The Moneychanger
Daily Commentary
Thursday, 24 January a.d. 2013 Browse the commentary archive

Strange goings-on today!

Dow reached a new high for the move, an the upper boundary of the Jaws of Death topping formation. Rose 46 points (0.33%) to 13,825.33. Here's part of what's odd: S&P500 gained a measly 1/100 point to $1,494.82. Most other indices dropped, but the Russell 2000 gained 0.39% & the Wilshire 5000 added 0.1%. No enthusiasm anywhere but the Dow. RSI at 73.64, way overbought, and MACD out of line, too. Correction coming.

More oddness: when the Dow in Gold broke out above resistance yesterday, I thought it was a fluke. Today it gapped up again, to 8.28 oz (G$170.54 gold dollars). Indicators warn it is way overbought, but the next resistance is about 9.12 oz (G$188.53).

None of this makes sense after its September breakdown, & another breakdown in November, but I don't tell the markets what make sense, they tell me.

It gets odder still. The Dow in Silver gapped up today above its 200 day moving average, even above its 20 DMA (434.96) to close at 435.83. However, it has NOT broken out above resistance, and stocks look much weaker against silver than gold.

Two paths split off here. Either stocks will blow out the top much higher & gain on silver & gold, or stocks are within a day or two of some top. Stocks look way overbought here, but overbought can always get overboughter.

US Dollar index gained 9.4 basis points (0.12%) to 79.98, not quite above to breach 80. Euro rose 0.44% to 1.3375, but the surprise came in the yen, which dove 1.95% and gapped down to a new low at 110.61 c/Y100. Seems the yen can go lower after all.

That long 8 day silver upmove made me suspicious yesterday, & ought to have made me more suspicious. Silver fell 71.4 cents today to 3169.5c, giving back three days progress & falling beneath the 50 DMA (31.90) again. Came to a stop right on the uptrend line form the June '12 low. Fairly strong support at 3150 or stronger support above 3100c ought to catch it. Low today came at 3158c.

Gold lost $16.80, falling to $1,669.50 and the uptrend line from the June low. Owch! Even touched the 200 DMA (1,664.01). Right there about $1,665 gold has done a lot of trading, so that's a likely place to stop. Could even drop to $1,650, but there's not really much indication of any greater weakness.

Lose not heart, neither puff & blow. Corrections happen. Keep your eyes open to buy a little more, maybe tomorrow.

On 24 January 1568 in the Netherlands the Spanish Duke of Alva, acting for the Habsburg emperor, declared William, Prince of Orange, an outlaw. William became the first leader of the 80 year war for Dutch independence. Because the Spanish were unable to beat him, they had assassinated him in 1584.

On 24 January 1861 Confederate troops seized the United States arsenal at Augusta, Georgia. There the Confederate government built the most efficient gunpowder mill in the world at the time, and even northern troops preferred the superior Confederate powder to their own.

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
23-Jan-13 Price Change % Change
Gold, $/oz 1,669.50 -16.80 -1.00%
Silver, $/oz 31.70 -0.71 -2.20%
Gold/Silver Ratio 52.674 0.642 1.23%
Silver/Gold Ratio 0.0190 -0.0002 -1.22%
Platinum 1,682.30 -6.70 -0.40%
Palladium 725.95 -3.70 -0.51%
S&P 500 1,494.82 0.01 0.00%
Dow 13,825.33 46.00 0.33%
Dow in GOLD $s 171.19 7.50 4.58%
Dow in GOLD oz 8.28 0.36 4.58%
Dow in SILVER oz 436.20 11.03 2.59%
US Dollar Index 79.98 0.09 0.12%
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: 1,667.70      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,711.06 1,723.57 1,723.57
1/2 AE 0.50 850.02 878.46 1,756.92
1/4 AE 0.25 425.01 447.57 1,790.28
1/10 AE 0.10 175.00 182.61 1,826.13
Aust. 100 corona 0.98 1,626.51 1,640.51 1,673.64
British sovereign 0.24 392.58 396.58 1,684.69
French 20 franc 0.19 311.36 315.36 1,689.12
Krugerrand 1.00 1,699.39 1,714.39 1,714.39
Maple Leaf 1.00 1,677.70 1,692.70 1,692.70
1/2 Maple Leaf 0.50 958.93 875.54 1,751.09
1/4 Maple Leaf 0.25 425.26 446.11 1,784.44
1/10 Maple Leaf 0.10 176.78 181.78 1,817.79
Mexican 50 peso 1.21 2,000.53 2,017.53 1,673.32
.9999 bar 1.00 1,673.54 1,684.54 1,684.54
SPOT SILVER: 31.68      
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 23,040.88 23,434.13 32.78
US 40% silver 1/2s 0.30 9,299.88 9,374.88 31.78
100 oz .999 bar 100.00 3,167.50 3,207.50 32.08
10 oz .999 bar 10.00 321.75 324.25 32.43
1 oz .999 round 1.00 31.78 32.23 32.23
Am Eagle, 200 oz Min 1.00 32.93 33.93 33.93
SPOT PLATINUM: 1,682.30      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,707.30 1,747.30 1,747.30
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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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