The Moneychanger
Weekly Commentary
Friday, 24 May a.d. 2013 Browse the commentary archive
Here's the weekly scorecard:
  17-May-13 24-May-13 Change % Change
Silver, cents/oz. 2,233.90 2,248.20 14.30 0.6
Gold, dollars/oz. 1,364.90 1,386.60 21.70 1.6
Gold/silver ratio 61.099 61.676 0.580 0.9
Silver/gold ratio 0.0164 0.0162 -0.0002 -0.9
Dow in Gold Dollars (DIG$) 232.55 228.14 -4.41 -1.9
Dow in gold ounces 11.25 11.04 -0.21 -1.9
Dow in Silver ounces 687.35 680.69 -6.67 -1.0
Dow Industrials 15,354.79 15,303.18 -51.61 -0.3
S&P500 1,658.18 1,649.61 -8.57 -0.5
US dollar index 84.28 83.57 -0.71 -0.8
Platinum 1,468.00 1,451.90 -16.10 -1.1
Palladium 739.50 726.45 -13.05 -1.8

No gigantic changes appear on the board, but this was probably the week stocks turned down and silver and gold confirmed their bottoms. May have been the week the US Dollar Index turned down, too.

Both daily and weekly stock charts show a key reversal, although next week's weekly chart must still confirm that. It was the first week in five that stocks did not end higher.

Even thought the Dow spent most of today underwater, it managed "somehow" to close up 8.6 (0.06%) to 15,303.18. Right cosmetic close, I'd say, with some Ripe Mackerel perfume. Along with every other index except the Dow, the S&P500 fell 0.91 (0.6%) to 1,649.60. As huge markets stocks take a long time to roll over, but the definitive event came this week with a Key Reversal on Wednesday (new high intraday with lower close for the day) confirmed on Thursday (lower close). That's the definitive event, like signing up to join the army. They haven't started yelling at you or shooting at you yet, but that will all surely come once you sign that line.

Likewise, the Dow in Gold & Dow in Silver both fell through their uptrend lines. Dow in gold rose a smidge today, as did the Dow in Silver, but these tiny gains change nothing. Assuming that the Dow/Gold & Dow/Silver confirm with lower prices next week, the trend of stocks gaining value against silver & gold has ceased. Special value of that message for us is that normally it signals that the metals' price lows are behind us.

Yes, I did say that.

Not clear to me yet whether the US dollar index has broken for good or just for a correction in an ongoing uptrend. Assumption must lie with the ongoing up trend (targeting 89 or so) but a close below 83 would cast some pretty leaden doubt on that.

One reason to suspect the dollar's future will more resemble an earthworm than a soaring hawk would be the Euro. It caught at crucial $1.2800 support & rallied. Has reached but not been able to penetrate its 200 dma ($1.2989). Still, the euro, scrofulous, ratty, mired in the most incurable banking & economic mess of an economy carrying social costs like a 500 lb. anchor, looked peppy the last two weeks. Today it rose a nothing 0.02% to $1.2935.

Yen rose again today, up 0.81%, to 98.92 cents/Y100. For whatever mysterious reason, stocks & the yen are moving opposite each other. Yen is about to clear its 20 DMA (now 99.45) for the first time since April, first sign it MIGHT turn up. Other indicators also show an upturn.

Fiat currency & central banking! Why, a world without fiat currencies & banks would be like a fish without a bicycle! It would be unthinkable, like a world without ticks, chiggers, tapeworms, or fever blisters.

Y'all keep an eye on that 10 year US treasury note yield. It is trying to push through 2.1% and if it does, Ben Bernanke will need some Excedrin. Maybe some Scotch, too, because it might signal faltering faith in the dollar.

Gold gave back some of yesterday's' gains today, losing $5.20 to $1,386.60. Silver lost a nothing 1.2 cents to 2248.2c.

Silver began the week with an overnight attack in Asia that tugged it down to a 2025c low, but it speedily recovered & closed the day higher. Rest of the week it maintained, but not much more. Silver needs to climb above 2300c, then 2500c, then up past that 2750c where it broke down in April.

More than gold, silver stands yet in the shadow of one possible last plunge to a lower low. We are entering into June, which seasonally usually shows the year's low. Equally, silver might NOT break to a lower low, & that Monday low might mark a double bottom with the previous 2200c low.

How do you know which? You wait to see what the market says. Remember also that silver tends to lag gold when stocks are feeling poorly, which almost certainly will be the case for a while.

