The Moneychanger
Weekly Commentary
Friday, 30 November a.d. 2012 Browse the commentary archive
Here's the weekly scorecard:
  23-Nov 30-Nov Change % Change
Silver, cents/oz. 3,411.60 3,320.40 -91.20 -2.7
Gold, dollars/oz. 1,751.40 1,710.90 -40.50 -2.3
Gold/silver ratio 51.337 51.527 0.190 0.4
Silver/gold ratio 0.0195 0.0194 -0.0001 -0.4
Dow in Gold Dollars (DIG$) 153.55 157.38 3.83 2.5
Dow in gold ounces 7.43 7.61 0.19 2.5
Dow in Silver ounces 381.34 392.29 10.95 2.9
Dow Industrials 13,009.68 13,025.58 15.90 0.1
S&P500 1,409.15 1,416.18 7.03 0.5
US dollar index 80.27 80.23 -0.04 -0.0
Platinum 1,615.10 1,603.10 -12.00 -0.7
Palladium 667.60 686.25 18.65 2.8

It does no good to tell a fool he's wrong, he just goes right ahead anyhow. It's like teaching a pig to sing. Never try to teach a pig to sing: it wastes your time and it annoys the pig.

'Twas a hard week for silver & gold, but in a minute I'll explain why not as hard as it may seem.

Nor did stocks prosper this week, closing a bare few points higher this week than last. Only palladium managed to rise. Biggest surprise was the US dollar, which, contrary to all expectation, justice, & gravity did not flow down the sewer this week.

First, the currencies. The ugly dollar index traced out a head & shoulders top this week with a neckline at 80.05. What meaneth this? That the dollar index is highly unlikely to rise above 80.30, the top of the shoulders, & virtually assured to drop below 80.05. Of course, when the Nice Government Men are in the market pushing things this way & that for their own inscrutable but invariably nefarious ends, it may take a while for that technical bent to work itself out, but it will at last.

Euro is poking at the downtrend line and overhead resistance, but keeps proving incapable of any meaty advance. Will probably jump one day next week, but I doubt that will last. Rose 0.08% today to $1.2988.

After a five day rise the yen fainted again today, gapping down for a new low for the move at $121.26c/Y100, down 0.44%. I very much doubt the NGM around the world will stand by idle while the Japanese hone their competitive advantage by depreciating their currency below 118c/Y100. That's what I love to watch: the Midianites & Amalekites start fighting each other.

US$1=Y82.47=E0.7699+.030117 oz Ag=0.000584 oz Au.

I don't talk much about manipulation in silver & gold, because it doesn't take much talent or imagination merely to blame everything on the secret manipulators. Oh, yes, they manipulate the markets, but with that same success that attends all government efforts, keeping the gold price down from $252 in 2001 to $1,710.90 today and silver from $4.01 to $33.204 today. Yet they do manipulate them over the short term, & try to hit them at critical junctures, as when Gold is fixing to break over $1,800 and silver over $37.50. What success attends their wretched frauds, I have already pointed out.

Stocks rose for the week, but have not yet made good their escape from beneath the drowntrend line. Dow added 3.76 today to 13,025.58 & S&P500 added 0.23 to 0.03%. Stocks will rally into year end, a bootless exercise.

The season is one reason you won't be able to tell this stubborn fool anything about silver & gold dropping lower is the season. They hardly ever ever decline into year end. Another reason lies in the longer term charts: No damage has been done. Rather, the metals have merely touched back to support: support that has held so far.

What of today? Silver lost 114.4c to 3320.4c while gold lost $16.30 to close Comex at $1,710.9. This painted a pretty tape, but in the aftermarket gold was trading at $1,714.01 and silver at 3339c. Not exactly cowering.

Critical support in gold, bear in mind, is $1,705. Low today hit $1,708.68, which was higher than Tuesday's $1,705.20. So gold has posted either double bottom or slightly higher lows.

Coming out of European trading gold was doing just fine, thanks, betwixt $1,727 and $1,731. Lo & Behold, about the time Comex opened in New York, somebody started selling, taking gold down to $1,720 by 8:30. Another bout of selling hit just before 11, gapping gold down from $1,724 to $1,719. Declined into $1,708.68 about 2:30, & rose after the close.

Today's decline merely took gold for another kiss on the neckline of that inverted head and shoulders, although it did pull it back beneath the 20 DMA ($1,722.76).

The bounds are clear: gold must not break $1,705.50. Otherwise it drops to $1,665 (200 DMA) or uptrend line from the June low (now about $1,640, but rising). Overhead gold must -- must clear $1,755, the last high. This needs to happen soon. Next week.

Silver's five day chart doesn't look at all like gold's. Where gold shows a push off a cliff, silver's shows a V-bottom on Wednesday, with a sharp recovery yesterday and fall today to a HIGHER low than Wednesdays (3318c against 3291c).

One day chart shows silver cruising along fine above 3400c until about 9:45 NY time, when it gapped down to 3380c, hovered, then gapped down again to 3340c. Final erosion by 1:15 had dragged silver down to 3318c and the low. In the aftermarket it climbed to 3340c.

