The Moneychanger
Daily Commentary
Monday, 27 August a.d. 2012 Browse the commentary archive

Y'all have got to watch out! You know how to tell a politician is lying, right? His lips are moving. Some of y'all wrote me asking about a news story that the Republican Party is considering including a new gold standard in its platform. Now think about that.

Republicans will return the country to a gold standard when hell freezes solid. They've been owned by the banks & corporations since 1860, & Lincoln before that. He was a railroad lawyer.

We will get a gold standard when it is FORCED on them, Republicans & Democrats alike, and not before. It is a a reform so radical that it will GUT their power and the banks', & they just can't stand that.

Frederic Bastiat (d. 1850) said it best: "When plunder has become a way of life for a group of people living together in a society, they create for themselves in the course of time a legal system that authorizes it & a moral code that glorifies it." Not only do they steal from us, they preen themselves as morally superior because they steal from us.

You want to give power to the people? Then put gold & silver money into their hands! That's more powerful than a Remington 870 twelve gauge pump.

Sorry dollar gained a little against the sorry euro & sorry yen. Markets are nervous about what Ben the Bandit might bloviate to the Jackson Hole Gathering for Our Bosses. Super-Mario Draghi will speak there, too. My, my, they're a-gonna be wallerin' hip deep in Deep Thoughts -- or something.

Dollar gained 11.3 basis points (0.14%) from where it was trading when I wrote Friday. Five day chart has an iffy look. Probably planning to drop a little further, certainly will if it can't better 81.70 tomorrow, but to turn around & rally again it needs to climb over 81.85. Drop below last low at 81.20 will be like tying an anvil to a man's ankles & dropping him off a bridge with his hands tied.

Euro today stubbed its toe on bad economic news in Germany. Ended at $1.2498, lighter than Friday by 0.11%. So far that $1.2600 resistance has stopped like Jackson stopping yankees in the Valley.

Despite last week's jump yen did not get through 127.75c resistance, the main downtrend line. Closed at 127.0 c (y78.73) today, down 0.9% and just below its 20 DMA (127.12). For what the opinion of a natural born fool is worth, looks to me like the Nice Government Men are working at managing these currencies as hard as a hairy dog works at managing fleas.

STOCKS fluttered today like an naked chicken but never could get off the ground. Dow fell 33.3 (0.25%) to 13,124.67. S&P500 didn't do quite as badly, fell 0.69 (0.5%) to 1,410.44.

Stocks remain within their bearish rising wedge, so could yet jump higher. Any close below 13,000 is fatal & will loose a flood of blood.

Gold & silver both got their feet tangled in the downtrend line from last year's high. Gold gained $2.60 to $1,672.40 while silver added 44.2 cents to end Comex at 3104.8c. That was fine, but both dropped off in the aftermarket, a little too sharply.

Gold has now rounded over, in what may prove a consolidation or a short term top. Right now it's flirting with $1,660, but really must hold $1,645 to avoid a correction back to 41,625.

Silver scratched out a double top at 3120c today, and now is scratching to cling to 3060c. Support stands around 3060c, then 3000c and 2900c.

After those respectable closes, gold fell nearly $10 in the aftermarket, silver about 65 cents, platinum $8 and palladium $5. That sharp fall on no particular news I could find leads me to expect a rocky week, paying dues for last week's spiky gains.

It'll be all right. Silver & gold have made their decisive breakouts. May be a little negotiating to be done here leaving the gate, but that'll be soon passed.

Market is offering you an rare opportunity to LOAD UP before it takes off. Remember that I have been warning that this correction can be steep and fast, but don't let that worry you. On the other hand, any closes above today's (3104.8c & $1,672.40) means the rally has started, so don't wait to buy.

Thanks to his attacks on King Charles II who was just being restored to the English throne (before his even stupider sons lost it again) on 27 August 1660 John Milton's books were burnt in London. Milton's books, of course, are still read but the Stuarts are all long gone -- not that any of them were clever enough to write anything more than their names.

On 27 August 1789 the French National Assembly adopted the Declaration of the Rights of Man. It was the first of many wrong turns that would take France's course from reform, as in America, to revolution and a bloodbath. Richard Weaver was right: ideas DO have consequences.

On 27 August 1883 Krakatoa volcano, west of Java, exploded with a force of 1,300 megatons.

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
27-Aug-12 Price Change % Change
Gold, $/oz 1,672.40 2.60 0.16%
Silver, $/oz 31.05 0.43 1.39%
Gold/Silver Ratio 53.865 -0.666 -1.22%
Silver/Gold Ratio 0.0186 0.0002 1.24%
Platinum 1,551.90 -1.20 -0.08%
Palladium 649.30 2.60 0.40%
S&P 500 1,410.44 -0.69 -0.05%
Dow 13,124.67 -33.30 -0.25%
Dow in GOLD $s 162.23 -0.65 -0.40%
Dow in GOLD oz 7.85 -0.03 -0.40%
Dow in SILVER oz 422.72 -6.98 -1.62%
US Dollar Index 81.68 0.11 0.14%
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: 1,663.70      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,708.62 1,723.62 1,723.62
1/2 AE 0.50 847.98 873.44 1,746.89
1/4 AE 0.25 428.15 440.88 1,763.52
1/10 AE 0.10 176.25 180.51 1,805.11
Aust. 100 corona 0.98 1,622.60 1,632.76 1,665.74
British sovereign 0.24 391.63 398.63 1,693.44
French 20 franc 0.19 310.61 317.61 1,701.19
Krugerrand 1.00 1,678.67 1,693.67 1,693.67
Maple Leaf 1.00 1,673.70 1,693.70 1,693.70
1/2 Maple Leaf 0.50 823.53 865.12 1,730.25
1/4 Maple Leaf 0.25 411.77 440.88 1,763.52
1/10 Maple Leaf 0.10 164.71 179.68 1,796.80
Mexican 50 peso 1.21 1,989.71 2,006.71 1,664.35
.9999 bar 1.00 1,669.52 1,680.52 1,680.52
SPOT SILVER: 30.68      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 26,000.00 27,750.00 36.27
VG+ Peace dollar 0.77 25,000.00 27,500.00 35.95
90% silver coin bags 0.72 21,825.38 22,075.38 30.87
US 40% silver 1/2s 0.30 8,577.13 8,752.13 29.67
100 oz .999 bar 100.00 3,067.50 3,117.50 31.18
10 oz .999 bar 10.00 311.75 314.25 31.43
1 oz .999 round 1.00 30.53 31.38 31.38
Am Eagle, 200 oz Min 1.00 32.28 32.93 32.93
SPOT PLATINUM: 1,551.90      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,576.90 1,616.90 1,616.90
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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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