The Moneychanger
Daily Commentary
Thursday, 12 July a.d. 2012 Browse the commentary archive

Hogwash. Hogwash. Either its hogwash, or I am too durned dumb to understand, & I will admit that ever looms a possibility.

Stocks -- which investors have been misled to believe profit from central banks' inflating -- fell & the dollar rose on FOMC notes revealing that the criminals running the Fed are leaning toward more inflation. Y'all explain this to me, cause I am simply too thick headed to get it: the Fed is going to print more dollars, so the value will surely erode, but people are rushing to buy them? This is the same sort of broken logic that a man with a stick uses to fight off a nest full of hornets he has disturbed. He's got it ALL wrong if he thinks standing & fighting with hornets is a workable plan.

But Mercy! When you cheapen a nation's currency for 10 decades, & erect institutions like central banks and government agencies whose sole purpose is to feed like tapeworms off the public or enable other parasites to feed, is anybody surprised when the ability to think is cheapened, too? They already take PAPER as money, & believe it is. How goofy is that?

Something's at work here & I'm not sure what, but I suspect it bodes well for silver & gold. For two days silver has finished higher while gold dropped -- that's more than a little unusual. Then too, today's attacks on gold left it in the triangle & bloody but unconquered. Maybe time is running out for the Central Bank Masters of the Universe.

Scrofulous US dollar index finally broke through 83.50, but without much enthusiasm. It rose 19.3 basis points to 83.624, up 0.25%. For the next few days that ought to leave the dollar out of breath, although breaking through 83.50 today hints that the dollar will rise further. As always, however, it must confirm by moving higher soon. Downside it must not fall under the 81.52 line.

Scrofulous yen rose 0.61% today to 126.16 cents per 100 yen (Y79.26/US$1). Changed nothing on its downward trending chart, & leaves it below the 50 day moving average (125.76).

Scrofulous, pustulous euro dropped 0.27% today to close $1.2205, by way of a new low at $1.2167. Just seems nothing the Eurocrats do works any improvement -- bail out Greece, bail out Spanish banks, bail out Spain -- their boat just keeps on sinking, no matter how fast they bail it out. A reader asked me which fiat currency he should buy if getting out of euros -- NONE! I said. Yen, dollar, euro, they're all rotten. Use those fiat currencies to buy silver or gold while people are still willing to accept paper & electrons for real stuff.

I don't want to hurt anybody's feelings, but stocks just keep on looking sicker & sicker. The cardboard Dow lost 31.26 today (0.25%) to end at 12,573.27. That sounds like poor performance until you learn that it hit its low early in the day at 12,492. Climbing back up to almost unchanged was a victory of sorts. It won't last, though. Dow is chipping at recent support (since June) & threatened to pierce it today. 200 DMA and the last low are both at 12,450, so when the Dow crosses that line it will blow a foghorn that will scare every rat off the ship, 'cept the deaf ones.

S&P500 don't look that good. Lost 6.69 (0.5%) today to 1,334.76. Only safety net below is the 200 DMA at 1,306.60. Sorrow waits in the not distant future.

Silver rose again today, up 14.1 cents to 2713.6 & above 2700c resistance. Gold lost $10.30 to close at $1,564.90.

I am still riding the same horse. Gold is trading within that even-sided triangle, and today completed its move from the top boundary on 2 July to the bottom boundary. Next it will trade up toward that top boundary, and one day will trade through it and break out rallying. Only a close below $1,547.50 would gainsay this outlook.

Yes, that does mean this is a low risk place to buy gold.

Silver's 5-day chart shows a double bottom with today's low at 2648c. Upsurge off that low, beginning about 9:30, was powerful & left gaps behind. Silver keeps on refusing to stay down, a very good sign, plus the premium on 90% silver coin remains high, signaling strong physical demand.

Yep, I'd buy silver here, too.

In Northern Ireland 12 July is Orangeman's Day, commemorating the victory of Protestant forces led by the Dutchman William of Orange over James II's Roman Catholic army at the Battle of the Boyne in Ireland. And although that happened 322 years ago, they are still fighting. Scotch-Irish never forget, & neither do the plain Irish.

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-Jul-12 Price Change % Change
Gold, $/oz 1,564.90 -10.30 -0.65%
Silver, $/oz 27.14 0.14 0.52%
Gold/Silver Ratio 57.669 -0.683 -1.17%
Silver/Gold Ratio 0.0173 0.0002 1.18%
Platinum 1,409.80 -23.40 -1.63%
Palladium 573.50 -15.35 -2.61%
S&P 500 1,334.76 -6.69 -0.50%
Dow 12,573.27 -31.26 -0.25%
Dow in GOLD $s 166.09 0.69 0.42%
Dow in GOLD oz 8.03 0.03 0.42%
Dow in SILVER oz 463.34 -3.58 -0.77%
US Dollar Index 83.63 0.19 0.23%
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: 1,574.80      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,615.74 1,630.74 1,630.74
1/2 AE 0.50 795.27 826.77 1,653.54
1/4 AE 0.25 401.57 417.32 1,669.29
1/10 AE 0.10 166.93 173.23 1,732.28
Aust. 100 corona 0.98 1,528.18 1,542.18 1,573.33
British sovereign 0.24 370.71 377.71 1,604.54
French 20 franc 0.19 294.02 301.02 1,612.29
Krugerrand 1.00 1,590.55 1,605.55 1,605.55
Maple Leaf 1.00 1,584.80 1,604.80 1,604.80
1/2 Maple Leaf 0.50 779.53 818.90 1,637.79
1/4 Maple Leaf 0.25 389.76 417.32 1,669.29
1/10 Maple Leaf 0.10 155.91 170.08 1,700.78
Mexican 50 peso 1.21 1,879.59 1,895.59 1,572.19
.9999 bar 1.00 1,580.31 1,591.31 1,591.31
SPOT SILVER: 27.25      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 23,075.15 26,000.00 33.99
VG+ Peace dollar 0.77 22,075.15 25,000.00 32.68
90% silver coin bags 0.72 19,591.00 19,841.00 27.75
US 40% silver 1/2s 0.30 7,566.75 7,741.75 26.24
100 oz .999 bar 100.00 2,725.00 2,775.00 27.75
10 oz .999 bar 10.00 277.50 280.00 28.00
1 oz .999 round 1.00 27.10 27.95 27.95
Am Eagle, 200 oz Min 1.00 28.85 29.55 29.55
SPOT PLATINUM: 1,409.80      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,434.80 1,474.80 1,474.80
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© 2015 Little Mountain Corporation, d.b.a. The Moneychanger. All rights reserved. May not be republished in any form, including electronically, without our express permission.

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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