The Moneychanger
Weekly Commentary
Friday, 7 December a.d. 2012 Browse the commentary archive
Here's the weekly scorecard:
  30-Nov 7-Dec Change % Change
Silver, cents/oz. 3,320.40 3,305.30 -15.10 -0.5
Gold, dollars/oz. 1,710.90 1,704.00 -6.90 -0.4
Gold/silver ratio 51.527 51.554 0.030 0.1
Silver/gold ratio 0.0194 0.0194 -0.0000 -0.1
Dow in Gold Dollars (DIG$) 157.38 159.59 2.21 1.4
Dow in gold ounces 7.61 7.72 0.11 1.4
Dow in Silver ounces 392.29 398.00 5.71 1.5
Dow Industrials 13,025.58 13,155.13 129.55 1.0
S&P500 1,416.18 1,418.07 1.89 0.1
US dollar index 80.23 80.43 0.19 0.2
Platinum 1,603.10 1,605.50 2.40 0.1
Palladium 686.25 696.50 10.25 1.5

Thinking about the world this week has left me with one conclusion: A nation without a central bank is like a snail without a glue gun.

This is how silly the fiscal-cliff has gotten. Congress passed a law a few years ago to mint one ounce palladium coins, & left the denominations up to the Mint to assign. So some goof has suggested -- tongue in cheek or in earnest is not plain -- that the treasury just mint two of these with trillion dollar denominations, then deposit them with the Federal Reserve. Economist Joseph Gagnon of the Peterson Inst. For International Economics says that since the yankee gov't. would merely be using the money to maintain spending at present levels, it wouldn't create any extra inflation.

Surely, surely, these folks are kidding. Aren't they? Surely they realize that it makes no difference whether you print a 1 followed by 12 zeros on paper or platinum, it's still inflation? Don't they?

Thanks to MDM for sending me this. Just when I thought the fiscal cliff conversation couldn't possibly become any stupider, this turns up.

Odd week, passing odd. After all the turmoil in silver & gold, they were down only 0.5% & 0.4% for the week. Stocks finally broke through the downtrend line, but not much. US dollar index rose, but probably not for long.

Dollar's surge in the last two days has taken it above the resistance/support line & even above its 50 DMA (80.15. Closed today up 18 basis points (0.23%) to 80.425. Wouldn't it surprise everyone if the dollar turned around & rallied from here? Sure would, but bet on that happening next week just after hogs put on neckties. 200 DMA stands way above at 80.79.

Y'all write that down, because next week if the US dollar index does close over its 200 DMA I will shamelessly disremember I ever said that.

Three days ago the euro hit its downtrend line & ran like a kid threatened with castor oil. Yesterday it plunged, & today again, down 0.32% to $1.2928, but got its feet tangled in a cluster of moving averages. Yesterday's drop shows that euro investors are nearly as loyal as Liberian army privates. Euro might still rise, but 'twill be a meaningless exercise, since all the bad debt problems, bankrupt banks, bad mortgages, and economies strangling on regulations and social costs have never been addressed, & won't be until the peasants take the pitchforks to parliament.

Mercy! Can it be the Yen made ANOTHER new low today, at 120.74c? Hard to fathom. Surely that ought to mark the decline's end. Closed down 0.12% at 121.22c/Y100. Japanese are trying to fix their export-addicted economy by depreciating their currency. Hard to win that fight, since every other country will do the same -- already is.

'Twill be interesting to observe how much honor there is among central banking thieves. So far they have kept their currencies in a wide range, depreciating generally at the same rate. If one of them goes below the 118c level, Fed's likely to get feisty.

Stocks, like ballet toe shoes & a chiffon tutu, are not something I aspire to own. Still, they're working on a rally that will be touted as stupor mundi, the wonder of the world. 'Tain't, tho.

Dow racked in 81.09 (0.62%) today to close at 13,155.13. S&P500 clawed in 4.153 (0.3%) to end up at 1,418.07. This brought distinct progress, as the Dow broke through the dam at 13,080 which had so long blocked its upward flow. Also closed the Dow above its 200 DMA (12,999) & its 50 DMA (13,147).

Shortly the Dow will challenge 13,300, where strong resistance waits in ambush. Should stocks overpower that resistance, they could run to to 13,700.

This will not be good. Rather, will be the last touch off the top of the Jaws of Death that will snap them shut.

Y'all get this straight, get out your little shirt-pocket notebooks & write this down: stocks are in a primary down trend (bear market) & have been since the year 2000. That bear market has another 3 - 10 years to run.

Silver & gold are hinting at something, but talking out of both sides of their mouth. Silver rose 1.4 cents today to 3305.3 while gold augmented $3.70 to $1,704.

Let's look at the good, the bad, and the ugly.

Bad, bad, gold! You didn't close above $1,705 resistance today.

