The Moneychanger
Daily Commentary
Tuesday, 16 October a.d. 2012 Browse the commentary archive

Don't y'all get tired of hogwash? I believe if I see one more news report that "the Euro crisis is solved because some German politician belched favorably toward a Spanish bailout" I am just going to turn in my keyboard & call it a career. I'm about to where I don't believe anybody in the world can count, or add, or subtract. America, Europe, Japan, China -- they're all flat busted. The borrowing-money-into- existence system, the borrowing-to-consume, the government-can- run-an-economy system is dead as a hammer, & ain't coming back.

That rotten US dollar is just like a trashy girl. She keeps on lying to you, and you just can't believe anybody could lie that much & that consistently. Now she's done it again.

Dollar dropped below that 79.50 I said yesterday it needed to hold. Well, I reckon I'm just like that sucker boyfriend that still wants to believe her. Last bottom was 79.10, so the dip today to 79.30 might not prove fatal to a rally. Worse, today's close at 79.319 (down 44.5 basis point or 0.57%) leaves the dollar looking up at its 20 DMA (now 79.61).

Currencies today stand at US$1 = Y78.88 = E 0.7660.

Think of the world as a rather large concentration camp where all the inmates are swapping rumors all the day long about the war finally being over, or an amnesty coming. That's what happening with the euro, Currency of Bums. Today it gapped up to $1.3055 (+0.84%) on rumors so flimsy a six year old wouldn't bite on 'em. All is illusion, wet cardboard waiting for some doubter to stick a finger thru it. In spite of today, the euro remains in a downtrend unless it can climb over 1.3100.

Yen keeps going out of this world backwards. Tumbled another 0.23% today to 126.78c.

If y'all go look at this Dow/Gold chart, it will become plain that stocks are rallying against gold, having gapped up through their 20 DMA two days ago. Target of this COUNTER-trend rally is at least the 200 DMA (7.80 oz), maybe higher before it plays out. Make this plain: stocks have more to rise, gold & silver further to fall.

Wall Street was enough to warm a banker's frozen heart today. Dow rose 127.55 (0.95%) to 13,556.37. S&P500 outran it, up 14.79 (1.03%) to 1,454.92.

'Twould be a mistake to view metals' bounce today as the bottom of this drop -- not enough time yet, not enough price. Minimum target is the 50 DMA at $1,712.64 for gold.

Today gold rose $8.70 to $1,744.70. Silver rose also, 21.5 cents to 3292.2c, but without successfully penetrating 3300c.

Gold made a new intraday low for the move yesterday at $1,729.70. Today's low hit only $1,736.46, while the high reached $1,748.20. About $1,755 it will meet resistance as determined as the Confederate line at Fredericksburg in 1862. For now, the momentum remains gravityward.

Silver pierced 3300c today & reached 3304c but fell back. This is neither zeal, nor enthusiasm, nor strength. More downside's a-coming.

If markets won't give you a philosophical & patient turn of mind, won't anything. We simply have to wait with longsuffering while this little correction plays itself out, biding our time until we buy again. Don't let the waiting rile you.

Never underestimate how much damage a fool can do you. A real fool, armed with fanatic purpose s& sufficient self-righteousness, can do far more damage than a determined smart man armed only with a grudge. On 16 October 1859 John Brown, fresh from his murders in Kansas, led an attack on the federal arsenal at Harper's Ferry, Virginia, ostensibly to lead a slave insurrection. First person they killed was a free black man. They were armed by other fools, six "respectable" New Englanders, the Secret Six, including ministers. They had already sent so many rifles to Kansas that they were know as Beecher's Bibles, after the abolitionist preacher.

Brown's raid accomplished only one thing, other than his well-deserved hanging, and that was to convince all those yet unconvinced Southerners that war was inevitable. Quite an accomplishment, for a fool. It would only cost 625,000 soldier's lives & the lives of as many civilians. God save us from humantarians who love all humanity but no man!

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
16-Oct-12 Price Change % Change
Gold, $/oz 1,744.70 8.70 0.50%
Silver, $/oz 32.92 0.22 0.66%
Gold/Silver Ratio 52.995 -0.082 -0.16%
Silver/Gold Ratio 0.0189 0.0000 0.16%
Platinum 1,657.10 11.40 0.69%
Palladium 637.95 6.35 1.01%
S&P 500 1,454.92 14.79 1.03%
Dow 13,556.37 127.55 0.95%
Dow in GOLD $s 160.62 0.73 0.46%
Dow in GOLD oz 7.77 0.04 0.46%
Dow in SILVER oz 411.77 1.19 0.29%
US Dollar Index 79.32 -0.45 -0.56%
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: 1,753.90      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,797.75 1,815.29 1,815.29
1/2 AE 0.50 893.98 923.87 1,847.73
1/4 AE 0.25 446.99 470.70 1,882.81
1/10 AE 0.10 184.05 192.05 1,920.52
Aust. 100 corona 0.98 1,710.58 1,721.17 1,755.94
British sovereign 0.24 412.87 416.87 1,770.89
French 20 franc 0.19 327.45 331.45 1,775.32
Krugerrand 1.00 1,774.95 1,791.95 1,791.95
Maple Leaf 1.00 1,763.90 1,778.90 1,778.90
1/2 Maple Leaf 0.50 868.18 912.03 1,824.06
1/4 Maple Leaf 0.25 434.09 464.78 1,859.13
1/10 Maple Leaf 0.10 173.64 189.42 1,894.21
Mexican 50 peso 1.21 2,097.59 2,114.59 1,753.82
.9999 bar 1.00 1,760.04 1,771.04 1,771.04
SPOT SILVER: 33.53      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 30,500.00 32,500.00 42.48
VG+ Peace dollar 0.77 30,000.00 32,000.00 41.83
90% silver coin bags 0.72 23,759.45 24,116.95 33.73
US 40% silver 1/2s 0.30 9,699.60 9,899.60 33.56
100 oz .999 bar 100.00 3,345.00 3,393.00 33.93
10 oz .999 bar 10.00 340.30 342.80 34.28
1 oz .999 round 1.00 33.38 34.08 34.08
Am Eagle, 200 oz Min 1.00 35.03 35.73 35.73
SPOT PLATINUM: 1,657.10      
Plat. Platypus 1.00 1,667.10 1,707.10 1,707.10
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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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