The Moneychanger
Daily Commentary
Wednesday, 13 February a.d. 2013 Browse the commentary archive

I reckon I'm so old that my reflexes are slowing down. This morning in the car National Proletarian Radio played a clip from a speech O'Bama was making in Asheville, & before I could change the channel, turn it off, or rip the radio out of the dash (I'm slowing down, I tell y'all) I heard him say that his plan to revive the economy was to raise the minimum wage from $7.25 to $9.25.

I have to admit, that is pretty astoundingly stupid, even for O'Bama. Let's see: how can we revive the economy & lower unemployment? I know! Let's RAISE wage costs for all employers, and price the lowest cost workers out of the market by raising the minimum wage! That way employers -- those our moronic policies haven't already driven out of business -- will have to buy machines to replace those low wage workers, and that will stimulate the economy! You can almost hear him & Ben guffawing over how smart they are.

It's time for me to move on to the next galaxy. There's no intelligent life left in this one.

Stock indices were confused today, some up, some down. Dow lost 35.79 (0.26%) and ended below the morale-busting or -boosting 14,000 at 13,982.91. I keep going back to the chart where I see what looks like one of those cartoons with the big fish gulping down a smaller fish who is gulping down a still smaller fish who is gulping down a minnow. It's Jaws of Death within Jaws of Death within Jaws of Death. Sooner or later, somebody's gonna get eaten.

S&P500 rose by a miniscule 0.9 (0.06%). Doesn't really differ much from the Dow. In a month or so the weeping will begin.

Went back & looked again -- my daily exercise -- at the Dow in Gold & Dow in Silver. Figuring the Dow in Gold began its fall in July 2009 at 10.04 oz (G$207.54), and it bottomed at 5.82 in July 2011, then today it stands nearly at a 61.8% correction of that fall. About 9 oz (G$186.05) would make a 75% correction, which nests with the target of 9.12 I already had in mind. Dow in Silver weekly chart has not yet reached its 200 day moving average (465.83), a likely target for a turnaround and about on par with the 50% correction of the last fall (473.57).

Let us hear the end of the matter: both charts can rise more, but not much more. Maybe 5 or 6%.

Note carefully the sound of claxons in the US Treasury security market. The 10 year treasury note yield really has broken out to the upside. Now at 2.02%, if it rises above 2.4%, Ben the Business Slayer has lost the battle against reason and the interest rate. Just what a struggling economy & an inflating dollar need, higher interest rates.

US dollar rose an unimportant mite, 3.2 basis points to 80.083. While the dollar may have turned & has been generally rising since February began, it wilted yesterday when it struck the downtrend line from November's high. Bias is upward as it stands above its 50 & 20 DMAs.

Euro remains broken below its late $1.3711 high. Yet it might still climb higher unless it closes below $1.3150. Lost a measly 0.3% today to end at $1.3354.

Yen -- surprise, surprise -- did not sink again today to another new low. Rather, it rose 0.4% to 107.03c/Y100. No trend change yet.

Odd. Gold closed $4.50 lower today at $1,644.20 but posted a higher low, $1,640.90 v. $1,639.27. Highs were nearly identical, $1,651.91 today against $1,651.87 yesterday.

Silver traded to a higher high today at 3115c, & a higher low at 3071c, but closed down 15c at 3085.4c

Clearly buyers support gold around $1,640 & silver around 3050c - 3070c. If those don't hold, maximum downside risk for silver is 2990 - 2960c & for gold $1,600. Up above, no confirmation of a rally arrives before they close above 3250c and $1,705.

We wait, stuck in the middle. Be patient, our time will come.

On 13 February 1692 in the Glencoe highlands of Scotland soldiers of the neighboring Campbell clan murdered 38 MacDonalds who had accepted the Campbells as their guests and extended them hospitality. Another 40 women and children died of exposure after their homes were burned. The excuse given was that the McDonalds had not promptly pledged allegiance to the new king, William of Orange, but that was false. Alistair McDonald recorded a ballad with the refrain, "Cruel is the snow that sweeps Glencoe and covers the graves o' Donald."

On 13 February 1945 Allied bombers began bombing the German city of Dresden, not a military target & so famous for its Baroque artwork & architecture it was called the "Florence of the Elbe." The Allies dropped so many incendiary bombs they created a self-feeding fire storm that killed 25,000 civilians, literally incinerating many alive, and destroyed the entire 15 square mile city center. Mostly women and children were killed, and American author Kurt Vonnegut's novel "Slaughterhouse-Five recounts his first hand experience of the raid while a prisoner of war.

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
13-Feb-13 Price Change % Change
Gold, $/oz 1,644.20 -4.50 -0.27%
Silver, $/oz 30.85 -0.00 -0.00%
Gold/Silver Ratio 53.290 -0.143 -0.27%
Silver/Gold Ratio 0.0188 0.0001 0.27%
Platinum 1,728.60 -12.50 -0.72%
Palladium 771.65 0.65 0.08%
S&P 500 1,520.33 0.90 0.06%
Dow 13,982.91 -35.79 -0.26%
Dow in GOLD $s 175.80 7.50 4.46%
Dow in GOLD oz 8.50 0.36 4.46%
Dow in SILVER oz 453.20 -1.14 -0.25%
US Dollar Index 80.08 0.03 0.04%
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: 1,641.80      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,684.49 1,696.80 1,696.80
1/2 AE 0.50 836.81 864.82 1,729.64
1/4 AE 0.25 418.40 440.62 1,762.47
1/10 AE 0.10 172.28 179.78 1,797.77
Aust. 100 corona 0.98 1,601.25 1,615.25 1,647.87
British sovereign 0.24 388.80 398.80 1,694.13
French 20 franc 0.19 308.36 314.19 1,682.85
Krugerrand 1.00 1,668.07 1,683.07 1,683.07
Maple Leaf 1.00 1,651.80 1,666.80 1,666.80
1/2 Maple Leaf 0.50 944.04 861.95 1,723.89
1/4 Maple Leaf 0.25 418.66 439.18 1,756.73
1/10 Maple Leaf 0.10 174.03 178.96 1,789.56
Mexican 50 peso 1.21 1,969.46 1,986.46 1,647.56
.9999 bar 1.00 1,647.55 1,658.55 1,658.55
SPOT SILVER: 30.75      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 30.50 34.00 44.44
VG+ Peace dollar 0.77 29.00 33.00 43.14
90% silver coin bags 0.72 22,343.75 22,672.75 31.71
US 40% silver 1/2s 0.30 9,027.00 9,102.00 30.85
100 oz .999 bar 100.00 3,075.00 3,115.00 31.15
10 oz .999 bar 10.00 312.50 315.00 31.50
1 oz .999 round 1.00 30.85 31.30 31.30
Am Eagle, 200 oz Min 1.00 32.00 33.00 33.00
SPOT PLATINUM: 1,728.60      
Plat. Platypus 1.00 1,753.60 1,793.60 1,793.60
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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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