The Moneychanger
Daily Commentary
Thursday, 25 October a.d. 2012 Browse the commentary archive

Today was Dead Cat Thursday, when most markets bounced no matter how moribund they might be.

All but the US dollar index, which rose a determined 7.5 basis points to elbow its way through that 80.00 resistance and close at 80.034.

US dollar is still nursing a rally, & fended off an attack today that drove it down to 79.70. It wheeled and closed above 80. Now it's time to spit or chew: dollar index has posted two tops about the same place yesterday & today. Tomorrow it must advance.

Currencies: US$1.00 = Y80.30 = E0.7732

Whoa! Just when I thought the yen had finished falling, it found a manhole cover, dragged it off, & jumped down the hole. Lost 0.64% today, gapped down, & closed at 124.54 cents. If it doesn't stop at the June low (124.12), it could plunge to 119.

Euro looked only slightly better. Range widened out and it lost 0.28% to close at $1.2934, now below the $1.2970 twenty day moving average. It's only hovering above its 200 DMA ($1.2826). One piece of really bad news would send the euro tailspinning toward $1.2600.

Stocks wound up with tiny gains after a very raggedy day. Dow gained 0.2% or 26.34 points to 13,103.68. S&P50 gained 4.22 to 1,412.97.

Not a step of this bodes well for stocks. They have broken down through the neckline of that head & shoulders that they painted earlier in the year, formed a fatal rising wedge, fell down out of that, & confirmed their love of gravity by closing below the 20 & 50 day moving averages, and if the 200 DMA was a pretty girl, the Dow'd be close enough to steal a kiss (12,972.57).

Stocks need some magic to pull out of this nosedive, & I think Swami Ben is all out of tricks. But what good is the opinion of a natural born fool from Tennessee?

Toughest job in the world is calling thing by their real name -- admitting what your eyes see & your ears hear. Silver today regained 45.4 cents to close above 3200 at 3204.9c. Gold clawed back $11.50 to close $1,712.

I know this soundeth sanguine, but 'tain't. They have only risen to the ruling downtrend line, & until they close ABOVE that downtrend line & confirm intentions by doing it twice, they are still obeying that downtrend line, no matter what I would like em to do.

I remind y'all, silver & gold remain in a primary Uptrend, a BULL market. You are watching a mere normal correction in that bull market. Keep watching for that place to buy.

On 25 October 1621 Gov. Bradford of the New England Plymouth colony disallowed sport on Christmas Day. Man, them puritans were some fun! Worse yet, they got the date for Christmas two months off!

Just to show you how good a dictator's word is, on 2 October 1932 Benito Mussolini vowed to remain dictator for 30 years. He lasted barely 12.

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
25-Oct-12 Price Change % Change
Gold, $/oz 1,712.00 11.50 0.68%
Silver, $/oz 32.05 0.45 1.44%
Gold/Silver Ratio 53.418 -0.404 -0.75%
Silver/Gold Ratio 0.0187 0.0001 0.76%
Platinum 1,567.10 6.90 0.44%
Palladium 604.80 11.75 1.98%
S&P 500 1,412.97 4.22 0.30%
Dow 13,103.68 26.34 0.20%
Dow in GOLD $s 158.22 -0.73 -0.46%
Dow in GOLD oz 7.65 -0.04 -0.46%
Dow in SILVER oz 408.86 -5.04 -1.22%
US Dollar Index 80.03 0.08 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: 1,711.30      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,759.22 1,771.20 1,771.20
1/2 AE 0.50 872.25 901.43 1,802.85
1/4 AE 0.25 436.13 459.27 1,837.08
1/10 AE 0.10 179.58 187.39 1,873.87
Aust. 100 corona 0.98 1,669.03 1,679.42 1,713.34
British sovereign 0.24 402.84 406.84 1,728.29
French 20 franc 0.19 319.50 323.50 1,732.72
Krugerrand 1.00 1,730.12 1,747.12 1,747.12
Maple Leaf 1.00 1,721.30 1,736.30 1,736.30
1/2 Maple Leaf 0.50 847.09 889.88 1,779.75
1/4 Maple Leaf 0.25 423.55 453.49 1,813.98
1/10 Maple Leaf 0.10 169.42 184.82 1,848.20
Mexican 50 peso 1.21 2,046.64 2,063.64 1,711.57
.9999 bar 1.00 1,717.29 1,728.29 1,728.29
SPOT SILVER: 32.08      
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 22,754.88 23,004.88 32.17
US 40% silver 1/2s 0.30 9,270.38 9,470.38 32.10
100 oz .999 bar 100.00 3,199.50 3,247.50 32.48
10 oz .999 bar 10.00 325.75 328.25 32.83
1 oz .999 round 1.00 31.93 32.63 32.63
Am Eagle, 200 oz Min 1.00 33.58 34.28 34.28
SPOT PLATINUM: 1,567.10      
Plat. Platypus 1.00 1,577.10 1,617.10 1,617.10
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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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