The Moneychanger
Daily Commentary
Thursday, 20 December a.d. 2012 Browse the commentary archive

Aww, shucks! Tomorrow's the end of the world, according to some interpreters of the Mayan Calendar. Say, I have an idea for all y'all who're convinced the world will end tomorrow: y'all send me your money. Probably better wire it, as there's not much time left. While you're at it, mail me your credit cards, too, & any jewelry you're not planning to take with you.

Another rough day for silver & gold. Odd day: at one point EVERYthing was down: stocks, metals, US dollar, oil. Pop up in the gold/silver ratio gives us a clue where this might end.

Dollar index fell 8.9 basis points to 79.245, nothing new there. Euro took advantage of that, hit $1.3300 as yesterday, but too spindly-armed to hold on there. Closed $1.3244, up 0.26%. Yen fell another tiny bit, to 118.49c/Y100. Got to be near the end of that fall.

Stocks suffered a bad beating this morning, but found "sponsorship" in the latter part of the day, & managed to close above 13,300 at 13,311.72, up 59.75. S&P500 rose 0.55% (7.88) to 1,443.69. Weak & wormy, but will climb more, I believe.

Gold lost $21.60 to close Comex at $1,644.90. Silver lost a bruising 4.6% today, 143.3 cents, to smash support at 3100 AND 3000c by closing at 2961.2c.

For both silver & gold today's move complete a 61.8% correction of the rise that began last June. Both have oversold RSIs, both have MACDs that are scraping their last bottom, both are below the long term moving averages I watch (150 & 200 for gold, 300 & 200 for silver).

In short, they are oversold and ready to get oversold-er. Perverse, but when morale is broken in a market, it has to have its back completely broken before it reverses.

Gold/silver ratio also points to more deterioration in silver. Today it gapped up to 55.548. and appears headed to close an old gap between 57 & 57.5. Silver & gold are in the waterfall phase, so this spasm could end in a few days. Will certainly pause for Christmas in any event.

Since bother metals cut through their uptrend line form the June 2012 low, underneath them now is only the Downtrend line from the 2011 highs, 2900 - 2850c for silver, $1635 - 1620 for gold.

Sounds like I've got it all scoped out, but if I did I wouldn't have gotten it so wrong till now. More than that, markets never do exactly what you expect them to. They move to support, & instead of stopping, pierce through before they reverse, or never quite reach support. It's as if they know what you are thinking, and dodge on purpose. Thus the proverb that "bull markets always to shake off as many riders as they can." Question is, can YOU hold on? Can you stand the heat?

Thus every day markets give you a highly concentrated dose of humility.

What we surely know is that silver & gold remain in a primary uptrend, and that every day brings us closer to the end of this correction. Just stand back & watch it a few days. There's time, it's not running away, and if it starts to climb, well, give it more time still. We need more certainty here like a dying man needs a drink of water.

Be patient. Still, I have to buy at least a little silver here somewhere. Whenever that gap in the gold silver ratio is filled, that'd be about the day. See that chart at http://bit.ly/VTcNi6

On 20 December 1861 the South Carolina secession convention voted 169-0 to secede.

On 20 December 1924, there was freed early from his prison sentence for insurrection Adolf Hitler. Somebody on the parole board made a BIG mistake there.

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
20-Dec-12 Price Change % Change
Gold, $/oz 1,644.90 -21.60 -1.30%
Silver, $/oz 29.61 -1.43 -4.61%
Gold/Silver Ratio 55.548 1.863 3.47%
Silver/Gold Ratio 0.0180 -0.0006 -3.35%
Platinum 1,546.20 -46.70 -2.93%
Palladium 679.25 -18.10 -2.60%
S&P 500 1,443.69 7.80 0.54%
Dow 13,311.72 59.75 0.45%
Dow in GOLD $s 167.29 7.50 4.69%
Dow in GOLD oz 8.09 0.36 4.69%
Dow in SILVER oz 449.54 22.63 5.30%
US Dollar Index 79.25 -0.09 -0.11%
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: 1,647.50      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,700.22 1,705.16 1,705.16
1/2 AE 0.50 839.72 864.94 1,729.88
1/4 AE 0.25 423.97 436.59 1,746.35
1/10 AE 0.10 174.53 178.75 1,787.54
Aust. 100 corona 0.98 1,606.81 1,616.88 1,649.54
British sovereign 0.24 387.82 391.82 1,664.49
French 20 franc 0.19 307.59 311.59 1,668.92
Krugerrand 1.00 1,675.51 1,690.51 1,690.51
Maple Leaf 1.00 1,657.50 1,677.50 1,677.50
1/2 Maple Leaf 0.50 815.51 856.70 1,713.40
1/4 Maple Leaf 0.25 407.76 436.59 1,746.35
1/10 Maple Leaf 0.10 163.10 177.93 1,779.30
Mexican 50 peso 1.21 1,970.34 1,987.34 1,648.28
.9999 bar 1.00 1,653.27 1,664.27 1,664.27
SPOT SILVER: 29.90      
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 21,339.18 21,589.18 30.19
US 40% silver 1/2s 0.30 8,627.28 8,802.28 29.84
100 oz .999 bar 100.00 2,989.50 3,039.50 30.40
10 oz .999 bar 10.00 303.95 306.45 30.65
1 oz .999 round 1.00 29.75 30.60 30.60
Am Eagle, 200 oz Min 1.00 31.50 32.15 32.15
SPOT PLATINUM: 1,546.20      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,571.20 1,611.20 1,611.20
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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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