The Moneychanger
Weekly Commentary
Friday, 7 June a.d. 2013 Browse the commentary archive
Here's the weekly scorecard:
  31-May-13 7-Jun-13 Change % Change
Silver, cents/oz. 2,222.80 2,173.70 -49.10 -2.2
Gold, dollars/oz. 1,392.60 1,383.00 -9.60 -0.7
Gold/silver ratio 62.651 63.624 0.970 1.6
Silver/gold ratio 0.0160 0.0157 -0.0002 -1.5
Dow in Gold Dollars (DIG$) 224.38 227.92 3.54 1.6
Dow in gold ounces 10.85 11.03 0.17 1.6
Dow in Silver ounces 680.02 701.48 21.46 3.2
Dow Industrials 15,115.57 15,248.12 132.55 0.9
S&P500 1,630.74 1,643.38 12.64 0.8
US dollar index 83.28 81.68 -1.61 -1.9
Platinum 1,460.60 1,501.40 40.80 2.8
Palladium 751.05 759.45 8.40 1.1

It's the age of hot money whipsaw, wheeling into and out of markets on the turn of a news report, however trivial. Don't think in terms of "investments" any more -- think in terms of "fifty bucks on No. 10 black." You'll get closer to the reality.

'Twas a hard week for silver (lost 2.2%) and gold (lost 0.7%) and the US dollar index (lost nearly 2%). Oddly, in the teeth of all the pressure on silver & gold, platinum & palladium advanced. Stocks rose nearly 1%, after a bad break last week.

Yesterday I expected the Dow & S&P500 to rally back to their downtrend lines at 15,200 & 1,640, I just didn't expect them to do that in a single day. Markets are drunk on Ben Bernanke's daisy -- yes, he will inflate more, no, he won't. Every dribble of news is interpreted in that light, & today's jobs report -- more jobs but unemployment rate up -- was interpreted as meaning Bernanke must keep inflating, which, according to the loony logic regnant, means that stocks will rise. Monday bad news will probably dribble out that will drive both indices down the same amount, who knows?

We do know that stocks are presently correcting a long up move, & will most likely move further down before resuming their rally. The top that will follow toward the end of the year or early next year will mark the top of a 300-year wave (yep, that's back to the beginning of the 18th century) that has carried stocks up. What do y'all reckon the decline following will look like?

After closing below their 20 day moving averages yesterday, the Dow & Silver & Dow in Gold both turned around & closed above. Dow in Gold rose 3.8% to 11.025 (G$227.92 gold dollars). Dow in silver rose 5.9% to 701.48, a marginal new high. Last high was 699.48 oz. Clearly more work to be done here.

US Dollar Index did no more than bounce like a dead cat, up 9.1 basis points to 81.676. Hopes of an uptrend are hopelessly demolished. Unless something big comes to rescue the dollar, it's searching for some number below 81, maybe as low at 79.

Yen gave back 0.47% today after yesterday's mighty lunge through its 50 DMA. Closed at 102.51 cents/Y100. Maybe Bernanke and the rest of his global criminal syndicate of central bankers have drunk their fill of the Japanese depreciating the yen.

Euro backed off 0.2% after yesterday's large gain, but still looks stet to reach for $1.3500.

US$1=Y97.55=E0.7565=0.046 005 oz Ag=0.000 723 oz. Au.

I reckon gold didn't eat its Wheaties today, because it fell out of bed Gold plunged $32.70 (2.3%) to $1,383 and silver crumbled 96.4 cents (4.2%) to 2173.7.

Strange thing is that both stayed above & outside the downtrend line from the April highs. That seems to make little sense because today's break calls for another leg down. Only closes above $1,425 & 2350c would gainsay a further drop coming.

Gold was rocking along about $1,410 today until 10:30, which was I suspect when the unemployment numbers were announced. Dropped in a single swoop to $1,385, then edged off a little more to a $1,378 low & flat lined.

Silver played out the same way, but differs from gold. While gold at $1,383 is a long ways above its April $1,320 low, silver broke its recent 2200c support, and closed down there. This resembles swimming with an anvil.

Well, it's June, the month when silver generally makes a low, often its low for the year. This should come next week. I don't expect to see prices lower than 1950c and $1,320.

