The Moneychanger
Daily Commentary
Tuesday, 15 January a.d. 2013 Browse the commentary archive

Big doings in today's markets, with news out of Germany about repatriating gold reserves & platinum running past gold for the first time since May 2012.

News out of the Deutsche Bundesbank announces they will re-arrange their gold storage (now 45% in New York, 13% in London, 11% in Paris, & 31% in Frankfurt). Exactly how they will re-arrange this storage wasn't declared. Gold shot up on this news because loads of suspicious folks believe that central banks have loaned out most of their gold and thus a large German repatriation would put pressure on the phantom supplies of central banks, including the Federal Reserve.

Now in America we always know how to tell when a federal government or Federal Reserve official is lying: his lips are moving. In Germany, however, government officials act differently. They lie in German.

What meaneth this hubbub about platinum rising above gold's price? Simply that the smaller, more volatile platinum GENERALLY (not always) trades higher than gold. It went below gold in August 2011, struggled into May 2012 to rise back to even, then couldn't hold there and fell to a July 2012 low of 85% of gold. That correction & struggle to advance generally signals trouble for silver & gold since folks expect platinum to trade above gold. When it doesn't, there's trouble in the air. By the same token, strong platinum promises strength in silver & gold, too.

But one chigger maketh not a summer. Platinum must continue rising against gold or this signal stops flashing green.

Meanwhile the contemptible, scabby US dollar index rose 26.8 basis points (0.34%) to 79.767. Right now 79.80 resistance is stopping it like a Flit gun stops cockroaches. Not impressed: only bounced off the downtrend line it broke out of first of the year. Wait to see if it can come back. Bernanke cannot want a sharply higher dollar squeezing off American exports. When it comes to a choice between common sense & politics, politics always trumps.

After three days of sprinting, the euro backed off today to 1.3307, down 0.55%. Unless it closes below $1.3200 it's targeting $1.3500.

The Japanese Nice Government Man in charge of the economy (yes, this precisely resembles putting an alcoholic in charge of the wine cellar) caught markets by surprise by warning against a weaker yen. Since nothing happens in politics unless it's meant to happen, only an investor in government bonds would believe that this NGM just shot his mouth off accidentally. NGM feel the yen has fallen enough. Gained 0.82% today to 112.62 c/Y100. With a huge short position on board, any yen reversal should climb quick & mean as the shorts panic.

Aren't you glad you own silver & gold, so you don't have to worry about all the shabby tricks played by the gabby crooks who run these scabby currencies to dupe their victims into holding their flabby currencies?

Stocks inched up a little more today. Dow tested ground at 13,450, then climbed the rest of the day. Advanced 27.57 (0.2%) to 13,534.89. S&P gained only 0.11% (1.66) to 1,472.34.

I'm still puzzling over that Dow in gold chart. It made what looked like an island reversal top, then fainted like your self-confidence when somebody points out that lettuce stuck between your front teeth. But rather than follow through lower, in the first days of the year it soared, even gapped up to the downtrend line, where it has since bubbled like stew when the propane tank is nearly empty -- lower and lower all the time. And very gappy. Looks very indecisive & timid. If the Dow in Gold closes below 7.99 oz, the 20 DMA, then the plunge will be something to behold.

A similar pattern has painted the Dow in Silver chart, but it hath already broken down below the 20 dma (now 435.14), closing today at 431.53.

One final confirmation by the Dow in Gold will have both these indicators SCREAMING that silver & gold are about to surge against stocks.

Wait, wait, what am I forgetting? Oh, yeah, silver & gold.

Gold rose $14.50 (0.87%) by Comex closing time to finish at $1,683.40. That came after a high at $1,698.50 and a low at $1,648.

Let's get our bearings. Where standeth gold? ABOVE its 200 DMA ($1,662.79), its 150 DMA ($1,678.06), its 20 DMA ($1,666.81) but below its 50 DMA ($1,696.57). MACD has turned up, RSI is rising, lark's on the wing and snail's on the thorn. It's springtime, come early. And today gold burst through the downtrend line from the November $1,755 high.

