The Moneychanger
Daily Commentary
Thursday, 21 February a.d. 2013 Browse the commentary archive

If the object of the FOMC manipulation was to drive down the euro against the dollar, it worked today. Euro dropped 0.75% to $1.3186, while the US dollar index (about half comprised of the euro) rose 0.5% or 39.2 basis points to 81.475. The euro gapped down and closed beneath its 62 day moving average. Euro's momentum indicators are screaming in freefall. Test will come about $1.3150. If it falls thru that, 'twill fall much more, say to the 200 DMA at $1.2827. More bad economic news out of Europe today will speed that fall. Surprise. European economy is not recovering. Euro fell 1.21% against the yen.

Yen gained 0.45% today to close at 107.38 cents per 100 yen. For better than two weeks the yen has traded sideways, but now has risen high enough to approach its 20 DMA (108.04) & the first sign of a reversal.

US Dollar index's close yesterday took it above the 200 DMA (80.92). Today it added to that gain 39.2 more basis points to end at 81.475. Dollar index has a minimum of 82 targeted, and perhaps higher. Of course, given the hyperactive Nice Government Men, that could change at any time.

The day wasn't kind to stocks. The Dow broke 13,900 to close down 46.92 (0.34%) at 13,880.62. The day was less kind to the S&P500, which lost 9.53 or 0.63%, closing at 1,502.42.

Right now 13,800 is the magic number for the Dow. It must hold that or tumble at least another 150 points.

AHA! Both the Dow in Gold & the Dow in Silver gapped down today, leaving yesterday's high isolated above & looking much like an island reversal. If so, both ought to follow through with lower closes tomorrow.

If confirmed, that implies stocks have peaked against silver & gold, and will cheapen against them.

From the Comex closes today, you'd think silver & gold had stayed home in bed today. Gold closed up sixty cents (spell it out it's so small) at $1,578.20 while silver gained eight cents to 2869.5c. However, other charts don't tell that story.

Overnight gold hit a lower low, about $1,558 but from midnight forward (NYC time) rallied as high as $1,584.70. This has the look of a key reversal.

What's that? When a market trades into new low ground for the move, then closes the day higher, that's the first half of a key reversal. Second and necessary half is a higher close the next day, i.e., tomorrow. All this plainly shows on an EOD (End of the Day) chart. See With sentiment dragging the bottom, the RSI at a 12 year low, and gold trading below its lower Bollinger Band, gold is screaming time to slam it into reverse.

But screaming won't change gears. That takes market action, and I want to see some proof, like higher closes tomorrow for both silver & gold.

Silver looks much the same as gold, but didn't quite make a lower low today. Hit 2832c at the bottom and 2884.2c at the high.

However, silver's three day chart shows a double bottom yesterday and today, and a rise out of that bottom most of the day. Needs to close above 2884c tomorrow to make that look like a bottom.

Be patient. Better days are coming soon, as long as silver & gold don't close below the last two days' lows. Let's watch.

Quote of the day, from Steve Saville at "Although the markets have gone much further than we anticipated, it's important to bear in mind that the more a rubber band gets stretched the less the potential for it to be stretched further and the greater the potential for a snap-back. You may not want to bet heavily on the timing of the inevitable snap-back, but you should at least be prepared for it."

On 21 February 1848 was published the in London the Communist Manifesto, written by Karl Marx and Friedrich Engels. This dismal document contained ten planks or goals, all of which have subsequently been realized & installed in the United States. They include

1. Abolition of property in land, etc. (If they

can sell your property for taxes, you don't own it.)

2. A heavy progressive or graduated income tax.

3. Abolition of all rights of inheritance (inheritance tax)

(If they can tax it, it's not a right.)

4. Confiscation of all property of emigrants & rebels

(Rebel & watch what they do with your property.

They did it to us all over the South, & still are.)

5. Centralization of credit in the hands of the state

by means of a national bank with state capital

& an exclusive monopoly (the Federal Reserve &

all the Government Sponsored Enterprises that loan

money, from Fannie & Freddy on down.)

6. Centralization of communication & transport in the State.

(Maybe y'all haven't heard of the FCC, FAA, ICC,

Department of Transportation?)

7. Extension of factories & productive facilities owned

owned by the state; bringing waste lands into

cultivation and improving the soil according

to a common plan (Dept. of Agriculture, Energy, GSEs )

8. Equal liability of all to work. Establishment of

industrial armies, especially for agriculture.

(Industrial armies were created during the New Deal: CCC, WPA)

9. Combining agriculture with manufacturing

(industrialization of agriculture, already happened);

abolishing distinction between town & country

by a more equable distribution of the populace.

(Government policy has redistributed rural

populace into urban areas)

10. Free education for all children in public schools.

Abolition of child factory labor, and combination

of education with industrial production.

(Y'all have public schools where you live?

Department of Education? Community or Tech schools?)

Now that's the bad news. The good news is it doesn't matter where we start abolishing, it will help restore freedom. And y'all thought I was just joking when I called 'em communists!

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
21-Feb-13 Price Change % Change
Gold, $/oz 1,578.20 0.60 0.04%
Silver, $/oz 28.70 0.08 0.28%
Gold/Silver Ratio 54.999 -0.133 -0.24%
Silver/Gold Ratio 0.0182 0.0000 0.24%
Platinum 1,618.90 -27.10 -1.65%
Palladium 733.20 -2.80 -0.38%
S&P 500 1,502.42 -9.53 -0.63%
Dow 13,880.62 -46.20 -0.33%
Dow in GOLD $s 181.81 7.50 4.30%
Dow in GOLD oz 8.80 0.36 4.30%
Dow in SILVER oz 483.73 -2.97 -0.61%
US Dollar Index 81.48 0.39 0.48%
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SPOT GOLD: 1,575.30      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,616.26 1,628.07 1,628.07
1/2 AE 0.50 802.89 829.79 1,659.58
1/4 AE 0.25 401.45 422.77 1,691.08
1/10 AE 0.10 165.30 172.50 1,724.95
Aust. 100 corona 0.98 1,536.39 1,550.39 1,581.71
British sovereign 0.24 373.05 383.05 1,627.23
French 20 franc 0.19 295.87 301.46 1,614.68
Krugerrand 1.00 1,600.50 1,615.50 1,615.50
Maple Leaf 1.00 1,585.30 1,600.30 1,600.30
1/2 Maple Leaf 0.50 905.80 827.03 1,654.07
1/4 Maple Leaf 0.25 401.70 421.39 1,685.57
1/10 Maple Leaf 0.10 166.98 171.71 1,717.08
Mexican 50 peso 1.21 1,889.69 1,906.69 1,581.39
.9999 bar 1.00 1,580.81 1,591.81 1,591.81
SPOT SILVER: 28.59      
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 20,867.28 21,196.28 29.65
US 40% silver 1/2s 0.30 8,388.33 8,463.33 28.69
100 oz .999 bar 100.00 2,858.50 2,898.50 28.99
10 oz .999 bar 10.00 290.85 293.35 29.34
1 oz .999 round 1.00 28.69 29.14 29.14
Am Eagle, 200 oz Min 1.00 29.84 30.84 30.84
SPOT PLATINUM: 1,618.90      
Plat. Platypus 1.00 1,643.90 1,683.90 1,683.90
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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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