The Moneychanger
Daily Commentary
Tuesday, 31 July a.d. 2012 Browse the commentary archive

Markets are bating their breath, waiting on a policy announcement from the Federal Reserve Wednesday & from the ECB on Thursday. "Twill be more loud & showy explosions from the Blarney Cannons, but I am warning y'all, they're shooting blanks. Ain't got a single cannon ball between 'em.

Folks, look at the US dollar index chart at http://quotes.ino.com/chart/?s=NYBOT_DX Notice that since last Thursday it has been basically flat, ranging 82.40 to 83.00. Today it skootched down 16.9 basis points (0.22%), ending at 82.621. On a longer term chart it punched through its 50 day moving average (82.57) Monday but didn't close there. Today it bounced off the 50 DMA & rose a little bit. In other words, since it hit the top trading channel boundary last week it has only corrected back to its 50 DMA, a common vanilla retracement. But expect no movement until the Fed & ECB touch off their Blarney Cannons. And remember that neither of them need or want a higher dollar, while both need & want a higher euro.

The Yen closed at 128.03c [Y78.11], floating just above the downtrend line but paralyzed. Can't imagine the Japanese Nice Government Men agreeing to a higher yen. Euro has bunched up around its 20 DMA (122.86). Closed today up 0.35% at $1.2305. Solid resistance is entrenched above at $1.2500. Any positive noise out of the ECB criminals on Thursday will goose it higher, but not for long.

Stocks were confused today, some indices rising, some falling, none very clear. Confusion & indecision abound. Dow shrank 24.9 points (0.19%) to 13,048.11. S&P500 did about the same, losing 2.48 (0.,18%) to 1,382.82.

S&P500 is hovering just beneath resistance from that neckline that broke down in May. A Fed announcement perceived as "positive" will give it an up-spurt, but ask yourself: is it a real market if it depends on central back announcements to survive? Who's kidding whom?

Gold mounted an attack on $1,625 resistance today, reached $1,627.70, then collapsed to close near the bottom of the range, down $9.20 at $1,610.50. Appears to me that gold will stage another rise tomorrow, then fade to a low perhaps lower than today's. What's important? Must not drop below $1,600.

About noon today, just at $1,618, somebody smacked gold with selling, sending it down suddenly to $1,610. Program trading? NGM? Who knows.

Silver misplaced 11.9c today, closing at 2789.5c at the bottom of the range. Support from last Thursday is 2780c. Silver remains above its flat topped triangle boundary, in other words, it has still broken out to the upside & done nothing to contradict that or its rise above the 50 DMA (2777c). Silver usually has a slower time getting traction than gold when a rally is just beginning.

As the European & US economies continue to unravel, do not expect any of the frauds in charge to appear on TV announcing they are rolling-back regulations, reducing taxes, eliminating the social burden on employers, or adopting a gold standard. Any of those would help, and fast, to restore economies, but all of them require government to give up fascist control over lives. That they will never do -- voluntarily.

These past few days I may have sounded rather harsh and unforgiving toward the criminals, parasites, and tyrants who stand in the way of our lives, freedom & prosperity. Most of the time I merely laugh at them because they are so ridiculous, posturing as Great Benefactors of Humanity & Wise Men when in fact they lack enough maturity to be admitted to an adult Sunday School class. But watching them is like watching a drug addict or alcoholic destroy his life. On the one hand a terrible sadness seizes you whenever someone destroys himself, but at the same time his self-destruction infuriates you so that you want to hit him upside the head with a tire iron and tell him to "Grow Up!"

On 31 July 1774 Joseph Priestly discovered oxygen. Everybody had been holding his breath for that.

I never knew this before, but on 31 July 1777 the Marquis de Lafayette was made major-general of the Continental Army at an age of only 19. That couldn't happen today because the only thing 19 year olds know is how to play video games, although a few can read.

Ironically, on 31 July 1792 the first federal government building's cornerstone was laid, the Philadelphia Mind. Ironic why? Because it was the cornerstone of sound silver & gold money, coined by that mint, that founded the prosperity of the new American Union.

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
31-Jul-12 Price Change % Change
Gold, $/oz 1,610.50 -9.20 -0.57%
Silver, $/oz 27.90 -0.12 -0.42%
Gold/Silver Ratio 57.734 -0.083 -0.14%
Silver/Gold Ratio 0.0173 0.0000 0.14%
Platinum 1,415.40 5.10 0.36%
Palladium 589.75 2.20 0.37%
S&P 500 1,382.82 -2.48 -0.18%
Dow 13,048.11 -24.90 -0.19%
Dow in GOLD $s 167.48 0.65 0.39%
Dow in GOLD oz 8.10 0.03 0.39%
Dow in SILVER oz 467.76 1.10 0.24%
US Dollar Index 82.62 -0.17 -0.20%
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: 1,615.40      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,652.55 1,667.55 1,667.55
1/2 AE 0.50 815.78 848.09 1,696.17
1/4 AE 0.25 411.93 428.08 1,712.32
1/10 AE 0.10 171.23 177.69 1,776.94
Aust. 100 corona 0.98 1,567.58 1,581.58 1,613.53
British sovereign 0.24 380.27 387.27 1,645.14
French 20 franc 0.19 301.60 308.60 1,652.89
Krugerrand 1.00 1,626.71 1,641.71 1,641.71
Maple Leaf 1.00 1,625.40 1,645.40 1,645.40
1/2 Maple Leaf 0.50 799.62 840.01 1,680.02
1/4 Maple Leaf 0.25 399.81 428.08 1,712.32
1/10 Maple Leaf 0.10 159.92 174.46 1,744.63
Mexican 50 peso 1.21 1,928.05 1,944.05 1,612.38
.9999 bar 1.00 1,621.05 1,632.05 1,632.05
SPOT SILVER: 27.95      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 23,612.66 26,000.00 33.99
VG+ Peace dollar 0.77 22,612.66 25,000.00 32.68
90% silver coin bags 0.72 20,087.93 20,337.93 28.44
US 40% silver 1/2s 0.30 7,771.78 7,946.78 26.94
100 oz .999 bar 100.00 2,794.50 2,844.50 28.45
10 oz .999 bar 10.00 284.45 286.95 28.70
1 oz .999 round 1.00 27.80 28.65 28.65
Am Eagle, 200 oz Min 1.00 29.55 30.25 30.25
SPOT PLATINUM: 1,415.40      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,440.40 1,480.40 1,480.40
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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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