The Moneychanger
Daily Commentary
Monday, 10 December a.d. 2012 Browse the commentary archive

The eurocrat imposed on Italy, Monti, to bring the country down into austerity, is done for. Silvio Berluscone & his party have withdrawn support fro him, so he will resign. Interest rates the Italian government has to pay responded by rising since Berlusconi is already campaigning on an anti-Germany, anti-austerity program. Never mind all Berluscone's baggage, longer & gamier than the baggage train of the Khan's Golden Horde, the point is that opposition is surfacing, & making enough waves to drive out the technocrat. Euro remains imperilled.

US dollar index gave ground today, losing 21.4 basis points to 80.318 (down 0.28%). If this little reflex (upward) reaction hasn't already sputtered out, it might yet reach the 200 DMA at 80.80. If it can't cross that line, dollar is just marking time until it falls again.

US$1=Y82.37=E0.7726=0.030 030 oz Ag=0.000 584 oz Au.

[Short Exchange Rate Lesson: The US Dollar exchange rate in Euros can be expressed as (a) dollars per euro, today $1.2944 or (b) euros per dollar, today E0.07726. Likewise, silver can be expressed in "dollars per ounce," today $33.30, or "ounces per dollar," today 0.030030 oz.]

Stocks have surely embarked on a rally. For the second day the Dow closed above its 50 DMA (13,142), & already stood above the 200 & 20 DMAs. Higher. Not clear yet whether it wills top around 13,300 or reach higher, but 'tis clear that this peak likely will be the final disaster dénouement, the last peak, & then the flood.

Today the Dow rose 34.14 (0.26%) to 13,189.27. S&P500 gained 2.06 (0.15%) to 1,420.13.

Yet only the unwary would gauge stocks' performance by their mere, un-inflation-adjusted numbers. Only measuring them against gold & silver tells us whether they are gaining purchasing power (value). Against gold, stocks ran over Victoria Falls in November, then rallied back about 3/4 of the way. Now they've stalled & are rolling over. Against silver stocks have painted the same picture, only worse. Rebound off November low has only been about 1/3 of the foregoing loss.

What, what, what does this say? That regardless what stocks do, high or low, silver & gold are both set to outrun them speedily.

Today silver added 24.7 cents & shuttered Comex at 3330c an ounce. Gold picked up $9.00 to score $1,713 at close.

No question this was a better day. Five day chart shows two bottoms at $1,685, one on Wednesday & one Thursday, followed by a sharp rise. If the chart is accurate & not sporting an artifact, there was a very short spike to $1,685 on Friday, too, but that may be a misprint. Thereafter gold climbed steadily at 45%.

Today it put in a little peak at $1,716.74, & never fell below critical $1,705 support (low was $1,705.18.

Now look at silver. The bottoms Thursday & Friday was successively higher, 3250c & 3260c. After Friday's low, silver continuously climbed toward today's 3341.5 high, then rolled over.

Silver & gold may well have posted their lows, but I've been slapped on both sides of my face too often in this range for me to call a bottom yet. Silver needs to close above 3350c or below 3250c and gold above $1,725 or below $1,685. I'd buy in either of those places, but only when silver & gold exceed those numbers, up or down, will we have a clue what the very short term holds.

By "very short term" I mean till year-end. If they haven't dropped by then, the new year will kick in and take them up.

You see, with silver & gold there is no "Fiscal Cliff" because long decades ago the Fed & the US government pushed the US dollar over that cliff, & the faster & harder it falls, the faster & harder silver & gold will rise.

Really not any more complicated than that, folks. Only reason I can grasp that is that I have no Harvard MBA, no MIT Economics PhD (Piled Higher & Deeper), no cushy job losing other people's money on Wall Street while pretending to "manage" their money. Since I'm only a natural born fool from Tennessee, why, I don't know no better than to call a fool a fool, and to name a thing for what it is.

Wish I could get educated, but just as soon as I see idiocies, I recognize we're kin & the words just POP out of my mouth. That's why I can't visit the White House or congress.

WABI-SABI

The term "Christian music" generally rouses the same thrilling anticipation & trembling excitement in me as "local ballet," "cricket championship," or "non-elective surgery without anesthesia." Most of it is plain old vanilla rock sprinkled with Bible verses, & if I wanted to listen to rock, I'd want it straight.

But I have a friend, Nathan Clark George, who is a musician's musician & a grand performer with a pleasing voice, and deep and thoughtful imagination. He & his ensemble presented a concert of Christmas music at our church last night.

He and his mandolinist, Mark Stoffel, & his bass player, Ross Sermons, have produced two Advent/Christmas CDs, "Still" and "A Midwinters Eve." If you think "Jingle Bell Rock" is perfect Christmas music, don't even bother to go look at www.nathanclarkgeorge.com/store/ because you won't find it there. Nathan has gathered classic Christmas songs & carols from all over the world, both well-known & new. These are two of the best Christmas albums you'll ever find. Www.nathanclarkgeorge.com

MORE WABI-SABI

When I see things like this, the Landfill Harmonic, http://vimeo.com/52711779, I feel pretty sure that despite what all the central banks, governments, oppressors, & hateful, evil people in the world can throw at at mankind to kill, cripple, and deprive us, a soul will still stretch a hand up to heaven. Can't be stopped.

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
6-Dec-12 Price Change % Change
Gold, $/oz 1,712.50 7.90 0.46%
Silver, $/oz 33.04 0.16 0.47%
Gold/Silver Ratio 51.833 -0.006 -0.01%
Silver/Gold Ratio 0.0193 0.0000 0.01%
Platinum 1,599.20 16.30 1.03%
Palladium 695.55 6.75 0.98%
S&P 500 1,413.94 4.66 0.33%
Dow 13,074.74 39.55 0.30%
Dow in GOLD $s 158.96 -0.24 -0.15%
Dow in GOLD oz 7.69 -0.01 -0.15%
Dow in SILVER oz 395.74 -0.67 -0.17%
US Dollar Index 80.23 0.40 0.51%
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GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,751.67 1,758.47 1,758.47
1/2 AE 0.50 865.98 891.98 1,783.95
1/4 AE 0.25 437.24 450.24 1,800.94
1/10 AE 0.10 179.99 184.34 1,843.42
Aust. 100 corona 0.98 1,657.03 1,667.36 1,701.04
British sovereign 0.24 399.94 403.94 1,715.99
French 20 franc 0.19 317.20 321.20 1,720.42
Krugerrand 1.00 1,722.79 1,737.79 1,737.79
Maple Leaf 1.00 1,709.00 1,729.00 1,729.00
1/2 Maple Leaf 0.50 841.01 883.48 1,766.96
1/4 Maple Leaf 0.25 420.50 450.24 1,800.94
1/10 Maple Leaf 0.10 168.20 183.49 1,834.92
Mexican 50 peso 1.21 2,031.93 2,048.93 1,699.37
.9999 bar 1.00 1,704.95 1,715.95 1,715.95
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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 23,530.65 23,780.65 33.26
US 40% silver 1/2s 0.30 9,546.20 9,721.20 32.95
100 oz .999 bar 100.00 3,301.00 3,351.00 33.51
10 oz .999 bar 10.00 335.10 337.60 33.76
1 oz .999 round 1.00 32.86 33.71 33.71
Am Eagle, 200 oz Min 1.00 34.61 35.26 35.26
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PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,624.20 1,664.20 1,664.20
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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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