The Moneychanger
Weekly Commentary
Friday, 28 December a.d. 2012 Browse the commentary archive
Here's the weekly scorecard:
  21-Dec 21-Dec Change % Change
Silver, cents/oz. 3,014.20 2,992.00 -22.20 -0.7
Gold, dollars/oz. 1,659.10 1,654.90 -4.20 -0.3
Gold/silver ratio 55.043 55.311 0.270 0.5
Silver/gold ratio 0.0182 0.0181 -0.0001 -0.5
Dow in Gold Dollars (DIG$) 164.35 161.61 -2.74 -1.7
Dow in gold ounces 7.95 7.82 -0.13 -1.7
Dow in Silver ounces 437.62 432.42 -5.20 -1.2
Dow Industrials 13,190.84 12,938.11 -252.73 -1.9
S&P500 1,430.15 1,402.43 -27.72 -1.9
US dollar index 79.57 79.66 0.09 0.1
Platinum 1,536.90 1,517.40 -19.50 -1.3
Palladium 681.80 699.60 17.80 2.6

Everything went down this week? Everything? Yes, everything. Stocks were the biggest losers, down 1.9%. Well, okay, Palladium didn't fall. And the dollar was flat as a fritter. Otherwise the bleeding was general.

A look at the US Dollar's chart this week won't send you away enlightened. It merely traded in a range between 79.8 and 79.35, with a leetle spike today to 79.90. Flat. However, the longer term trend remains down, so you can expect small things from the dollar.

Euro remains above its downtrend line, but paralyzed & unable to advance. Not an encouraging sign, but the euro remains in an established uptrend, & a trend in force remains in force until violated. Closed $1.3218, down 0.18%

The Yen, on the other hand, is plumbing the depths of a politically engineered drop over Niagara Falls. Rose today 0.21% to 116.39 cents per 100 yen. The yen at this depth must be making the Nice Government Men all over the world nervous, because it screams "Competitive devaluation!" something no central banker in his right mind wants to see start. After all, where is the honor among thieves?

Stocks plunged deeply into trouble today. Somebody took a meat-ax to the Dow and chopped off 158.2 (1.21%), leaving it bleeding at 12,938.11, WAY below that 13,300 resistance above. Whoops. Did I mention that is also WAY below its 200 DMA at 13,015? Or its 50 DMA at 13,069? Or its 20 DMA at 13,140? No, I don't think I did.

Fix this in your mind: it is possible -- barely -- that a market in a primary down trend like stocks might, in the course of a rally, re-visit its 200 DMA & live to rally longer, it's just not too likely. That 200 DMA, remember, is the watershed of a primary downtrend, which spends most of its life BELOW that 200 DMA. Dow has now cast a continuing rally into the drawer with all "less likely outcomes."

S&P did a little better. Misplaced 5.13 (0.61%) to close at 1,402.43. S&P500 has not fallen below its 200 DMA (1390) but is below its 20 & 50 DMA.

More to the point are the charts of the Dow in Gold & S&P500 in gold. Both formed island reversal tops, both have fallen sharply down from that. Other indicators scream, "Expect lower prices!" Whatever they do in nominal dollar terms, from here stocks will lose lots of value against gold & silver.

Yet gold & silver remain lethargic. Silver lost 26.4 cents today & closed Comex at 2992c. Gold mislaid $7.80 to end at $1,654.90.

Gold's range was tight, $1,662.60 to $1,651.10, but so 'twas the whole week. Stood rangebound by $1,667 and 1,650. Longer term chart makes me expect one final push down, but you'll know I am wrong if gold closes above $1,684.10, the last low. One last push down might carry to $1,620 or even $1,610.

Silver traded tightly today, too, from 3027.9c to 2987c. Week was bounded by 3040c & 2970c. Marking time, that's all.

Down below one last exhaustion selling spike down could carry silver to 2900c. It needs to close above 3100c to reverse.

Keep your eyes on the horizon. Silver & gold remain I a bull market (primary long term trend). If they have not already bottomed, they should in January's first two weeks. This is a time to BUY silver & gold, not panicking into selling them, and not a time to fret. Relax.

Today is Holy Innocents, commemorating the slaughter of the Innocents by Herod.

On 28 December 1832 John C. Calhoun became the first US Vice President to resign, stepping down over differences with President Andrew Jackson. Jackson, although a Tennessean, was wrong and Calhoun right (although a South Carolinian).

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
28-Dec-12 Price Change % Change
Gold, $/oz 1,654.90 -7.80 -0.5
Silver, $/oz 29.92 -0.26 -0.9
Gold/Silver Ratio 55.311 -0.256 -0.5
Silver/Gold Ratio 0.0181 -0.0002 -0.9
Platinum 1,517.40 -14.40 -0.9
Palladium 699.60 -8.20 -1.2
S&P 500 1,402.43 -5.13 -0.4
Dow 12,938.11 -158.20 -1.2
Dow in GOLD $s 161.61 -1.19 -0.7
Dow in GOLD oz 7.82 -0.06 -0.7
Dow in SILVER oz 432.42 -1.46 -0.3
US Dollar Index 79.66 -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: 1,654.90      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,709.51 1,707.86 1,707.86
1/2 AE 0.50 843.49 868.82 1,737.65
1/4 AE 0.25 425.88 438.55 1,754.19
1/10 AE 0.10 175.31 179.56 1,795.57
Aust. 100 corona 0.98 1,614.02 1,624.13 1,656.94
British sovereign 0.24 389.56 393.56 1,671.89
French 20 franc 0.19 308.97 312.97 1,676.32
Krugerrand 1.00 1,681.38 1,696.38 1,696.38
Maple Leaf 1.00 1,664.90 1,684.90 1,684.90
1/2 Maple Leaf 0.50 819.18 860.55 1,721.10
1/4 Maple Leaf 0.25 409.59 438.55 1,754.19
1/10 Maple Leaf 0.10 163.84 178.73 1,787.29
Mexican 50 peso 1.21 1,979.19 1,996.19 1,655.62
.9999 bar 1.00 1,660.69 1,671.69 1,671.69
SPOT SILVER: 30.00      
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 21,625.18 21,875.18 30.59
US 40% silver 1/2s 0.30 8,656.78 8,831.78 29.94
100 oz .999 bar 100.00 2,999.50 3,049.50 30.50
10 oz .999 bar 10.00 304.95 307.45 30.75
1 oz .999 round 1.00 29.85 30.70 30.70
Am Eagle, 200 oz Min 1.00 31.60 32.25 32.25
SPOT PLATINUM: 1,517.40      
Platinum Platypus 1.00 1,542.40 1,582.40 1,582.40
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© 2015 Little Mountain Corporation, d.b.a. The Moneychanger. All rights reserved. May not be republished in any form, including electronically, without our express permission.

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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