The Moneychanger
Daily Commentary
Tuesday, 2 October a.d. 2012 Browse the commentary archive

Today was a day notable only for its unnoteworthiness. Nothing much happened, unless you count the annoying presidential race, in which the nothing that did happen was puffed up to pass for something. It's a great thing that we on Plantation America every four years get to pick our overseer. After all, he works for us, right?

I've been reading the Fed's September 13 announcement about QE3, & I've changed my mind. They won't be creating half a trillion new dollars. With all the other tricks, it will touch closer to a full trillion.

How are y'all CDs doing? That dollar's safer than gold or silver, right? It doesn't go up & down like silver & gold do, so it's easier to keep up with. It just goes down.

Y'all won't believe it, but people have actually said that to me, such prisoners are they of the dollar as their numeraire. Seems they haven't caught on that every price or exchange rate is a fraction, & one man's denominator is another man's numerator. For instance, today one US dollar buys 0.032 ounce of silver or 0.00056 ounce of gold. Whoa. That's a mighty long ways from 1913's 0.7734 and 0.0438. What happened in 1913? Oh, right, the Fed was founded. Coincidence.

Those trashy central banks are killing market activity. I reckon folks are waiting for their [existentially meaningless] announcements about interest rates. Ozzie dollar fell today on its central bank announcement it is lowering interest rates.

US dollar index has traded itself into an even-sided triangle, up against its downtrend line. Traded flat & a little down today, bounded by 79.848 & 79.479. Now down 7.3 basis points to 79.738.

Dollar index is trading into that triangle's point, so something will happen soon, up or down. My money's on Down.

Yen fell 0.26% today while the euro rose 0.26%. Euro barely poked its head into the downtrend line, & closed at $1.2919 (€0.7741) Yen barely fell through its 20 DMA (128.00c) to 127.90c (Y78.19). Quiet as a bar at 6:00 in the morning.

Stocks behaved very oddly today. Indices all closed up slightly except the Dow, which fell 32.75 (0.24%) to 13,482.36. S&P500 gained a tiny 1.26 (0.9%) to 1,445.75. Whenever markets that OUGHT to move together gainsay each other, something funny might be brewing.

Dow is bouncing along its 20 day moving average (13,445.65), piercing it today & Friday. S&P500 closed today almost on its 20 DMA (1,445.51). Significance of that is the 20 DMA's function as a trip wire & first warning of a change of direction.

Spain is still causing investors acute dyspepsia. Bail out is on again, off again, but it won't help anybody but the banks -- certainly not the Spanish economy.

Gold lost ground today, down $7.80 to $1,772.70, & silver was right by its side, losing 27.7 cents to 3460.4c.

As with other markets, it wasn't so much that it fell as that it just edged down sidewise. Range today was tighter than yesterday's, probably reflecting investor uncertainty. High came at $1,784.05, low at $1,770.75, but on balance the sellers outnumbered the buyers.

So gold has resolved nothing, answered nothing, merely tightened its range. A close above $1,790 takes it higher, a close below $1,760 drags it lower.

Silver's range tightened to 3505 (lower than yesterday) and 3439.5c. We await a move above 3550c or below 3440c.

Life isn't always lively. Silver & gold are becalmed on a sea of central bankers' intents. They will break one way or the other, & I am leaning toward upward.

On 2 October 1656 Connecticut colony passed a law against Quakers. Y'all ever notice how the minority always favors toleration until they get to be the majority? The Puritans who left England pleading for toleration set up the most intolerant colony in English America. In 1659, 1660, & 1661 they HANGED four Quakers (the "Boston martyrs") and later about a dozen folks for witchcraft. They whipped Baptists (they'd have a big job in the South). Apparently very few folks genuinely believe that in the marketplace for ideas, truth will prevail, especially their version of the truth, hence they will gladly beat, banish, shoot, strangle, burn, or drown their opponents. And that's not much changed today.

Leaves have already begun turning here, & it will be an exceptionally beautiful fall. A few places are still open for our Transformations & Renewal Conference 12 & 13 October. We'll be dealing with the question, "How do we build, in love, an economy that is prosperous, just, and free?"

This is not a conference for self-styled experts, but for serious people who are tired of feeling alone in a world without integrity. Good news is, there are an awful lot of people out there who still have both integrity & honesty, and are itching to put them to work. See www.transformationsgathering.com.

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
2-Oct-12 Price Change % Change
Gold, $/oz 1,772.70 -7.80 -0.44%
Silver, $/oz 34.60 -0.28 -0.79%
Gold/Silver Ratio 51.228 0.183 0.36%
Silver/Gold Ratio 0.0195 -0.0001 -0.36%
Platinum 1,682.90 1.40 0.08%
Palladium 648.96 8.60 1.34%
S&P 500 1,445.75 1.26 0.09%
Dow 13,482.36 -32.75 -0.24%
Dow in GOLD $s 157.22 0.32 0.21%
Dow in GOLD oz 7.61 0.02 0.21%
Dow in SILVER oz 389.62 2.16 0.56%
US Dollar Index 79.74 -0.07 -0.09%
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: 1,773.60      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,819.71 1,834.71 1,834.71
1/2 AE 0.50 904.03 931.14 1,862.28
1/4 AE 0.25 456.44 470.00 1,880.02
1/10 AE 0.10 187.90 192.44 1,924.36
Aust. 100 corona 0.98 1,729.79 1,740.48 1,775.64
British sovereign 0.24 417.51 421.51 1,790.59
French 20 franc 0.19 331.13 335.13 1,795.02
Krugerrand 1.00 1,787.79 1,802.79 1,802.79
Maple Leaf 1.00 1,783.60 1,803.60 1,803.60
1/2 Maple Leaf 0.50 877.93 922.27 1,844.54
1/4 Maple Leaf 0.25 438.97 470.00 1,880.02
1/10 Maple Leaf 0.10 175.59 191.55 1,915.49
Mexican 50 peso 1.21 2,121.15 2,138.15 1,773.36
.9999 bar 1.00 1,779.81 1,790.81 1,790.81
SPOT SILVER: 34.60      
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 24,592.43 24,842.43 34.74
US 40% silver 1/2s 0.30 9,733.53 9,908.53 33.59
100 oz .999 bar 100.00 3,459.50 3,509.50 35.10
10 oz .999 bar 10.00 350.95 353.45 35.35
1 oz .999 round 1.00 34.45 35.30 35.30
Am Eagle, 200 oz Min 1.00 36.20 36.85 36.85
SPOT PLATINUM: 1,682.90      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,707.90 1,747.90 1,747.90
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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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