The Moneychanger
Weekly Commentary
Friday, 5 April a.d. 2013 Browse the commentary archive
Here's the weekly scorecard:
  28-Mar-13 5-Apr-13 Change % Change
Silver, cents/oz. 2,829.20 2,720.10 -109.10 -3.9
Gold, dollars/oz. 1,594.80 1,575.40 -19.40 -1.2
Gold/silver ratio 56.369 57.917 1.550 2.7
Silver/gold ratio 0.0177 0.0173 -0.0005 -2.7
Dow in Gold Dollars (DIG$) 188.97 191.12 2.15 1.1
Dow in gold ounces 9.14 9.25 0.10 1.1
Dow in Silver ounces 515.29 535.47 20.18 3.9
Dow Industrials 14,578.54 14,565.25 -13.29 -0.1
S&P500 1,569.19 1,553.28 -15.91 -1.0
US dollar index 82.98 82.49 -0.49 -0.6
Platinum 1,571.20 1,534.40 -36.80 -2.3
Palladium 767.10 722.75 -44.35 -5.8

What last week promised, this week made good.

Last week the Dow in Silver & Dow in Gold looked toppy, silver & gold seemed at the correction's end, and it seemed the world couldn't get no better for the US dollar & stocks. Well, if it can't get no better, it won't. Today showed the first signs of turnarounds.

Out of 13 weeks since the year began, Dow has fallen only four. This week was, ominously, one of them. Dow today lost 40.86 -- great tape-painting at day's end, Nice Government Men! -- or 0.28% to close 14,565.25. S&P500 lost 0.43% (6.70) to 1,553.28.

Today was not kind to stocks. Day opened with a bad unemployment report which whispered that Bogus Ben's money flood might not be turning the tide against joblessness. Stocks did not like that, & sank like your future when you crash into the back of a cop car at a stop light, spilling your beer & dropping your joint.

Today's close took the S&P500 waaay below its 20 DMA (now 1,557.35), although it didn't close at the bottom of its range (1,539.50). Chart looks like a windshield with hoar frost a cat slid down. 50 DMA lieth not far below at 1,531.11.

To remind y'all, the 20 day moving average is the first trip wire of a decline. Each close below each successive moving average confirms a cross of the one above. (A 20 DMA takes the last 20 days' prices and averages them. Tomorrow you drop the oldest price, pick up the newest, & re-average -- thus it "moves." Mathematically, a rising market should remain above that MA if it is to continue rising.)

Dow Industrial Average pierced its 20 DMA (14,511.24) but didn't close beneath it. Yet like the S&P500 it has been trending downward for the last four days.

More to the point are the Dow in Silver & Dow in Gold. Both gapped down today, leaving an "island reversal" behind. That's a few days of trading at the top of a rally, isolated by gaps going into it and coming out. Gaps are usually filled, but this one is not, so filling this gap negates the island reversal. Dow/Silver today fell 1.94% to 534.11 oz. Dow/Gold slid 2.01% to 9.21 oz (G$190.39 gold dollars). For comparison's sake, the Dow in 1929 peaked at G$381.17, and in August 1999 at G$925. So much for the so-called bull market in stocks.

Charts are here: http://bit.ly/ZEtu2q & here http://bit.ly/Z7fWO0

Durn, I get distracted too easily. My point is that it appears (confirmation is always needful) stocks have peaked against silver & gold. That, in turn, whispers that silver & gold have turned up.

Whoo! That dollar index posted first half of a key reversal yesterday, reaching a new high intraday but closing lower than the day before. Today the dollar obligingly filled in the SECOND half of that key reversal by closing lower, & sharply lower. Dollar lost 22.9 basis points (0.29%) to end at 82.494, below both the 20 DMA (82.85) and 50 DMA (81.54). Dollar has left behind a big old rounding top. Chart at http://bit.ly/11yMpAJ

Yesterday the new governor of the Bank of Japan announced the BOJ would add $1.2 trillion (with a T) to the money supply by end-2014. That tanked the yen & today it hit a new low, closing down 1.29% at 102.45 cents/Y100. Now I reckon the world will be treated to a demonstration of the question, "Can a nation reach prosperity by depreciating its currency?" I already know the answer, and would give it to the Japanese for a lot less than $1.2 Trillion, but they, like their central bank counterparts around the world, are such stone-cold Keynesian goofs they won't listen & will screw up their economy anyway.

