The Moneychanger
Daily Commentary
Monday, 3 December a.d. 2012 Browse the commentary archive

Now here's a news item that would warm a banker's ventricles: Fannie Mae & Freddie Mac, the Franken-lenders sponsored by the yankee government, will suspend "some" foreclosures for the holidays. Just brings a tear to the eye, don't it?

The US dollar index at last fell through support at 80, which might break up the congestion in other markets. Closed today at 79.917, down 6.4 basis points, not a significantly sized drop but a significantly placed one. Punches through the 50 day moving average and that mid channel support reaching back to July 2011. Bad juju. Dollar is straining at the leash to move lower.

Yen and Euro fed off the dollar's fall. Euro climbed 0.52% to $1.3055, through $1.30 & all the way to the short term downtrend line from the previous two peaks. If the euro can burst that resistance, it can reach $1.3400.

Yen rose 0l30% to 121.62 cents/Y100. That filled the gap left on Friday, but not much more.

US$1=Y82.22=E0.7660=0.029 690 oz Ag=0.000 582 oz Au.

Stocks finally breached the downtrend line last week, but couldn't guess what to do today. Dow lost 59.98 (0.46%) to 12,965.60, closing below its 200 DMA (12,996). S&P500 looks much better. It lost 6.72 (0.47%) to 1,409.46 & remains above both its 200 DMA & 20 DMA, & today actually touched its 50 DMA. Don't let my kind words confuse you: I still don't want to own stocks.

Stocks valued in silver and gold are near the bottom (and past, for gold) of a congestion stretching back to September. Next big move will be down.

Silver gained 47.7 cents to 3368.1 & gold added $8.70 to $1,719.60. That thrills me none at all.

Today I am going to tell y'all all the things I DON'T like about silver & gold right now.

Gold's chart has become equivocal. The MACD might be fixing to blow a negative crossover. The RSI is drifting. Gold has been moving sideways since mid October, and last week, after outlining an upside down head and shoulders, came back to the neckline rather than breaking away from it. Nasty too, is gold's location below its 20 DMA ($1,724.92).

Today gold closed up $8.70, but without enough skyward conviction to get over $1,725 resistance & that 20 DMA.

Nothing goes sideways forever. Gold must either climb to $1.755 & better that last peak, or fall back toward the early November low at $1,672.50.

There are things I don't like about silver, too, but not as many. RSI is headed down from a November high. MACD might be crossing over downside. Volume is rising on the falls, and falling on the rises, like gold's.

But silver also offers things to like, things gainsaying gold's gloom. Silver has unequivocally trended up since that early November low, up and out of that upside-down head & shoulders, as it should. It stands above its 20 DMA (32.97) & 50 DMA (3314c).

What I don't like about silver's strength against gold's is that often -- not always, but often -- silver strength appears late in any move. But silver can also lead the way up early in a rally, too.

I went back & checked the bull market Decembers, those through 2001. I keep telling y'all that December normally is a strong month seasonally for silver & gold, but I hadn't looked at it from this angle. I compared the last trading day of November to the last trading day of December. Of those 11 years, both metals rose seven years out of eleven. All Decembers averaged for silver show a 0.65% rise and for gold 1.06%. Average of the downs took silver lower a painful 12.36% while the up years saw it gain 8.9%. Gold's average of losing Decembers was -6.08%, of gaining Decembers plus 5.14%.

Of course, those are all just dead numbers. An average takes a fellow who makes $15,000 a year & adds him to a fellow making $1,000,000 a year & invents a mythical man who makes $507,500 a year. That predominance of up Decembers carries more weight with me.

What persuades me more that I am right & that the next big silver & gold rally has begun is that all this is happening after a 1-1/2 year and 1 year correction in silver & gold. Just not time for another big fall, unless something goes horribly awry.

Here are the boundaries: gold must clear $1,755 and not fall through $1,705. Silver must o'erleap 3450c and must not fall below 3314c (50 DMA & uptrend line). In any event, those "averages" I quoted say that the maximum downside for silver is 2910c & for gold is $1,594. Gold will lay bare its intentions in the next day or two.

If they break, likelier downside targets are support at $1,640 & 3050c.

Bear in mind I'm not an optimist or pessimist on silver or gold, I am merely riding the bull market & for entertainment meantime reading the charts. It appears to me still that the correction from the August-September rise has been completed, but another leg down is possible. Longer metals stall here, more likely that becomes.

On 3 December 1468 Lorenzo the Magnificent & his brother Guiliano succeeded their father, Piero de Medici, as rulers of Florence, Italy, nominally a republic.

On 3 December Tennesseean Andrew Jackson was elected president of the United States.


Because I like to put my money where my mouth is, I asked my design genius Collin the Magnificent to put up a website at There you can read not a measly first page or copyright page or chiseling title page like you get on Amazon, but an ENTIRE chapter called "Pig Persuader." If you read it and don't laugh out loud at least once, probably with loud snorting, I will send you a quarter. And all the rest of the book is just as good, lots of it better, but this is one of my personal favorites.

Go. Read. Buy At Home In Dogwood Mudhole. Unsolicited one reader wrote me that he had laughed himself "SILLY" reading it. More than one reader has bought a case or half a case, reckoning they could give no better Christmas gift. I am humbled & gratified, & I bet if you'll read that chapter, you'll like it, too. Go, click:

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
3-Dec-12 Price Change % Change
Gold, $/oz 1,719.60 8.70 0.51%
Silver, $/oz 33.68 0.48 1.44%
Gold/Silver Ratio 51.055 -0.471 -0.91%
Silver/Gold Ratio 0.0196 0.0002 0.92%
Platinum 1,612.30 9.20 0.57%
Palladium 689.45 3.20 0.47%
S&P 500 1,409.46 -6.72 -0.47%
Dow 12,965.60 -59.98 -0.46%
Dow in GOLD $s 155.86 -1.50 -0.95%
Dow in GOLD oz 7.54 -0.07 -0.95%
Dow in SILVER oz 384.95 -7.34 -1.87%
US Dollar Index 79.92 -0.06 -0.08%
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SPOT GOLD: 1,716.50      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,768.00 1,776.58 1,776.58
1/2 AE 0.50 874.91 901.16 1,802.33
1/4 AE 0.25 441.74 454.87 1,819.49
1/10 AE 0.10 181.84 186.24 1,862.40
Aust. 100 corona 0.98 1,674.10 1,684.51 1,718.54
British sovereign 0.24 404.06 408.06 1,733.49
French 20 franc 0.19 320.47 324.47 1,737.92
Krugerrand 1.00 1,738.81 1,753.81 1,753.81
Maple Leaf 1.00 1,726.50 1,746.50 1,746.50
1/2 Maple Leaf 0.50 849.67 892.58 1,785.16
1/4 Maple Leaf 0.25 424.83 454.87 1,819.49
1/10 Maple Leaf 0.10 169.93 185.38 1,853.82
Mexican 50 peso 1.21 2,052.86 2,069.86 1,716.73
.9999 bar 1.00 1,722.51 1,733.51 1,733.51
SPOT SILVER: 33.64      
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 24,016.85 24,266.85 33.94
US 40% silver 1/2s 0.30 9,732.05 9,907.05 33.58
100 oz .999 bar 100.00 3,364.00 3,414.00 34.14
10 oz .999 bar 10.00 341.40 343.90 34.39
1 oz .999 round 1.00 33.49 34.34 34.34
Am Eagle, 200 oz Min 1.00 35.24 35.89 35.89
SPOT PLATINUM: 1,612.30      
Plat. Platypus 1.00 1,637.30 1,677.30 1,677.30
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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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