The Moneychanger
Daily Commentary
Wednesday, 17 July a.d. 2013 Browse the commentary archive

Here's a measure of how much I love y'all: I willingly watch video clips of Ben Bernanke so I can write for y'all. Yes, I watch him, even though my Hogwash Detector is blaring its klaxon in my ear and you could see its red alarm blinking from outer space. Still, I watch him.

But I am not edified. Poor man is succumbing to Greenspan's Disease, so every sentence he says he pulls right back with the next sentence. Clearly the import of today's performance is that he roiled the markets with his June statement & is trying to calm them with this -- "calm them" being code words for assure them he will create more money by buying more bonds.

This is just so wrong I don't know where to start. I had a friend in Memphis who was a policeman back in the 1970s. About 2:00 a.m. he got called out on a domestic violence call. He noticed that several small children were playing out on the street. He went & knocked on the door, and while he was waiting for an answer a little 5 year old hand tugged at his sleeve: "Hey, (12 letter word), give me a nickel!" There's so much wrong in that situation, like Bernanke's speechifying, that you just don't know where to start. Just let it lie. Anybody who thinks you can inflate your way to prosperity is so ignorant of history & economics there's just ain't no point in messing with him.

In spite of all Ben the Beneficent (of all the many words I could choose that begin with B) bloviating, stocks traded jaggedly today, and ended up minimally.

Dow gained 18.67 (0.12%) to 15,470.52. S&P500 scratched up 4.65 (0.,28%) to end at 1,680.91.

Dow measured by silver & gold jumped up today, but still below past lows. Dow in gold added 1.15% to close at 12.106 oz (G$250.25 gold dollars) versus a June high of 12.56. Dow in silver jumped 21.5 oz (2.77%) to 797.08 (versus June high at 819.52). Still rolling over downward.

US dollar index rose 11.1 basis points (0.14%), but on what grounds no sane person might say. Just rose because Bernanke failed to say he intended to nuke Washington, DC.

Dollar's short term trend remains down, but this is likely only part of a longer term rise.

Euro lost 0.26% today to $1.3125, still climbing, though. Yen lost 0.41% to 100.47 cents/Y100 -- moving sideways.

Gold coughed up $12.90 (-1%) to $1,277.90. Silver backed away 51.4 cents (2.6%) to 1940.9c.

Bernanke said he would continue unraveling the dollar, but silver & gold dropped. Welcome to Wonderland, Alice.

Oddly enough, gold remained in the range that has reigned for the last five days. Still, today's fall counts as a failure at $1,300 resistance, and forecasts gold may fall further. Should gold hold above $1,270 & advance, it would gainsay that outlook.

Silver, on the other hand, fell out of its trading range (bottom was about 1970c) to a low at 1929.2c & a close at 1940.9c. That closes silver also below the 20 day moving average. Expect more downside, unless silver contradicts by closing higher tomorrow.

On 17 July 1821 Spain ceded Florida to the United States.

On 18 July 1821 developers flooded into Florida from the United States.

On 17 July 1864 President Jefferson Davis replaced General Joe Johnston fighting Sherman in Georgia with John Bell Hood. It was not Davis' best decision. At Gettysburg a wound had rendered Hood's left arm useless, and at Chickamauga in September 1863 another wound cost him his right leg. His aggressive assaults on Sherman around Atlanta failed and he was compelled to retreat. Rumors continue that he was in so much pain that he was addicted to laudanum, tincture of opium. Later he used a superb strategic idea, the invasion of middle Tennessee, to destroy the Army of Tennessee at Franklin and Nashville.

But Mercy! He and his Texans were brave!

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
17-Jul-13 Price Change % Change
Gold, $/oz 1,277.90 -12.90 -1.00%
Silver, $/oz 19.41 -0.51 -2.58%
Gold/Silver Ratio 65.841 1.051 1.62%
Silver/Gold Ratio 0.0152 -0.0002 -1.60%
Platinum 1,411.60 -14.50 -1.02%
Palladium 734.35 -0.15 -0.02%
S&P 500 1,680.91 4.65 0.28%
Dow 15,470.52 18.67 0.12%
Dow in GOLD $s 250.26 2.80 1.13%
Dow in GOLD oz 12.11 0.14 1.13%
Dow in SILVER oz 797.08 21.50 2.77%
US Dollar Index 82.64 0.11 0.13%
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: 1,275.10      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,309.53 1,316.54 1,316.54
1/2 AE 0.50 649.79 671.66 1,343.32
1/4 AE 0.25 324.90 342.20 1,368.82
1/10 AE 0.10 133.78 139.62 1,396.23
Aust. 100 corona 0.98 1,241.10 1,252.10 1,277.40
British sovereign 0.24 301.96 313.96 1,333.73
French 20 franc 0.19 238.06 245.06 1,312.59
Krugerrand 1.00 1,292.95 1,304.95 1,304.95
Maple Leaf 1.00 1,290.10 1,305.10 1,305.10
1/2 Maple Leaf 0.50 733.18 669.43 1,338.86
1/4 Maple Leaf 0.25 325.15 341.09 1,364.36
1/10 Maple Leaf 0.10 135.16 138.99 1,389.86
Mexican 50 peso 1.21 1,529.57 1,540.39 1,277.59
.9999 bar 1.00 1,279.56 1,290.56 1,290.56
SPOT SILVER: 19.31      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 26.00 29.00 37.91
VG+ Peace dollar 0.77 24.00 27.00 35.29
90% silver coin bags 0.72 15,629.90 16,129.90 22.56
US 40% silver 1/2s 0.30 5,504.70 5,654.70 19.17
100 oz .999 bar 100.00 1,921.00 2,001.00 20.01
10 oz .999 bar 10.00 198.10 199.10 19.91
1 oz .999 round 1.00 19.41 20.21 20.21
Am Eagle, 200 oz Min 1.00 20.56 22.11 22.11
SPOT PLATINUM: 1,411.60      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,436.60 1,476.60 1,476.60
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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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