The Moneychanger
Daily Commentary
Thursday, 18 October a.d. 2012 Browse the commentary archive

Since I'm nothing more than a natural born fool from Tennessee & not in the news business, I can do what they never can: admit that nothing much happened today. I don't even have to make a big deal out of same little mouse burp event or go searching around the globe for grisly dismemberments, murders, etc. I can just say, "Not much happened."

Let's look at the not much.

Currencies: $1.00 = Y79.26 = E0.7652.

Yen & euro continue to diverge. Both fell today by 0.4% (wonder why?) to 126.16 cents/Y100 and $1.3068/euro. Yen gapped down again & closed nearly plumb on its 200 DMA (126.11) while the euro again demonstrated that the September $1.3172 high makes the euro feel like Kryptonite makes Superman feel. Maybe it will continue higher, but my, O, my it looks green sick & trashy to me.

US dollar index surprised everybody, me included, by bouncing off 70 by 29.8 basis points and rising 0.38%. I'm tired of it lying to me. It might have made a bottom yesterday just below 79, as a kind of rounding bottom appears on the 5 day chart. HOWEVER, it must o'erleap 79.40 to prove it has turned around.

None of these currency antics did the metals or stocks any good. Dow stayed about as near flat as the top of my head all day, tried to push through 13,580 and got the snot slapped out of it instead & ended the day lower by 8.06 at 13,548.94. S&P500 lost 3.57 (0.24%) to 1,457.34.

I wish I was smart like them Wall Street fellers. (You got to be smart to mash your feet into them pointy-toed shoes.) I look at the stock chart & only see a broadening top, the harbinger of grief, pain, sorrow, & whopping loss. They see stocks going lots higher permanently. Clearly I AM a fool.

Metals had a right bad day. Platinum gave back $26.80 of the $25.30 it gained yesterday. Palladium coughed up $6.20 of yesterday's $14.45 gain. Gold lost $8.20 of yesterday's $6.80 gain to leave it at $1,743.30. Silver also dug a deeper hole, losing 35.9 cents to 3283.2c.

You all can rant & th'ow rocks at me if you want, but all I see on that five day chart is gold and silver rolling over in rounding tops. If gold breaks $1,730 & silver & silver 3240c, the waterfall commences.

Of course, that is by no means a sure thing, but so saith the market today.

Be careful, keep watching, a great buying opportunity is near.

On 18 October 1469 Ferdinand King of Aragon married Isabella of Castile, uniting Spain into a single kingdom. The Reyes Catholicos would go on to complete the 700 year battle to reclaim the Spanish peninsula from the Moors and the create an empire on which the sun never set.

On 18 October 1685 King Louis XIV of France revoked the Edict of Nantes which had granted religious freedom to the protestant Huguenots. Thousands of them fled France to Germany, South Africa, South Carolina, and Virginia.

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
18-Oct-12 Price Change % Change
Gold, $/oz 1,743.30 -8.20 -0.47%
Silver, $/oz 32.84 -0.36 -1.08%
Gold/Silver Ratio 53.088 0.327 0.62%
Silver/Gold Ratio 0.0188 -0.0001 -0.62%
Platinum 1,641.20 -26.80 -1.61%
Palladium 647.50 -6.20 -0.95%
S&P 500 1,457.34 -3.57 -0.24%
Dow 13,548.94 -8.05 -0.06%
Dow in GOLD $s 160.66 0.67 0.42%
Dow in GOLD oz 7.77 0.03 0.42%
Dow in SILVER oz 412.60 4.22 1.03%
US Dollar Index 79.38 0.30 0.38%
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: 1,740.80      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,786.06 1,801.73 1,801.73
1/2 AE 0.50 887.30 916.97 1,833.93
1/4 AE 0.25 443.65 467.19 1,868.75
1/10 AE 0.10 182.68 190.62 1,906.18
Aust. 100 corona 0.98 1,697.80 1,708.33 1,742.84
British sovereign 0.24 409.78 413.78 1,757.79
French 20 franc 0.19 325.01 329.01 1,762.22
Krugerrand 1.00 1,761.69 1,778.69 1,778.69
Maple Leaf 1.00 1,750.80 1,765.80 1,765.80
1/2 Maple Leaf 0.50 861.70 905.22 1,810.43
1/4 Maple Leaf 0.25 430.85 461.31 1,845.25
1/10 Maple Leaf 0.10 172.34 188.01 1,880.06
Mexican 50 peso 1.21 2,081.92 2,098.92 1,740.83
.9999 bar 1.00 1,746.89 1,757.89 1,757.89
SPOT SILVER: 32.77      
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 23,212.48 23,462.48 32.81
US 40% silver 1/2s 0.30 9,473.93 9,673.93 32.79
100 oz .999 bar 100.00 3,268.50 3,316.50 33.17
10 oz .999 bar 10.00 332.65 335.15 33.52
1 oz .999 round 1.00 32.62 33.32 33.32
Am Eagle, 200 oz Min 1.00 34.27 34.97 34.97
SPOT PLATINUM: 1,641.20      
Plat. Platypus 1.00 1,651.20 1,691.20 1,691.20
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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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