Euro rose 0.46% to $1.2992, above its 1.2925 20 DMA, above its 200 DMA, very strongly rising. Try to riddle that riddle, how the 2nd ugliest of three ugly currencies could be asked to dance?

I reckon every dog has his day, and this day belonged to silver & gold. Silver gained 45.3 cents (1.7%) to 2720.1c & gold shot up $23.60 (1.5%) to $1,575.40. That carries them above the levels I wanted to see to mark a turnaround (I had previously said $1,580 but since it closed above $1,575 & traded at $1,580 in the aftermarket, I'll call that a win.)

Gold began getting frisky as soon as the US market opened & never looked back. Range was $1,549.88 - $1,580.64.

On a four month chart gold stretched its neck like a giraffe & closed near the top of the range (and above, on the End Of Day chart). This takes it back above the support/resistance where it broke down. See chart at http://bit.ly/SoDA5t

Hovering above gold is the 20 DMA at $1,591.66, coincidentally resistance. To confirm today's reversal as genuine & lasting, gold must jump over $1,600 and the 50 DMA at $1,612.62 next week.

A reversal this week after a three day breakdown conforms to gold's (& silver's) behavior in the last few month, where breakdowns have spiked down only a day or two. This week was two days down below support, and one day back up.

Silver was already rising when the New York market opened & just kept at it after quickly leaving 2700c behind.

This week silver broke down through the bottom channel line that had contained it since last August. Low this week came at 2658c yesterday. Silver spent two days below that support, then punched back into the channel today. Chart's at http://bit.ly/T07wYB

Silver has created a falling wedge, which usually resolves by turning upward. However, silver must close above 2850c to prove a rally has begun, & could handily do that next week.

Once again, today's reversals must be validated by ongoing rises above overhead resistance, but it appears that silver & gold bottomed yesterday.

Gold/Silver ratio today closed at 57.917. If you still want to swap silver for gold, you have very little time to do it. Ratio peaks don't hang around a long time.

Bull market (Primary Uptrend) remains intact. Won't give you much more chance to buy at these bargain prices, so y'all had better buy soon.

Y'all enjoy your weekend!

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
5-Apr-13 Price Change % Change
Gold, $/oz 1,575.40 23.60 1.5
Silver, $/oz 27.20 0.45 1.7
Gold/Silver Ratio 57.917 0.858 1.5
Silver/Gold Ratio 0.0173 0.0003 1.7
Platinum 1,534.40 17.70 1.2
Palladium 722.75 -1.55 -0.2
S&P 500 1,553.28 -6.70 -0.4
Dow 16,565.25 -40.86 -0.2
Dow in GOLD $s 217.36 -3.83 -1.7
Dow in GOLD oz 10.51 -0.19 -1.7
Dow in SILVER oz 608.99 -11.84 -1.9
US Dollar Index 82.49 -0.23 -0.3
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: 1,581.40      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,622.52 1,634.38 1,634.38
1/2 AE 0.50 809.96 836.17 1,672.33
1/4 AE 0.25 408.93 425.99 1,703.96
1/10 AE 0.10 165.94 173.56 1,735.59
Aust. 100 corona 0.98 1,537.69 1,551.69 1,583.03
British sovereign 0.24 374.50 384.50 1,633.37
French 20 franc 0.19 295.25 298.25 1,597.47
Krugerrand 1.00 1,598.80 1,611.80 1,611.80
Maple Leaf 1.00 1,591.40 1,606.40 1,606.40
1/2 Maple Leaf 0.50 909.31 830.24 1,660.47
1/4 Maple Leaf 0.25 403.26 423.02 1,692.10
1/10 Maple Leaf 0.10 167.63 172.37 1,723.73
Mexican 50 peso 1.21 1,897.00 1,912.69 1,586.38
.9999 bar 1.00 1,586.93 1,597.93 1,597.93
SPOT SILVER: 27.36      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 30.50 34.00 44.44
VG+ Peace dollar 0.77 28.00 31.00 40.52
90% silver coin bags 0.72 20,670.65 20,995.65 29.36
US 40% silver 1/2s 0.30 7,702.45 8,072.45 27.36
100 oz .999 bar 100.00 2,736.00 2,776.00 27.76
10 oz .999 bar 10.00 278.60 279.60 27.96
1 oz .999 round 1.00 27.46 27.91 27.91
Am Eagle, 200 oz Min 1.00 28.61 29.71 29.71
SPOT PLATINUM: 1,534.40      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Platinum Platypus 1.00 1,559.40 1,599.40 1,599.40
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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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