Yet stands in gold's road more resistance. Downtrend line from the October high at $1,798 stands about $1,715, & gold ain't nothing till it clears that barrier.

But clearly it's working on it.

Silver rose 41.8 cents (1.34%) to close at 3149.8c & leave 3100c resistance in the dust.

Where in the world is silver? From a spike low to 2920c on 4 January silver has made a 45 degree rise up through its 200 DMA (3068c), its 300 DMA (3121c), its 20 DMA (3058c), and stands not far from its 50 DMA at 3198c. Yesterday it broke through the downtrend line from the November 3449c high.

That 50 DMA and 3200c resistance are the next hurdle.

Every day brings more and stronger confirmation that the 4 January lows were the bottom of the correction. I have been buying and buying. Silver above 3200c and gold above $1,685 is a buy again tomorrow.,

"Do not despise the day of small things." On 15 January 1559 Elizabeth I was crowned queen of England. The child of Henry VIII by Anne Boleyn, her mother was executed 2-1/2 years after she was born and Elizabeth declared illegitimate. Her half-brother Edward VI tried to give the crown to Lady Jane Grey & bypass his two half-sisters Elizabeth & Mary. Lady Jane was executed and Bloody Mary took the throne. She imprisoned Elizabeth nearly a year on suspicion of supporting rebels. When Mary died in November 1558, nobody quite knew what to expect of this 26 year old girl.

She settled religion in a country that had been bleeding over it throughout Mary's 5 year reign, and ruled cautiously and well, with the help of a very efficient spy service. In spite of attacks & intrigues foreign & domestic, she led England to heights of national harmony & artistic (especially literary) achievement previously unknown.

"Do not despise the day of small things." You can't judge the end from the beginning.

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
15-Jan-13 Price Change % Change
Gold, $/oz 1,683.40 14.50 0.87%
Silver, $/oz 31.50 0.42 1.34%
Gold/Silver Ratio 53.445 -0.252 -0.47%
Silver/Gold Ratio 0.0187 0.0001 0.47%
Platinum 1,688.00 31.70 1.91%
Palladium 712.60 10.05 1.43%
S&P 500 1,472.34 1.66 0.11%
Dow 13,534.89 27.57 0.20%
Dow in GOLD $s 166.21 7.50 4.73%
Dow in GOLD oz 8.04 0.36 4.73%
Dow in SILVER oz 429.71 -4.89 -1.13%
US Dollar Index 79.77 0.27 0.34%
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: 1,678.50      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,727.18 1,734.73 1,734.73
1/2 AE 0.50 855.53 884.15 1,768.30
1/4 AE 0.25 427.76 450.47 1,801.87
1/10 AE 0.10 176.14 183.80 1,837.96
Aust. 100 corona 0.98 1,633.75 1,647.75 1,681.03
British sovereign 0.24 395.12 399.12 1,695.49
French 20 franc 0.19 313.38 317.38 1,699.92
Krugerrand 1.00 1,708.71 1,723.71 1,723.71
Maple Leaf 1.00 1,688.50 1,703.50 1,703.50
1/2 Maple Leaf 0.50 965.14 881.21 1,762.43
1/4 Maple Leaf 0.25 428.02 449.00 1,796.00
1/10 Maple Leaf 0.10 177.92 182.96 1,829.57
Mexican 50 peso 1.21 2,007.41 2,024.41 1,679.03
.9999 bar 1.00 1,684.37 1,695.37 1,695.37
SPOT SILVER: 31.33      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 30.50 34.00 0.04
VG+ Peace dollar 0.77 29.00 33.00 0.04
90% silver coin bags 0.72 22,719.13 22,933.63 32.08
US 40% silver 1/2s 0.30 9,196.63 9,271.63 31.43
100 oz .999 bar 100.00 3,132.50 3,172.50 31.73
10 oz .999 bar 10.00 318.25 320.75 32.08
1 oz .999 round 1.00 31.43 31.88 31.88
Am Eagle, 200 oz Min 1.00 32.58 33.58 33.58
SPOT PLATINUM: 1,688.00      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,713.00 1,753.00 1,753.00
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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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