Good, gold! You have three days touched off the same $1,685+ low & held every time. Strong. Persuasive. Makes me want to believe you might have found your bottom.

The Ugly: Gold was correcting from the August - October rally through the 12 month downtrend line to $1,800. Found a bottom at $1,672.50, rallied, but never went all the way to the 200 DMA or 150 dma (now both about $1,664). That would have given me firm grounds to believe you have finished correcting. Uglier still, you might be tricking me. You might intend to kiss back all the way to that downtrend line, say $1,630 - $1,650.

Wherefore, gold, I'm going to have to wait until you give better security, a better pledge of upward intentions, like closing over $1,725 support, or better yet, over the last high ($1,755). Oh, you'll get there, I know, but I'm going to have to see the cash, and let the credit go.

Silver, you have been so bad. You're wrestling right now with your 50 DMA (3305c) & 20 DMA (3322c) & can't get clear of that sticky 3300c level. But you, too, hit that 3250-3260c level three times in as many days, and held like a rock. Can I really trust you right here?

The ugly is that big drop that might take you all the way to 3050c, or 2950c. Can I really trust you?

'Tis good is that you are holding on, Silver, & no matter how hard you've been hit, you haven't really been knocked down. I love you, but I just want to see you climb over 3350c, then jump past 3450c, before I can really rest easy.

Don't miss the long term: silver & gold remain in a primary up trend (bull market) & have finished their 12-month & 17 month corrections & begun their next rally. By spring this ought to take gold to $2,300 & silver above $50.

You all ought to be watching silver & gold like hungry red-tailed hawks over a rodent-ridden field. Your chance to buy will come soon, & will flee away fast.

I'll probably need asbestos eye-balls to read all the smoking emails y'all will send, but I'm going to say it anyway: Roosevelt set up the Japanese to attack Pearl Harbor. That doesn't excuse their perfidy, by any means, but it puts another color on Roosevelt's complicity in those & other American deaths. Roosevelt was desperate for any excuse to get into the war, so he waged economic war against the Japanese. In September, I believe, US intelligence had broken the Japanese Purple Code so the administration read all the correspondence with the Japanese Embassy in Washington, & pretty well knew the Japanese plans. Roosevelt issued orders to guard against sabotage, so planes were concentrated on airfields instead of being spread out against air attack. And why was the whole Pacific Fleet in Pearl Harbor for the first time ever? But y'all don't take my word for it, read The Final Secret of Pearl Harbor by Robert A. Theobald.

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
7-Dec-12 Price Change % Change
Gold, $/oz 1,704.00 3.70 0.2
Silver, $/oz 33.05 0.01 0.0
Gold/Silver Ratio 51.554 0.112 0.2
Silver/Gold Ratio 0.0194 0.0000 0.0
Platinum 1,605.50 6.30 0.4
Palladium 696.50 0.95 0.1
S&P 500 1,418.07 -22.50 -1.6
Dow 13,155.13 -2.35 -0.0
Dow in GOLD $s 159.59 -0.36 -0.2
Dow in GOLD oz 7.72 -0.02 -0.2
Dow in SILVER oz 398.00 -0.24 -0.1
US Dollar Index 80.43 0.18 0.2
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: 1,704.00      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,756.82 1,763.64 1,763.64
1/2 AE 0.50 868.53 894.60 1,789.20
1/4 AE 0.25 438.52 451.56 1,806.24
1/10 AE 0.10 180.52 184.88 1,848.84
Aust. 100 corona 0.98 1,661.91 1,672.26 1,706.04
British sovereign 0.24 401.12 405.12 1,720.99
French 20 franc 0.19 318.14 322.14 1,725.42
Krugerrand 1.00 1,727.86 1,742.86 1,742.86
Maple Leaf 1.00 1,714.00 1,734.00 1,734.00
1/2 Maple Leaf 0.50 843.48 886.08 1,772.16
1/4 Maple Leaf 0.25 421.74 451.56 1,806.24
1/10 Maple Leaf 0.10 168.70 184.03 1,840.32
Mexican 50 peso 1.21 2,037.91 2,054.91 1,704.33
.9999 bar 1.00 1,709.96 1,720.96 1,720.96
SPOT SILVER: 33.09      
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 23,587.85 23,837.85 33.34
US 40% silver 1/2s 0.30 9,569.80 9,744.80 33.03
100 oz .999 bar 100.00 3,309.00 3,359.00 33.59
10 oz .999 bar 10.00 335.90 338.40 33.84
1 oz .999 round 1.00 32.94 33.79 33.79
Am Eagle, 200 oz Min 1.00 34.69 35.34 35.34
SPOT PLATINUM: 1,605.50      
Platinum Platypus 1.00 1,630.50 1,670.50 1,670.50
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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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