The Moneychanger
Daily Commentary
Tuesday, 22 January a.d. 2013 Browse the commentary archive

The mountain gave birth to a mouse, & panicked all the shorts. I mean, of course, the Bank of Japan's announcement today that it would buy assets just like Big Ben Bernanke, but only beginning next year. Shorts panicked and the yen gapped up to 112.71 cents/Y100 (up 1.56%). Maybe that's the end of the dropping yen, or, dare I say, the currency has lost its yen to drop?

Speaking of nasty fiat currencies, the US dollar (?dolor?) index took a whipping today with a peach tree limb, down 0.2% to 79.883. Lost 14.4 basis points when it slipped through that morale-busting 80 level.

Dollar index still hasn't decided whether it will fish or cut bait. Can't rise above 80.2, won't fall below 79.60. 5-day chart is either indecisive and diddling, or about to fall further. Not clear, but any break below 79.6 carries the dollar lower, any break above 80.20 carries it skyward. Dollar ain't got nothing I want.

Euro stalled at $1.3400 six days ago & hasn't felt perky since then. Made two little tops that might point it lower. Lost 0.02% today, basically unchanged at $1.3319. Will continue climbing/crabbing sideways unless it breaks $1.32.

US$1=Y88.72=E0.7508=0.031107oz Ag=0.000591 oz Au.

Dow hit its highest point since December 2007 today. Closed 13,712.21, up 62.51 or 0.46%. S&P500 rose 0.44% (6.58 points) to 1,492.56.

Non-confirmations always make me nervous. When one stock index is rising, the others ought to rise, too. S&P500 is a little behind the Dow, & both the S&P500 & the Dow have over the past few years been the only world stock indices that have held up. The Dow Jones World Stock Index hit a 321.07 high in 2007, and today closed 270.57, about 16% lower. Compare the Dow today at only 3.4% lower than its 2007 high. All this does not foreshadow a bright future for stocks or the economy.

Meanwhile I've been gazing at the Charts for the Dow in Gold & the Dow in Silver. Both have formed diamond tops, & Dow/Silver is closer to breaking down than Dow/Gold. Only a matter of time till both break down.

Solid day today for metals. Gold rose $6.20 to $1,692.80 & silver gained 24.5 cents to 3214.7. Silver conquered 3200c resistance, while gold is still struggling with $1,695.

Five day chart shows gold range bound by $1,695 & $1,680. However, it's forming a long narrow triangle that promises to break out upside. The undecided are waiting for gold to validate its rally by climbing over $1,705 or $1,730. I don't expect gold's move above $1,695 will be inchmeal. Rather, gold will pull on its seven league boots and step on out. Probably this week.

Gold keeps stalling at $1,695. high. Low today cam at $1,686.80.

One reason I know gold has attracted huge physical demand is the relative scarcity of inexpensive small and large gold coins. Somebody has been vacuuming them up for over two months. Wholesalers just don't have any, and nobody's selling.

While gold remained range bound, silver hammered through 3200c resistance to reach new highs for the move today. Silver stands above every moving average, having punched through the 50 DMA today. (Gold hasn't quite closed through its 50 DMA at $1,694.76, but that's the only one still above it.)

From about 9:30 a.m. silver made a gappy move up & reached a high at 3234.2c. Low was 3182c.

More heartening still, silver pierced the downtrend line from its late November 3449c high. Poked its head clean through and sat down there. From here 3300c offers some round number resistance, but that 3449c last high is the first real target.

Silver & gold have left the starting gate, and are off and running. Stop waiting to buy.

Here's the Big Picture of what's going on. The world is slowly repudiating all fiat currencies as the system that spawned them fails. The worst is not behind us, it is yet to come. By the time this repudiation ends, the dollar & all the other scrofulous currencies will be only a dim & bitter memory, and a new monetary system will be established around silver & gold. But that's years away, & before then must come all the hardship, heartbreak, & catastrophe. It will take utter disaster to cement the repudiation, & no doubt some violence, most likely by governments against their citizens as the dying class seeks to hold on to power.

