The Moneychanger
Daily Commentary
Tuesday, 26 February a.d. 2013 Browse the commentary archive

There's an old proverb that says the poor man wastes his money bribing the rich. Way it usually works is the rich man gets the poor man's labor for nothing by promising that if he just helps him for free this time, he'll remember him when the next big deal comes around.

But it never comes.

A lot of employers jerk their employees around this way, promising big things in the future while taking away things in the present. The rich man already got me a number of years ago, & taught me never to bribe the rich. I don't remember much poetry, except these lines from Omar Khayyam, "Ahh, take the cash, and let the credit go/Nor heed the rumble of a distant drum!"

Y'all can turn your noses up at me if you like, but I have to warn y'all: that stock market isn't strong, it's blowing off. Erratic trading accompanies blow-off tops. On Friday the Dow gained 119.95, on Monday it lost 216.40, on Wednesday it gained 115.96, & today it gained 175.24 (1.26%) to close at 14,075.37, a new high close for the move.

Go look at the chart, You'll see that the these moves are slinging the Dow from one side of the Jaws of Death to the other (jaws marked by blue dotted line & red arrows. Red dashed line is resistance from earlier highs.)

The broadening top pattern is not a continuation pattern but a top. The hot & cold uncertainty may send the Dow higher, even to the 2007 high at 14,163, but these high stock prices are not long for this world.

Dow in gold and Dow in silver both bounced up today, but to lower highs. Hmmm -- lower lows & lower highs -- Doesn't that make a downtrend?

Stocks are rolling over, count on it.

Euro rose 0.54% today to $1.3132. However, 'tis only bouncing off an internal resistance line about $1.3040. Headed lower.

Yen lost 0.25% today to 108.40. Nothing technical yet to point to a turn around other than crossing above the 107.61 20 DMA day before yesterday. 50 DMA is above at 111.71c/Y100. It's so politically determined that I wouldn't trade it with y'all's money.

Silver & gold dropped today, but hold on a second. Get that knife away from your wrist and think. They had risen four day's running, so a little breather is in order. Silver lost 31.7 cents to 2894.3c & gold fell $19.80 to $1,595.20. This hasn't damaged the uptrend, but might mean that we're in for more sideways frustration. Lines are clearly drawn: silver has to climb over 2950, then 3050c to rally. Gold must conquer $1,620 - $1,630.

I have to stick by my tentative conclusion, iffy as it might be: silver & gold made their lows last week. Unless they fall lower than those in daily trading, they will continue to rally.

Yep, I'm biting my nails, too, but this will all clear up pretty soon. Once those stocks break, those nice government men & hedge funds will be skipping and hopping. So will silver & gold.

It's an odd thing to me that in an age when more than half the TV shows are about adultery that anybody would get too exercised about adulterating food (merely another brand of adultery) but behold! the uproar in the EU over horse meat in their wieners & meatballs. The goofiest face of this are the calls from the inveterate & unable- ever-to-learn-anything socialists for more government regulation. England has some of the world's tightest meat regulation. Problem is, of course, CONCENTRATION in the food industry. Would you rather buy beef from your local butcher who looks you in the eye, or mystery meat from some far-off corporation? Right, the cure is to know your farmer & buy local.

Forget the meatballs, I'm giving up sushi. A group named Oceana uncovered massive fraud in mislabeled fish. Seems that out of 1200 samples, 1/3 were mislabeled. What was swimming as tuna was in fact escalor, that will give you gastro-intestinal distress you don't want to hear described. Oceana did not find a single sushi bar without mislabeled fish.

I'm telling y'all, the only way to protect yourself from these adulterers and dangerous processed food is to buy local & know your farmer.

But shucks, I'm only a natural born fool from Tennessee. Y'all don't pay me no mind, and let me know how y'all like that escolar -- whoops! "Tuna."

A reader asked me what the inflation adjusted value of that 26 Feb 1974 $188 gold is: by the under-stated US government inflation adjustment, it's about 878.15 2013 dollars.

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
27-Feb-13 Price Change % Change
Gold, $/oz 1,595.20 -19.80 -1.23%
Silver, $/oz 28.94 -0.32 -1.08%
Gold/Silver Ratio 55.115 -0.080 -0.14%
Silver/Gold Ratio 0.0181 0.0000 0.14%
Platinum 1,599.00 -16.40 -1.02%
Palladium 743.15 3.75 0.51%
S&P 500 1,515.99 19.05 1.27%
Dow 14,075.37 175.24 1.26%
Dow in GOLD $s 182.40 7.50 4.29%
Dow in GOLD oz 8.82 0.36 4.29%
Dow in SILVER oz 486.31 11.26 2.37%
US Dollar Index 81.54 -0.32 -0.39%
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: 1,595.90      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,637.39 1,649.36 1,649.36
1/2 AE 0.50 813.40 840.64 1,681.28
1/4 AE 0.25 406.70 428.30 1,713.20
1/10 AE 0.10 167.46 174.75 1,747.51
Aust. 100 corona 0.98 1,556.48 1,570.48 1,602.20
British sovereign 0.24 377.93 387.93 1,647.96
French 20 franc 0.19 299.74 305.40 1,635.80
Krugerrand 1.00 1,619.84 1,634.84 1,634.84
Maple Leaf 1.00 1,605.90 1,620.90 1,620.90
1/2 Maple Leaf 0.50 917.64 837.85 1,675.70
1/4 Maple Leaf 0.25 406.95 426.90 1,707.61
1/10 Maple Leaf 0.10 169.17 173.95 1,739.53
Mexican 50 peso 1.21 1,914.40 1,931.40 1,601.89
.9999 bar 1.00 1,601.49 1,612.49 1,612.49
SPOT SILVER: 28.97      
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 21,424.98 21,753.98 30.43
US 40% silver 1/2s 0.30 8,500.43 8,575.43 29.07
100 oz .999 bar 100.00 2,896.50 2,941.50 29.42
10 oz .999 bar 10.00 294.65 297.15 29.72
1 oz .999 round 1.00 29.07 29.52 29.52
Am Eagle, 200 oz Min 1.00 30.22 31.22 31.22
SPOT PLATINUM: 1,599.00      
Plat. Platypus 1.00 1,624.00 1,664.00 1,664.00
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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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