The Moneychanger
Daily Commentary
Thursday, 31 January a.d. 2013 Browse the commentary archive

Perspective: It makes all the difference in the world. If you're an ant looking up at an elephant, you have no idea what that colossus is. Likewise, an elephant can't tell much about an ant without a magnifying glass. I'll explain presently.

Looky there! Stocks were wallowing in a deep swamp today. Spent most of the day underwater & fighting gravity. Dow lost 49.84 (0.36%) to 13,860.58. S&P500 swam alongside, losing 3.85 (0.26%) to fall below 1,500 & rest at 1,498.11.

Both of 'em are still as oversold as the efficiency of Government Sponsored Enterprises or the statecraft of Bernard O'Bama. There's a lot of air beneath that ledge stocks are standing on. They could fall to 13,625 without even damaging the chart too much. Don't count on aubstantially higher stock prices soon.

Yep, I'm still wearing out my eyeballs staring at the Dow in Gold chart. Last six days it has formed what I must call an Island Reversal Top, unless it gainsays that somehow. Similar but not selfsame pattern shows on the Dow in Silver chart. Those charts argue stocks have run out of gas against metals.

Only thing worse than having to work as an usher at the ballet is watching these rotten fiat currencies. Pure torture. US dollar index has fallen plumb against the bottom boundary of its trading channel, & now must rally or fall through that trap door & slide. Stepping back, the Dollar index has been trending down since its July high at 84.10. Today it lost another 5.7 basis points (0.7%) to wind up at 79.204. Here's more perspective for y'all: dollar index peaked in June 2001 at 121.21, so holding them green yankee dollars has cost you 35% of your purchasing power since then. Yeah, buddy, that dollar and them bonds & CDs are a going Jessie!

What of the other scrofulous fiat currencies today? Euro keeps on rising. Gained another 0.1% today & closed at $1.3578. If it clears this area, it's liable to run for $1.4000, where it will be even more sharply, preposterously overvalued than it is now.

Yen made a new low close, down another 0.5% to 109.26 cents/Y100. Nice Government Men in the ECB must be puking in their wastebaskets every time they look at that Euro/Yen chart. They've been snaked by the Japanese in the currency war.

Gold lost $19.30 today & closed at $1,660.60. Silver did no better, down 81.7 cents to 3133.5.

Both 5 day charts look the same, and the look is an Island Reversal top. Gold gapped from about $1,666 to $1672 yesterday, then traded sideways between 1675 & 1682. Today it gapped down about $1,679, and never settled till it hit $1,659.33. But if it's that week, why did it stop slap on Tuesday's close? Why not fall further?

Silver's chart is the same, save with different numbers. Gapped up yesterday from 3140c to over 3200c, traded sideways in a tight range, then fell off at 3180c today down to 3126 & ended at 3133.5c.

How will we know whether that is an island reversal in truth? Both will fall tomorrow hard. If instead the trade up into the range where they gapped down today, then it's not.

Now here's that perspective I was talking about. Looking at a 5 day chart twists your perspective. You might get an early warning signal there, but you have to factor that into the perspective of a longer term chart.

In the last three days, silver gained 139.6 cents, then lost back 81.7 today for a net gain of 57.9 cents. Gold gained $27, lost $19.30 today, for a net rise of $7.70.

Now back off further. Since mid December silver & gold have built even-sided triangles working further & further into the point. Only the spike low on 4 January violates that triangle, & that was a false breakout that never followed through. Trend for both since 4 January has been, & remains, up.

Today in particular gold closed below its 200 DMA ($1,663.32), no cheerful sign. Yet it remains in that uptrend.

Silver remained above its 20 DMA (3123c, near the low at 3126c where lots of buyers were hiding) and above its 300 DMA (3113c).

I know this roller coaster ride up one day & down the next wears out your stomach & maybe has you, too, reaching for your wastebasket. That's precisely why I don't trade futures or on margin. From the perspective of a BULL market & 100% paid for silver & gold, I can watch those declines with a lot more aplomb than when it's margined and everything I own & my wife and children are on the line. I like to sleep at night.

On 31 January 1940 the very first monthly retirement check was paid from Social Security to Ida May Fuller of Vermont. She had worked 3 years under the program, and paid taxes totalling $24.75. Her first check was for $22.54. She lived to be over 100 years old & collected $22,888 in social security benefits. Does this help y'all understand why Social Security is NOT an insurance scheme? Still, it's despicable for politicians to point fingers at the poor people on Social Security & call them welfare cheats & slackers. Most of them paid into the program their whole lives. How much retirement might they have had, what savings, if the yankee government hadn't been picking their pockets? No, anybody who retires on the "luxury" of Social Security has fully paid for whatever "benefits" he receives. Besides, in most Southern states 2/3 of those receiving benefits are over 65 and have no other means of support.

On 31 January 1861 the Republic of Louisiana seized the US Mint at New Orleans.

I won't be publishing a commentary tomorrow because I will be speaking at Covenant Presbyterian Church, 1420 Rock Springs Road, Buford, Georgia on Securing Your Family's Economy in This Economy. I don't know how much room they have, but you might be able to sneak in if you'll behave yourself.

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
31-Jan-13 Price Change % Change
Gold, $/oz 1,660.60 -19.30 -1.15%
Silver, $/oz 31.34 -0.82 -2.54%
Gold/Silver Ratio 52.995 0.747 1.43%
Silver/Gold Ratio 0.0189 -0.0003 -1.41%
Platinum 1,673.90 -13.90 -0.82%
Palladium 745.30 -5.70 -0.76%
S&P 500 1,498.11 -3.85 -0.26%
Dow 13,860.58 -49.84 -0.36%
Dow in GOLD $s 172.54 7.50 4.54%
Dow in GOLD oz 8.35 0.36 4.54%
Dow in SILVER oz 442.34 9.69 2.24%
US Dollar Index 79.20 -0.06 -0.07%
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: 1,660.60      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,705.44 1,716.23 1,716.23
1/2 AE 0.50 846.40 874.72 1,749.44
1/4 AE 0.25 423.20 445.66 1,782.65
1/10 AE 0.10 174.26 181.84 1,818.36
Aust. 100 corona 0.98 1,619.58 1,633.58 1,666.58
British sovereign 0.24 390.91 394.91 1,677.59
French 20 franc 0.19 310.03 314.03 1,682.02
Krugerrand 1.00 1,692.15 1,707.15 1,707.15
Maple Leaf 1.00 1,670.60 1,685.60 1,685.60
1/2 Maple Leaf 0.50 954.85 871.82 1,743.63
1/4 Maple Leaf 0.25 423.45 444.21 1,776.84
1/10 Maple Leaf 0.10 176.02 181.01 1,810.05
Mexican 50 peso 1.21 1,992.01 2,009.01 1,666.26
.9999 bar 1.00 1,666.41 1,677.41 1,677.41
SPOT SILVER: 31.40      
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 22,880.00 23,166.00 32.40
US 40% silver 1/2s 0.30 9,218.75 9,293.75 31.50
100 oz .999 bar 100.00 3,140.00 3,180.00 31.80
10 oz .999 bar 10.00 319.00 321.50 32.15
1 oz .999 round 1.00 31.50 31.95 31.95
Am Eagle, 200 oz Min 1.00 32.65 33.65 33.65
SPOT PLATINUM: 1,673.90      
Plat. Platypus 1.00 1,698.90 1,738.90 1,738.90
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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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