The Moneychanger
Weekly Commentary
Thursday, 13 June a.d. 2013 Browse the commentary archive
Here's the weekly scorecard:
  7-Jun-13 13-Jun-13 Change % Change
Silver, cents/oz. 2,173.70 2,158.20 -15.50 -0.7
Gold, dollars/oz. 1,383.00 1,377.60 -5.40 -0.4
Gold/silver ratio 63.624 63.831 0.210 0.3
Silver/gold ratio 0.0157 0.0157 -0.0001 -0.3
Dow in Gold Dollars (DIG$) 227.92 227.73 -0.19 -0.1
Dow in gold ounces 11.03 11.02 -0.01 -0.1
Dow in Silver ounces 701.48 703.18 1.70 0.2
Dow Industrials 15,248.12 15,176.08 -72.04 -0.5
S&P500 1,643.38 1,636.36 -7.02 -0.4
US dollar index 81.68 80.77 -0.90 -1.1
Platinum 1,501.40 1,446.20 -55.20 -3.7
Palladium 759.45 729.35 -30.10 -4.0

I'm sending out this weekly wrap-up on Thursday because this evening I'm driving over to Pickwick Lake to spend the weekend with my sons. Every year the women in my family take a week off at the lake -- they give us two nights. Mercy, I'm glad to get that. Till this year it's been only one night.

Markets are confused and spooky, the result of feeding off central bank inflation. Like a drunk at a bar, they get nasty & unpredictable when the bartender threatens to cut them off.

US dollar index lost 1.9% last week, and another 1.1% this week. Silver & gold eroded, slowly but painfully, and platinum & palladium were squashed, mostly today.

Although stocks returned from yesterday's thrashing with a bouncy day, they still closed the week lower.

Dow gained 1.21% (180.85) today after yesterday's 0.84% loss (126.79) and closed at 15,176.08. S&P500 today gained 1.48% to close 1,636.36.

All this up & down generates loads of broker commissions, but standing back & looking at a chart, stocks have been locked in a downtrend since their May high. Today's trading did no more than bring them back to the downtrend line. Both indices did touch their 50 day moving averages, which is a logical place for a little rally-ette to begin. On the other hand, closes below this mark will feed panic.

A strong feeling of "I've been here before" overcomes me when I view the Dow in Gold & Dow in Silver charts. The high struck in August, 1999, a big drop followed, then the Dow in gold spent another year rolling over. Dow in silver was even slower to make that final high.

I don't think the same thing is happening, only observing the sloth in rolling over. Stocks are a very, very big market and take a long time to roll over. Add to that silver & gold's present weakness, & a frustrating back & forth plagues the chart & our nerves.

Dow in gold today closed up 0.243 oz (2.3%) at 11.016 oz (G$227.73 in gold dollars). Yesterday it fell through the 20 DMA, today closed back above it. Downtrend from May high, though, remains undamaged.

Dow in silver today jumped up 15.2 oz (2.2%) to close 703.18 oz. This should turn down soon.

For whatever reason, the Mighty Masters of the Universe, a.k.a. "central bankers," have decided to swing the pendulum the other way, jacking up the yen & euro & knocking down the US dollar index. Come to think of it, I hope they're manipulating exchange rates. Otherwise this chaos means nobody is in charge. Come to think of it . . .

Technically the US dollar index has broken down badly and is targeting 79 or lower. Today it peeled off another 15.8 basis points (0.2%) to end at 80.774. That's well below the 200 day moving average(81.07), below internal support, just below everything. There's some chance it might catch around 80.25, & as far as it has fallen already, it's due at least a small correction.

Those who live by inflation, die by inflation. Nikkei stock index had gamboled & cavorted higher as the Japanese Nice Government Men drove the yen lower and lower. Yen is now rising and today the Nikkei lost 6.5%. Think an 825 point loss on the Dow & you'll approximate the pain. Now, as a point too painful for rational and fastidious minds to ponder, I pass over the grotesquely mythological Keynesian notion that depreciating a nation's currency by inflation can either spur economic activity or raise stock market values. However, that insanely goofy notion now driveth stock markets around the globe.

Yen rose 0.77% today, made a new high for the move at 106.47, & closed at 104.93 cents/Y100. Euro rose 0.22% to $1.3363, heading for $1.3500.