No problem at all appears on the 4 month silver chart. It began an uptrend off the 2 November low at 3066c, and if you draw a line under the lows, today's low stopped short of that uptrend line. Whoops, it also stopped shy of the 50 day moving average (3315c). Shows a market correcting, but refusing to break down.

What are the bounds? Silver must not close below that uptrend line, call it the same level as the 50 DMA (3315c), period. Should it breach that mark, could fall to the rising trendline form June's low & hit that about 3025c today.

The difference between a fool & a brave man charging into a cannon's mouth is whether he comes out alive. This is a risk I would take. Silver & gold have begun their next leg up, the correction lies in the past, seasonality is pushing them higher.

I'm still buying silver & gold, and more whenever they become cheaper. Let the croakers croak, let the squawkers squawk, let the whiners whine. They were all doing that same thing when gold was $252 & silver $4.01. Veritas filia temporis.

On 30 November 1864 the Confederate Army lost the Battle of Franklin, Tennessee. I would not say the Union Army won it, because when any general forces his men into a frontal assault against entrenched cannon across a mile long open field as Hood did, he is aiming to lose.

Confederate Division Commander General Patrick Cleburne told his friend Brig. Gen. Daniel Govan, "Well, Govan, if we are to die, let us die like men."

He, with five other Confederate generals, were killed that day.

Hood followed up the Franklin disaster by smashing the rest of the Army of Tennessee at Nashville, and with it the hope of Confederate independence. WABI-SABI:

Wabi-sabi is the Japanese idea that explains why no machine made quilt in the world, no matter how perfect, could ever equal your grandmother's quilt.  Wabi-sabi is that peculiar note in a banjo tune by which the player makes it his beloved own, and it might even be that mistaken note that proves the player is human and not computer.  Wabi-sabi is that sweater you bought when you were sixteen but still wear at 45, and never mind the patches at the elbow; it's perfect.  Wabi-sabi appears in anything that shows the maker's personality, creativity, individuality, heart, and skill.  Wabi-sabi is simple elegance, and elegant simplicity.  Wabi-sabi is man-made, not machine made. 

For a fuller explanation of wabi-sabi, see

http://bit.ly/fJaLe 

This Advent season as you are Christmas shopping, I am going to mention several people to you who, whether they know it or not, are wabi-sabi.  Some make bacon, some make soap, some make music, but if you want a gift completely individual and unique, look to these folks.

My first introduction is the West Ladies from Middle Tennessee, Vicki, Jasmine, Hannah, & CeCe. I don't remember how many years ago I began buying their hand made soap, but it's perfect, so gentle you can shower with it & use it as shampoo. In addition to soap the West Ladies turn their hands at other crafts, but especially to music. At their website, http://www.homestead-blessings.com/, you can sample their music or buy a CD.

They were having a Black Friday sale last week, & those prices are still up on the website, so I reckon they still apply. These are great folks, & everything they turn their hand to is wabi-sabi. Visit http://www.homestead-blessings.com/

Y'all enjoy your weekend.

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
30-Nov-12 Price Change % Change
Gold, $/oz 1,727.20 10.70 0.6
Silver, $/oz 33.20 -1.14 -3.3
Gold/Silver Ratio 52.018 0.340 0.7
Silver/Gold Ratio 0.0192 -0.0007 -3.3
Platinum 1,603.10 -14.90 -0.9
Palladium 686.25 1.05 0.2
S&P 500 1,416.18 -22.50 -1.6
Dow 13,025.58 -2.35 -0.0
Dow in GOLD $s 155.90 -0.98 -0.6
Dow in GOLD oz 7.54 -0.05 -0.6
Dow in SILVER oz 392.29 13.00 3.4
US Dollar Index 80.23 0.02 0.0
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: 1,814.00      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,868.42 1,877.49 1,877.49
1/2 AE 0.50 924.63 952.35 1,904.70
1/4 AE 0.25 466.85 480.71 1,922.84
1/10 AE 0.10 192.18 196.82 1,968.19
Aust. 100 corona 0.98 1,769.19 1,780.08 1,816.04
British sovereign 0.24 427.02 431.02 1,830.99
French 20 franc 0.19 338.67 342.67 1,835.42
Krugerrand 1.00 1,837.58 1,852.58 1,852.58
Maple Leaf 1.00 1,824.00 1,844.00 1,844.00
1/2 Maple Leaf 0.50 897.93 943.28 1,886.56
1/4 Maple Leaf 0.25 448.97 480.71 1,922.84
1/10 Maple Leaf 0.10 179.59 195.91 1,959.12
Mexican 50 peso 1.21 2,169.46 2,186.46 1,813.44
.9999 bar 1.00 1,820.35 1,831.35 1,831.35
SPOT SILVER: 1.10      
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 0.72 786.50 1,036.50 1.45
US 40% silver 1/2s 0.30 132.75 307.75 1.04
100 oz .999 bar 100.00 110.00 160.00 1.60
10 oz .999 bar 10.00 16.00 18.50 1.85
1 oz .999 round 1.00 0.95 1.80 1.80
Am Eagle, 200 oz Min 1.00 2.70 3.35 3.35
SPOT PLATINUM: 1,603.10      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Platinum Platypus 1.00 1,628.10 1,668.10 1,668.10
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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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