The Moneychanger
Daily Commentary
Tuesday, 21 May a.d. 2013 Browse the commentary archive

Isn't the power of intimidation amazing? That's one reason that government always wants to makes sure that you have a guilty conscience. Why? Because a guilty man is so easy to control. Today if any one stands up for his rights -- real rights, not manufactured ones -- or controverts the official government or media or academia line, why, then he's an extremist or a terrorist, and all they need do is brandish those or similar pejoratives to intimidate most folks into silence.

Intimidation -- it's government's most useful tool.

Today the whole world was fine, jes' fine, once again. Why, stocks rose and the dollar rose and the euro rose and the yen fell & pretty soon there'll be a chicken in every pot. Well, an artificial GMO-chicken, at least.

Dow added 52.30 (0.34%) to 15,387.58. S&P500 gained 2.87 (0.17%) to 1,669.16. I think both indices are vying for who can run the longest string of new all-time highs. I tell y'all, it's the best of all possible worlds, the very best. Ben himself said so, & if Ben tells you a rooster dips snuff, you can look under his wing for the brush.

Dow in Gold & Dow in Silver both rose today. Dow/Gold rose 0.15 oz to 11.17 oz (G$230.90 gold dollars). Dow/Silver gained 14.28 oz (2.13%) to end at 685.26.

US dollar index gained slightly, up 7.5 basis points (0.1%) to end at 83.831. That doesn't really tell us very much. Trend in force remains in force until it's broken, & the dollars uptrend has not yet been broken.

The euro gained 0.18% to $1.2908, but remains below all its moving averages. 200 DMA stands at $1.2980, so we'll see what happens there.

Japanese yen gave back some of yesterday's rise, losing 0.22% to 97.56 cents per Y100. Nothing interesting there, but although it may be nothing more than a coincidence, the yen & stocks have been moving opposite each other ("have been negatively correlated"). That suggests that any rise in the yen will be accompanied by falling stocks. Transmission mechanism of that relation, if there is one, isn't clear to me, unless money fleeing Japan and the yen is running to the US stock market for a possible return as opposed to a sure currency loss. But then, I'm always looking for sense where no sense may be.

Silver & gold failed to complete the second half of that key reversal. Silver lost 12.6 cents (0.47%) today to 2244.2c while gold lost $6.50 (0.56%) to $1,377.80.

That's certainly disappointing, but does not necessarily mean that silver & gold have not made their bottoms. Both charts still look good, & especially those turnarounds yesterday. I had to buy a little today.

I can't wholly rule out another plunge down for both metals, but for now their bias is upward.

On 21 May 1688 was born the English poet Alexander Pope. Among his voluminous writings is found this from his Essay on Criticism (1709), which, alas, though old & true is not widely respected:

"A little learning is a dangerous thing:

"Drink deep, or taste not the Pierian spring:

"there shallow draughts intoxicate the brain,

"and drinking largely sobers us again."

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-May-13 Price Change % Change
Gold, $/oz 1,377.80 -6.50 -0.47%
Silver, $/oz 22.44 -0.13 -0.56%
Gold/Silver Ratio 61.394 0.055 0.09%
Silver/Gold Ratio 0.0163 -0.0000 -0.09%
Platinum 1,458.40 -26.20 -1.76%
Palladium 747.70 -2.30 -0.31%
S&P 500 1,669.16 2.87 0.17%
Dow 15,387.58 52.30 0.34%
Dow in GOLD $s 230.87 7.50 3.36%
Dow in GOLD oz 11.17 0.36 3.36%
Dow in SILVER oz 685.66 6.15 0.90%
US Dollar Index 83.83 0.08 0.09%
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: 1,374.50      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,412.99 1,420.55 1,420.55
1/2 AE 0.50 703.92 726.77 1,453.53
1/4 AE 0.25 355.39 370.26 1,481.02
1/10 AE 0.10 144.22 150.85 1,508.51
Aust. 100 corona 0.98 1,340.55 1,354.55 1,381.91
British sovereign 0.24 325.50 335.50 1,425.23
French 20 franc 0.19 256.62 259.62 1,390.57
Krugerrand 1.00 1,396.49 1,409.49 1,409.49
Maple Leaf 1.00 1,384.50 1,399.50 1,399.50
1/2 Maple Leaf 0.50 790.34 721.61 1,443.23
1/4 Maple Leaf 0.25 350.50 367.68 1,470.72
1/10 Maple Leaf 0.10 145.70 149.82 1,498.21
Mexican 50 peso 1.21 1,648.81 1,663.23 1,379.48
.9999 bar 1.00 1,379.31 1,390.31 1,390.31
SPOT SILVER: 22.34      
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 17,649.78 17,934.78 25.08
US 40% silver 1/2s 0.30 6,220.08 6,590.08 22.34
100 oz .999 bar 100.00 2,233.50 2,283.50 22.84
10 oz .999 bar 10.00 228.35 229.35 22.94
1 oz .999 round 1.00 22.44 23.09 23.09
Am Eagle, 200 oz Min 1.00 23.59 24.69 24.69
SPOT PLATINUM: 1,458.40      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,483.40 1,523.40 1,523.40
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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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