After failing again to break through $1,395 overnight, gold went flat today. It's the weekend before the Memorial Day holiday, & no traders want to go home with a big position on. Might upset digesting all that barbecue. All the same, gold certainly showed strength withstanding that Asian attack on Monday. But all week long $1,395 has stymied it, so next week that becomes its target.

What I keep looking over my shoulder at is the chance of gold rallying up to $1,500, even $1,550, then falling down again for one last plunge. How will you know a trip to those heights is false? You won't. You'll know its true if it keeps shooting up.

So we are left, looking at silver and gold at bargain prices. Are we going to be afraid to buy because we aren't SURE? You're never going to have that much certainty with any market. I guess the downside risk from here is probably about 5%, down to $1,321.50 (April low). For silver that risk reaches to 1950c (on a plunge) or 14%.

Or you can wait and buy when gold trades steadily above $1,550 and silver above 2750c.

I wish y'all could all be here to share Tennessee with me today. 72 degrees, clear as a bell, gentle breezes, rambling roses and honeysuckle and privet filling the air. It's about as close to heaven as you'll get in this life. Yesterday I went and picked up 8 new swarms of bees, & put them out last night. Y'all see what a risk-taking plunger I am -- hive beetles or not, I'm going to try again.

On 24-25 May 1856 the Pottawatomie massacres were committed by John Brown, two of his sons, & two other helpers. Using broadswords in the cover of night they dragged unarmed men out of their homes and hacked them to death, five men in a single night. This was the same John Brown who was secretly funded by New Englanders called the "Secret Six." The same abolitionist do-gooders also funded Brown's raid on Harper's Ferry in 1859, which helped drive the South to secede, as it proved the violent intentions of Northern radicals. Oddly enough, none of the Secret Six actually fought alongside Brown. The Revolutionary Brown was the model for our times, loving all mankind but no man, willing to kill men to save them, the murderer transmogrified into hero.

Hell hath no fury like an armed do-gooder.

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
24-May-13 Price Change % Change
Gold, $/oz 1,386.60 -5.20 -0.4
Silver, $/oz 22.48 -0.01 -0.1
Gold/Silver Ratio 61.676 -0.231 -0.4
Silver/Gold Ratio 0.0162 -0.0000 -0.0
Platinum 1,451.90 -5.30 -0.4
Palladium 726.45 -12.20 -1.7
S&P 500 1,649.61 -0.90 -0.1
Dow 15,303.18 8.60 0.1
Dow in GOLD $s 228.14 1.00 0.4
Dow in GOLD oz 11.04 0.05 0.4
Dow in SILVER oz 680.69 0.75 0.1
US Dollar Index 83.57 -0.18 -0.2
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SPOT GOLD: 1,385.40      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,424.19 1,431.81 1,431.81
1/2 AE 0.50 709.51 732.53 1,465.06
1/4 AE 0.25 358.21 373.19 1,492.77
1/10 AE 0.10 145.36 152.05 1,520.48
Aust. 100 corona 0.98 1,349.82 1,363.82 1,391.37
British sovereign 0.24 328.08 338.08 1,436.19
French 20 franc 0.19 258.65 261.65 1,401.47
Krugerrand 1.00 1,408.95 1,421.95 1,421.95
Maple Leaf 1.00 1,400.40 1,415.40 1,415.40
1/2 Maple Leaf 0.50 796.61 727.34 1,454.67
1/4 Maple Leaf 0.25 353.28 370.59 1,482.38
1/10 Maple Leaf 0.10 146.85 151.01 1,510.09
Mexican 50 peso 1.21 1,661.89 1,676.38 1,390.38
.9999 bar 1.00 1,390.25 1,401.25 1,401.25
SPOT SILVER: 22.41      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 29.00 32.00 41.83
VG+ Peace dollar 0.77 26.00 29.00 37.91
90% silver coin bags 0.72 17,667.65 18,027.65 25.21
US 40% silver 1/2s 0.30 6,242.20 6,612.20 22.41
100 oz .999 bar 100.00 2,241.00 2,316.00 23.16
10 oz .999 bar 10.00 229.10 230.10 23.01
1 oz .999 round 1.00 22.51 23.41 23.41
Am Eagle, 200 oz Min 1.00 23.66 25.41 25.41
SPOT PLATINUM: 1,451.90      
Platinum Platypus 1.00 1,476.90 1,516.90 1,516.90
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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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