Disappointing? Yes, but 'tain't like Bernanke has repealed the Law of Gravity. Y'all can keep slugging this inflation-whiskey all you want, but the hangover will be mighty rough. Silver & gold remain in a bull market, and will end up as the ONLY beneficiaries of that inflation. Wait and see. Truth is the daughter of time. Eyes on the horizon.

I saw a surprised news report that the National Security Agency has been tapping directly into Google, Facebook, Aol, Yahoo, YouTube, Skype & other Internet providers. Surprised? Are y'all surprised? If I were the CIA, I would have invented Facebook and Google. Why do all that gumshoe work investigating people when they'll puke it all out themselves on Facebook, AND you can make a profit on 'em? Now hear this: for the last thirty years or more, the yankee government has been constructing a totalitarian police state. What do y'all think all those cameras at every traffic light betoken? Tourist photos? This didn't start with Obama. In 1984 -- sort of spooky, no? -- IRS unveiled a secret 5 year plan to create a computer dossier on every soul in the country. Through this dossier would come every financial transaction in your life, from buying a license for your dog to taking out a building permit, let alone your bank account. Privacy? For 30 years you've had no banking privacy. IRS or any other government agency can go to your bank and they'll puke out your records till the power shuts off, & never tell you a word about it.

And if you complain, the goofy retort comes back, "Well, if you ain't done nothing wrong, you ain't got nothing to worry about." Listen, when I go to the bathroom, I'm not doing anything wrong, but I sure don't want your video camera, your listening device, or your satellite watching.

On 7 June 1494 in a gesture of imperial arrogance, Spain & Portugal signed the Treaty of Tordesillas dividing the New World between themselves. They didn't ask anybody else, so nobody else paid any attention.

On 7 June 1932 over 7,000 World War I veterans marched on Washington, DC, demanding their bonuses. They didn't get 'em. Instead, later in the summer police were sent to remove them from their camp, shots were fired, & two vets died. Hoover then ordered the army in to clear the campsites, driving out their marchers, wives, and children and burning their shelters and belongings. Today they'd just hand out buckets of Valium and Xanax and pat 'em on the back.

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
7-Jun-13 Price Change % Change
Gold, $/oz 1,383.00 -32.70 -2.3
Silver, $/oz 21.74 -0.96 -4.2
Gold/Silver Ratio 63.624 -1.475 -2.3
Silver/Gold Ratio 0.0157 -0.0007 -4.2
Platinum 1,501.40 -26.70 -1.7
Palladium 759.45 -1.30 -0.2
S&P 500 1,643.38 20.82 1.3
Dow 15,248.12 207.50 1.4
Dow in GOLD $s 227.92 8.32 3.8
Dow in GOLD oz 11.03 0.40 3.8
Dow in SILVER oz 701.48 38.93 5.9
US Dollar Index 81.68 0.09 0.1
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SPOT GOLD: 1,382.10      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,423.56 1,428.40 1,428.40
1/2 AE 0.50 707.81 730.79 1,461.57
1/4 AE 0.25 357.36 372.30 1,489.21
1/10 AE 0.10 145.02 151.69 1,516.85
Aust. 100 corona 0.98 1,345.25 1,359.25 1,386.71
British sovereign 0.24 327.30 337.30 1,432.87
French 20 franc 0.19 258.04 261.04 1,398.17
Krugerrand 1.00 1,400.07 1,413.07 1,413.07
Maple Leaf 1.00 1,397.10 1,412.10 1,412.10
1/2 Maple Leaf 0.50 794.71 725.60 1,451.21
1/4 Maple Leaf 0.25 352.44 369.71 1,478.85
1/10 Maple Leaf 0.10 146.50 150.65 1,506.49
Mexican 50 peso 1.21 1,657.93 1,672.40 1,387.08
.9999 bar 1.00 1,386.94 1,397.94 1,397.94
SPOT SILVER: 21.64      
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 16,402.10 17,042.10 23.84
US 40% silver 1/2s 0.30 6,015.05 6,385.05 21.64
100 oz .999 bar 100.00 2,164.00 2,239.00 22.39
10 oz .999 bar 10.00 221.40 222.40 22.24
1 oz .999 round 1.00 21.74 22.64 22.64
Am Eagle, 200 oz Min 1.00 22.89 24.64 24.64
SPOT PLATINUM: 1,501.40      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Platinum Platypus 1.00 1,526.40 1,566.40 1,566.40
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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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