The Moneychanger
Daily Commentary
Monday, 7 January a.d. 2013 Browse the commentary archive

Did y'all hear the latest about Justin Bieber? He had a brain transplant, from a cocker spaniel, & all his friends say it's improved his IQ. And what about Jennifer Anniston? She had a brain IMplant, because she was born without one. Her friends say she can now beat Jennifer Lopez at Scrabble. I know all this is true, because I got it right out of People magazine at the grocery store while I was waiting to check out.

Now if the above coming from me seems puerile, contemptible, risible, & despicable, how does it sound any better coming from anybody with an IQ higher than a radish's? I'm not going to get in an argument with popular culture, because it has no more culture than pasteurized yogurt. Nor is it popular, it just merchandising. As long as this tripe rivets large numbers of Americans, however, they will continue to fall for pointless dramas like the Fiscal Cliff & the Debt Ceiling & the War on Terror & other claptrap pouring out of Washington. And Washington will continue to steal their honor, the wealth, & their freedom. Whoa! Wait! I gotta run! It's almost time for American Idol.

Back to markets. Silver & gold might have bottomed Friday & today, but more of that anon. First let us torture our spotless minds by contemplating the sorry fiat currencies.

US dollar index hit its 200 DMA (80.83) Friday & wilted like an orchid in the desert. Ended the day at 80.222, down 41.1 basis points (0.53%). Yet it remaineth outside its former downtrend line and having begun an uptrend. Dollar has given up another 10 basis points in aftermarket trading. Should it close below its 20 DMA (79.83), 'twould reverse.

The euro has broken down, leaving a gap behind. This day it tried to rally to the 20 DMA ($1.3135) but could not pass. Will probably trade up enough to fill that gap, then fall again.

The yen has been plunging over the waterfall in one great cataract since October opened its chilly arms. Got more holes in it than my wool pants after my wife feeds them to the moths. Now bouncing at prices not witnessed since June 2010, surely a bottom must live here somewhere? Today it gained 0.45% to 113.95c/Y100. Not anything I want to trade or own.

US$=Y87.76=E0.7621=0.033 298 oz Ag=0.000 607 oz Au.

Stocks have gotten their feet tangled in the barbed wire at 13,450, & can't shake it loose. Dow today scraped off 50.92 (0.38%) to 13,384.29. S&P500 was skinned 4.58 (0.31%) to 1,461.89.

Stocks are tracing out another doomed rising wedge, and before this ends may pierce 14,000. It will be the swan-song of stocks for a long, long time.

Charts of the Dow in Gold & Dow in Silver are jerky and gappy. View them here and here

The retreat from thatt straight up rise looks too weak & drippy to be a flag, but what else is it? If 'tis a flag then the move could move as far as it has already since the measuring rule is "flags always fly at half staff."

On the other hand, it might be nothing but a double top, juiced by all the year end trading & selling. It's a bear market for stocks. Odd favor way more downside.

Metals spake with fork├ęd tongue today. Gold fell $2.60 to $1,645.50 while silver rose 13.6 cents to 3003.2c.

What caught my eye that gold's low today at $1,643.71 occurred much higher than Friday's $1,625.76. Instructive also was the higher high at $1,661.71 versus Friday's $1,658.43.

Silver's performance on the low side mirrored gold's, with today's low at 2983c versus 2920c. Today's 3034c high hit about where Friday's stuck at 3031c.

Also belying gold's weakness was the gold/silver ratio's jump to 54.792. And the continuing sky-high premium on US 90% coin -- some wholesalers have stopped offering it until they can fill backorders. Haven't seen it this scarce since the fall 2008 panic. And small gold coins are very hard to find. The usually low-cost small Mexican coins -- 20, 10, 5, 2-1/2, & 2 pesos -- simply aren't available. Krugerrand premium is at a 4 or 5 year high.

Course I'm no more'n a natural born fool from Tennessee, but all that doesn't sound like a market fixing to fall further. Until I am bloodied again, I'm going to conclude tentatively that silver & gold saw their intraday lows last Friday. Only intraday lows lower than Friday's, 2920 cents & $1,625.20, would gainsay that working hypothesis.

In any event, if that bottom isn't behind us, it is near. Coming nearer all the time, to the rising whine of the croakers who croon that the gold & silver bull market is over. What do these people DO on their lunch breaks? Silver & gold bull market continues, don't let johnny-come-lately analysts who don't know a silver dollar from a silver ETF shake you.

My wife Susan & I had intended to take a little three day vacation to recover from the holidays, but her 94 year old aunt passed away, so our vacationette will be interrupted by a funeral. However, I will not be publishing a commentary the rest of this week.

Above I gave you the downside limits for silver & gold. Buy any decline. Also, buy any breakout that takes Gold over $1,685 or silver over 3100c. As I said above, I have already been buying.

On 7 January 1800 was born Millard Fillmore US President from 1850 to 1853. Vaulted to the presidency as vice-president when Pres. Zachary Taylor died, he is consistently listed among the ten least accomplished presidents, which ranks him pretty high in my book. If he didn't do much, then he didn't do much wrong, either.

Fillmore justified my suspicions of his worth when travelling in England in 1855. The University of Oxford offered him an honorary degree, but Fillmore turned them down. He explained that he had neither the "literary or scientific attainment" to justify the degree, and he "lacked the benefit of a classical education" and thus could not understand the Latin text of the diploma, adding that he believed "No man should accept a degree he cannot read."

My kind of president.

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-Jan-13 Price Change % Change
Gold, $/oz 1,645.50 -2.60 -0.16%
Silver, $/oz 30.03 0.14 0.45%
Gold/Silver Ratio 54.792 -0.336 -0.61%
Silver/Gold Ratio 0.0183 0.0001 0.61%
Platinum 1,553.80 -1.40 -0.09%
Palladium 669.25 -18.55 -2.70%
S&P 500 1,461.89 -4.58 -0.31%
Dow 13,384.29 -50.92 -0.38%
Dow in GOLD $s 168.14 7.50 4.67%
Dow in GOLD oz 8.13 0.36 4.67%
Dow in SILVER oz 445.67 -3.73 -0.83%
US Dollar Index 80.22 -0.41 -0.51%
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 1,693.63 1,706.81 1,706.81
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 1,762.83 1,777.83 1,777.83
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: 30.14      
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 21,832.53 22,107.53 30.92
US 40% silver 1/2s 0.30 8,845.58 8,920.58 30.24
100 oz .999 bar 100.00 3,013.50 3,053.50 30.54
10 oz .999 bar 10.00 306.35 308.85 30.89
1 oz .999 round 1.00 30.14 30.69 30.69
Am Eagle, 200 oz Min 1.00 31.14 32.34 32.34
SPOT PLATINUM: 1,553.80      
Plat. Platypus 1.00 1,578.80 1,618.80 1,618.80
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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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