy & willful failure to file income tax returns. Y'all can read about it at http://the-moneychanger.com/answers/the_most_dangerous_man_in_the_mid_south,

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
9-Jul-12 Price Change % Change
Gold, $/oz 1,588.60 10.30 0.65%
Silver, $/oz 27.41 0.52 1.94%
Gold/Silver Ratio 57.957 -0.742 -1.26%
Silver/Gold Ratio 0.0173 0.0002 1.28%
Platinum 1,443.20 -23.40 -1.60%
Palladium 582.60 -15.35 -2.57%
S&P 500 1,352.46 -2.22 -0.16%
Dow 12,736.29 -36.18 -0.28%
Dow in GOLD $s 165.73 -1.54 -0.92%
Dow in GOLD oz 8.02 -0.07 -0.92%
Dow in SILVER oz 464.66 -10.37 -2.18%
US Dollar Index 83.12 -0.26 -0.31%
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: 1,587.50      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,625.60 1,640.60 1,640.60
1/2 AE 0.50 801.69 833.44 1,666.88
1/4 AE 0.25 404.81 420.69 1,682.75
1/10 AE 0.10 168.28 174.63 1,746.25
Aust. 100 corona 0.98 1,540.51 1,554.51 1,585.91
British sovereign 0.24 373.70 380.70 1,617.24
French 20 franc 0.19 296.39 303.39 1,624.99
Krugerrand 1.00 1,603.38 1,618.38 1,618.38
Maple Leaf 1.00 1,597.50 1,617.50 1,617.50
1/2 Maple Leaf 0.50 785.81 825.50 1,651.00
1/4 Maple Leaf 0.25 392.91 420.69 1,682.75
1/10 Maple Leaf 0.10 157.16 171.45 1,714.50
Mexican 50 peso 1.21 1,894.75 1,910.75 1,584.76
.9999 bar 1.00 1,593.06 1,604.06 1,604.06
SPOT SILVER: 27.30      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 23,109.95 26,000.00 33.99
VG+ Peace dollar 0.77 22,109.95 25,000.00 32.68
90% silver coin bags 0.72 19,623.18 19,873.18 27.79
US 40% silver 1/2s 0.30 7,580.03 7,755.03 26.29
100 oz .999 bar 100.00 2,729.50 2,779.50 27.80
10 oz .999 bar 10.00 277.95 280.45 28.05
1 oz .999 round 1.00 27.15 28.00 28.00
Am Eagle, 200 oz Min 1.00 28.90 29.60 29.60
SPOT PLATINUM: 1,443.20      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,468.20 1,508.20 1,508.20
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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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