But it will end, and those who have capital -- gold & silver -- will be positioned to help build a new, just, prosperous, & parasite free economy.

Your worst mistake is to look around at today & forget what the future holds. Your best strategy is to ride the gold & silver bull market to safety, continuing to buy. Right now, having finished the long correction since October, is the right time to buy. Now.

On 22 January 1689 England's Glorious Revolution climaxed when parliament invited William and Mary to become joint sovereigns. They were first cousins: Mary the daughter of James II (Stuart) & William the son of James' sister. William was the prince of Orange and was governing the Dutch Republic as Stadtholder. On 16 December 1689 William and Mary signed the Bill of Rights, which ended the struggles between crown & parliament by which the Stuarts had so stupidly roiled the country for decades. Parliament came out on top.

The 1689 Bill of Rights guarantees no royal interference with the administration of justice, no taxation without parliamentary consent, freedom to petition without retribution, no standing army in peace time, right to keep arms, no royal interference in parliamentary elections, freedom of speech in parliament, and no excessive bail or cruel and unusual punishments. Most of its provisions were adopted in the US Bill of Rights, which is now in the process of being dismantled & rendered a nullity.

On 22 January 1840 the first British colonists reached New Zealand. That's not as bad as it sounds: January is summer there.

On 22 January 1805 czarist troops opened fire on a peaceful protestors marching to the Winter Palace in St. Petersburg to petition Czar Nicholas II. Known as "Bloody Sunday," it sparked the first Russian Revolution. Hard as it is to believe, the Romanovs ruled even more stupidly than the Stuarts.

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
22-Jan-13 Price Change % Change
Gold, $/oz 1,692.80 6.20 0.37%
Silver, $/oz 32.15 0.25 0.77%
Gold/Silver Ratio 52.658 -0.210 -0.40%
Silver/Gold Ratio 0.0190 0.0001 0.40%
Platinum 1,696.30 24.30 1.45%
Palladium 729.15 7.15 0.99%
S&P 500 1,492.56 6.58 0.44%
Dow 13,712.21 62.51 0.46%
Dow in GOLD $s 167.45 7.50 4.69%
Dow in GOLD oz 8.10 0.36 4.69%
Dow in SILVER oz 426.55 -1.32 -0.31%
US Dollar Index 79.88 -0.14 -0.18%
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: 1,693.10      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,739.66 1,749.82 1,749.82
1/2 AE 0.50 862.97 891.84 1,783.68
1/4 AE 0.25 431.49 454.39 1,817.54
1/10 AE 0.10 177.67 185.39 1,853.94
Aust. 100 corona 0.98 1,647.96 1,661.96 1,695.53
British sovereign 0.24 398.56 402.56 1,710.09
French 20 franc 0.19 316.10 320.10 1,714.52
Krugerrand 1.00 1,723.58 1,738.58 1,738.58
Maple Leaf 1.00 1,703.10 1,718.10 1,718.10
1/2 Maple Leaf 0.50 973.53 888.88 1,777.76
1/4 Maple Leaf 0.25 431.74 452.90 1,811.62
1/10 Maple Leaf 0.10 179.47 184.55 1,845.48
Mexican 50 peso 1.21 2,024.87 2,041.87 1,693.52
.9999 bar 1.00 1,699.03 1,710.03 1,710.03
SPOT SILVER: 32.27      
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 23,466.30 23,859.55 33.37
US 40% silver 1/2s 0.30 9,475.40 9,550.40 32.37
100 oz .999 bar 100.00 3,227.00 3,267.00 32.67
10 oz .999 bar 10.00 327.70 330.20 33.02
1 oz .999 round 1.00 32.37 32.82 32.82
Am Eagle, 200 oz Min 1.00 33.52 34.52 34.52
SPOT PLATINUM: 1,696.30      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,721.30 1,761.30 1,761.30
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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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