The Moneychanger
Daily Commentary
Monday, 8 April a.d. 2013 Browse the commentary archive

Silver & gold, like two big rattlesnakes that have just eaten particularly fat rabbits, took some time lying in the sun to digest Friday's gains. Stocks have inertia, but which way? Japanese finally talked the yen down to 100 cents.

Dow rose 48.23 today, 1/3 of 1%, to end at 14,613.48. S&P500 felt perkier, rising 0.63% (9.79) to 1,563.07. Not sure whether the inertia is keeping em up or dragging 'em down. They looked to have rolled over, though.

Dow in Gold & Dow in Silver, in spite of lower silver & gold and higher stocks today, managed not to disrupt that Island Reversal pattern. Dow/Gold closed at 9.29 oz (G$192.04 gold dollars), up 0.83%. Dow/Silver rose 048% to 536.67 oz. Both markets have broken, unless they gainsay that with closes higher than highs already posted. I still want confirmation.

Yen closed nearly on the low today at 100.62 cents/Y100. That's probably the target they were shooting for, the Nice Japanese Government Men.

Euro rose 0.19% to $1.3017. It wants to go much higher, and has escaped the chains of its downtrend.

US dollar is now trading up 0.9% (7 basis points) at 82.759. A close below 82.60 shatters the uptrend line. Dollar has rolled over, but with currencies who knows what will happen next. Governments can throw surprise parties any time.

Silver lost 8.1 cents to end at 2712 cents. Gold gave back $3.40 to $1,572.

Metals are, as I so luridly alluded above, digesting Friday's gains.

It appears that silver & gold both bottomed with Friday's lows. Here are the boundaries that will confirm or gainsay:

Gold must not close below $1,555. Above it needs to throw a leg over $1,600 this week (for my taste) & then climb over that 50 DMA at $1,610.73. That's not all. To attract more buyers it needs to better the last high at $1,616.50, but really needs to close over $1,625. Given the underlying jumpiness of today's markets, large leaps wouldn't surprise me. I am also bruised and bloody enough that even a lower close wouldn't surprise me, but THIS time I believe we have a bottom.

Silver must hold above today's 2696 low, but needs to march on through 2750 and then the 20 DMA at 2834 cents.

US 90% premium today rose to $2.555 an ounce, highest I've seen it since the 2008 Panic. Clearly, there is a huge appetite for physical silver. Silver rounds now have deliveries stretches out 4 - 6 weeks. I don't believe very many folks thoroughly grasp exactly how thin the physical market for silver really is, or how little runs in the supply lines. It doesn't take much buying to drain that line.

On 4 April 1861 the Confederate States seized the US mint at Dahlonega, Georgia. During the 1830s & 1840s there was a gold rush in northern Georgia and southern North Carolina. With typical government efficiency, the US mint refused for a long time to establish branch mints at Charlotte & Dahlonega. Two German brothers, the Bechtlers, set up a minting operation in Rutherfordton from 1830 - 1852, minting the first gold dollars, $2.50, & $5 pieces. I have heard but not seen proved that in many parts of the South the Bechtlers, being more common that US money, were preferred to it. If the Bechtlers tried to do that today, O'barmer & his trolls would throw 'em in jail.

On 4 April 1864 at the Battle of Mansfield General Richard Taylor rounded yankee troops. Son of Zachary Taylor, Richard Taylor wrote one of the most entertaining and clear-eyed memoirs of the war, Destruction & Reconstruction.

Taylor's victory stopped cold yankee General Nathaniel Banks Red River Campaign in which the northern army committed atrocities like opening fire on civilians out for a Sunday walk. They terrified slaves into leaving their plantations then abandoned them, leaving them in camps to die by the hundreds. It was, I believe, Louisiana Government Henry Watkins Allen who collected depositions from civilians about the Red River Campaign, and published them in book form. It's one of the few books I have ever had to push away from, sobbing.

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
8-Apr-13 Price Change % Change
Gold, $/oz 1,572.00 -3.40 -0.22%
Silver, $/oz 27.12 -0.08 -0.30%
Gold/Silver Ratio 57.965 0.048 0.08%
Silver/Gold Ratio 0.0173 -0.0000 -0.08%
Platinum 1,535.90 15.00 0.99%
Palladium 732.85 5.90 0.81%
S&P 500 1,563.07 9.79 0.63%
Dow 14,613.48 48.23 0.33%
Dow in GOLD $s 192.17 7.50 4.06%
Dow in GOLD oz 9.30 0.36 4.06%
Dow in SILVER oz 538.85 3.38 0.63%
US Dollar Index 82.76 0.07 0.08%
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SPOT GOLD: 1,571.80      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,614.24 1,624.46 1,624.46
1/2 AE 0.50 805.04 831.09 1,662.18
1/4 AE 0.25 406.44 423.40 1,693.61
1/10 AE 0.10 164.93 172.51 1,725.05
Aust. 100 corona 0.98 1,528.35 1,542.35 1,573.51
British sovereign 0.24 372.22 382.22 1,623.71
French 20 franc 0.19 293.46 296.46 1,587.87
Krugerrand 1.00 1,589.09 1,602.09 1,602.09
Maple Leaf 1.00 1,581.80 1,596.80 1,596.80
1/2 Maple Leaf 0.50 903.79 825.20 1,650.39
1/4 Maple Leaf 0.25 400.81 420.46 1,681.83
1/10 Maple Leaf 0.10 166.61 171.33 1,713.26
Mexican 50 peso 1.21 1,885.49 1,901.12 1,576.78
.9999 bar 1.00 1,577.30 1,588.30 1,588.30
SPOT SILVER: 27.21      
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 20,956.65 21,281.65 29.76
US 40% silver 1/2s 0.30 7,658.20 8,028.20 27.21
100 oz .999 bar 100.00 2,721.00 2,761.00 27.61
10 oz .999 bar 10.00 277.10 278.10 27.81
1 oz .999 round 1.00 27.31 27.76 27.76
Am Eagle, 200 oz Min 1.00 28.46 29.56 29.56
SPOT PLATINUM: 1,535.90      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,560.90 1,600.90 1,600.90
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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.
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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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