Riding the same old seesaw, silver lost 21.4 cents (1%) today, falling to 2158.2c. Gold lost 1%, too, or $14.20 and ended at $1,377.60. For the week gold fell 0.4% and silver slid 0.7%.

Silver & gold are both trading in tight ranges, $20 today for gold and 45 cents for silver, and they've done that all week. Ranges never last, so this one will break out one way or the other soon. Since the trend is down, most likely breakout direction is down, too. Silver's range is 2133c to 2200c, gold's $1,375 - $1,415. Closes above or below those levels will lead to long moves. I expect one more plunge to end this long correction, and I expect it before June ends, but what I expect and what the market may be two very different things.

Most of all, silver & gold investors shouldn't worry about the "end of the bull market." It hasn't ended, because the cause (inflation) hasn't ended, and there's no end in sight. Where is the statesman who will tell all those living off government that the game is over? That rotten banks must fail? That you can't have your cake and eat it, too? He's nowhere in sight, so the corruption will continue, and so will the silver & gold bull market.

After all the revelations of government spying, the Establishment damage control teams are being trotted out to tell us why it really is a good thing to spend billions spying, & to kill US citizens with drones. Let me see if I can dissect this insanity.

They issue, what -- an order, a warrant -- to murder a US citizen. Where is THAT in the constitution?

Who is "they"? The government -- read "some people" -- secretly identifies some person as a "terrorist." We don't know by what procedure they do that, but is it administrative and not judicial, therefore not subject to due process of law. The victim has no opportunity to controvert the government's claim. All is done secretly.

Then the government -- or the president -- arrogates to itself a "death warrant" to kill some person because he MIGHT commit a crime, or MIGHT be thinking about committing a crime someday. Thus he is punished in advance of committing a crime. Very efficient, but still no due process.

If they do this in the green tree, what will they do in the dry? They will MOST ASSUREDLY also apply this secret assassination policy to US citizens inside the US. Only a matter of time, & not much of that.

Hard sometimes not to throw up your hands in despair. The more you know, the worse it gets. To my great relief I read Psalm 12 this morning, which cured my lame perspective.

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
13-Jun-13 Price Change % Change
Gold, $/oz 1,377.60 -14.20 -1.0
Silver, $/oz 21.58 -0.21 -1.0
Gold/Silver Ratio 63.831 -0.652 -1.0
Silver/Gold Ratio 0.0157 -0.0002 -1.0
Platinum 1,446.20 -35.20 -2.4
Palladium 729.35 -25.90 -3.4
S&P 500 1,636.36 23.84 1.5
Dow 15,176.08 180.85 1.2
Dow in GOLD $s 227.73 5.03 2.3
Dow in GOLD oz 11.02 0.24 2.3
Dow in SILVER oz 703.18 15.20 2.2
US Dollar Index 80.77 -0.16 -0.2
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: 1,377.40      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,417.34 1,423.54 1,423.54
1/2 AE 0.50 705.41 728.30 1,456.60
1/4 AE 0.25 356.14 371.04 1,484.15
1/10 AE 0.10 144.52 151.17 1,511.70
Aust. 100 corona 0.98 1,340.68 1,354.68 1,382.04
British sovereign 0.24 326.19 336.19 1,428.15
French 20 franc 0.19 257.16 260.16 1,393.47
Krugerrand 1.00 1,393.93 1,406.93 1,406.93
Maple Leaf 1.00 1,392.40 1,407.40 1,407.40
1/2 Maple Leaf 0.50 792.01 723.14 1,446.27
1/4 Maple Leaf 0.25 351.24 368.45 1,473.82
1/10 Maple Leaf 0.10 146.00 150.14 1,501.37
Mexican 50 peso 1.21 1,652.29 1,666.73 1,382.38
.9999 bar 1.00 1,382.22 1,393.22 1,393.22
SPOT SILVER: 21.62      
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 16,705.98 17,205.98 24.06
US 40% silver 1/2s 0.30 6,007.68 6,377.68 21.62
100 oz .999 bar 100.00 2,161.50 2,236.50 22.37
10 oz .999 bar 10.00 221.15 222.15 22.22
1 oz .999 round 1.00 21.72 22.47 22.47
Am Eagle, 200 oz Min 1.00 22.87 24.27 24.27
SPOT PLATINUM: 1,446.20      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Platinum Platypus 1.00 1,471.20 1,511.20 1,511.20
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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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