The Moneychanger
Daily Commentary
Monday, 29 July a.d. 2013 Browse the commentary archive

It's getting easier every day to leave this world. Go to to read the article, "World's first test tube burger to be served in London this week." I don't want to live in a world without cattle, and that ain't meat. Soylent green, anyone?

Markets are holding their breath before the Federal Open Market's announcement on Wednesday, although few are betting that the Fed will make any big changes. This offers yet another example that the entire world is loony, but then, I reckon that's what happens when you put banks in the driver's seat of every government in the world.

Stocks are demonstrating their fearful addiction to more inflation, fading as they wait for word from the Pusher-Man. Dow lost 36.86 (0.24%) to end the day at 15,521.97. S&P500 didn't do quite that well, falling 6.32 (0.37%) to 1,685.33.

With stocks falling today and silver & gold rising, the Dow in Gold & Dow in Silver both fell. Dow in Gold dropped 0.75% to 11,685 oz (G$241.54 gold dollars). Dow in silver backed down 5.38 oz (0.68%) to 781.81 oz. Both indicators have rolled over and are pointing downward, whispering that silver & gold are about to gain value on stocks.

US dollar index is trading at 81.654, up an puny 7.9 basis points -- puny, but maybe not insignificant. Since Thursday the Dollar index ahs traced out a rounding bottom with a low at 81.50. That low falls so nigh the 200 DMA at 81.48 that it might have market the low for this move. Wednesday will tell.

The ECB and the Bank of England both meet this week as well as the FOMC. They're all like cockroaches: it's not what the carry off & steal, it's what they fall into and foul up. Anyway, the euro barely moved today, down 0.11% to $1.3264. Bumping against its uptrend line, and as extended as it's rally has been, it's liable to tank on any good news for the dollar.

Yen alone showed life today. It leapt 0.43% to 102.21 cents/Y100. Friday it gapped away from its 50 DMA and is rallying.

Silver & gold seem awfully subdued. Gold rose $6.90 (0.52%) to $1,328.40 while silver rose 8.9% (0.45%) to 1985.40. Those closes are actually lower than silver & gold were trading in Friday's aftermarket.

Over the last 5 trading days gold has traded out into a long narrow triangle with the apex on $1,325. Even-sided triangles can break out either way, so that offers us no forecast. Gold remains trapped below its short term downtrend line stretching back to early May (today about $1,330), even though it has conquered the downtrend line from the April highs. Since gold's failures last week came at that $1,350 level, that's where we fix our eyes and that's the number gold must beat to maintain the rally that began off the June low. Gold stands above its 20 day moving average ($1,284.58) and barely above its 50 DMA $1,327.35, so momentum points the right way.

Silver made a high today at 2015.5c, but can't hold on above 2000c. That's the mark to beat right now, then 2050c.

Silver still hasn't beaten its 50 DMA (2078c) Oh, it has a little uptrend running from the June low, but it's no more than slow & grinding.

Summer trading in the metals often doesn't amount to much (2011 excepted). It's also hard for me to expect much for silver & gold from the FOMC meeting. The metals' reaction to those things have been so illogical the past few months, I begin to incubate the suspicion that the Nice Government Men just smack silver & gold every time the Fed makes any announcement, just for good measure to punish silver & gold investors. All the same, I believe we have already seen the lows.

O'Bama said a couple of months ago that Bernanke had stayed on at the Fed longer than he wanted to, so folks have understood Ben was on his way out. He probably has enough sense to want to escape like Greenspan did, before his experiments blow up. Let his successor take the blame. Names presently noised abroad are Larry Summers & Janet Yellen.

In 1995 Summers, a longtime apparatchik of the Elite, was appointed Deputy Treasury Secretary under hatchetman Robert Rubin. In 1999 he succeeded Rubin. Those of us convinced that the US government manipulates the gold price mostly assume Summers was the author of the gold price suppression scheme, probably to keep interest rates low for other purposes. He also actively supported repealing Glass-Steagall, which repeal removed all brakes on the big banks and their speculation, helping pave the road for the 2008 financial crisis which remaineth with us. After blessing the US with his services, Summers moved on to bless Harvard as its president, but ran afoul of the feminists and resigned in 2007.

As if Summers weren't enough to blanch a nightmare, the other alternative, Janet Yellen, is worse. Well, wait, I'm not sure that when both choices are this wretched that you can rank one as worse. Anyway, she makes John Law look hawkish on inflation.

So y'all cheer up! There is somebody worse than Bernanke, & you're liable to get him/her/it.

Tomorrow I'll be wrapping up my monthly Moneychanger newsletter for my paid subscribers, so I won't publish a commentary. I'll return Wednesday, God willing.

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
29-Jul-13 Price Change % Change
Gold, $/oz 1,328.40 6.90 0.52%
Silver, $/oz 19.85 0.09 0.45%
Gold/Silver Ratio 66.908 0.048 0.07%
Silver/Gold Ratio 0.0149 -0.0000 -0.07%
Platinum 1,441.80 19.90 1.40%
Palladium 743.75 20.65 2.86%
S&P 500 1,685.33 -6.32 -0.37%
Dow 15,522.00 -36.68 -0.24%
Dow in GOLD $s 241.54 -1.83 -0.75%
Dow in GOLD oz 11.68 -0.09 -0.75%
Dow in SILVER oz 781.81 -5.38 -0.68%
US Dollar Index 81.65 0.08 0.10%
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SPOT GOLD: 1,329.20      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,362.43 1,372.40 1,372.40
1/2 AE 0.50 677.38 700.16 1,400.31
1/4 AE 0.25 338.69 356.72 1,426.90
1/10 AE 0.10 139.46 145.55 1,455.47
Aust. 100 corona 0.98 1,296.37 1,307.37 1,333.78
British sovereign 0.24 314.77 326.77 1,388.15
French 20 franc 0.19 248.16 255.16 1,366.69
Krugerrand 1.00 1,346.48 1,358.48 1,358.48
Maple Leaf 1.00 1,344.20 1,359.20 1,359.20
1/2 Maple Leaf 0.50 764.29 697.83 1,395.66
1/4 Maple Leaf 0.25 338.95 355.56 1,422.24
1/10 Maple Leaf 0.10 140.90 144.88 1,448.83
Mexican 50 peso 1.21 1,594.47 1,605.62 1,331.69
.9999 bar 1.00 1,333.85 1,344.85 1,344.85
SPOT SILVER: 19.84      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 25.50 28.00 36.60
VG+ Peace dollar 0.77 21.50 25.00 32.68
90% silver coin bags 0.72 15,969.53 16,469.53 23.03
US 40% silver 1/2s 0.30 5,659.58 5,809.58 19.69
100 oz .999 bar 100.00 1,973.50 2,053.50 20.54
10 oz .999 bar 10.00 203.35 204.35 20.44
1 oz .999 round 1.00 19.94 20.74 20.74
Am Eagle, 200 oz Min 1.00 21.09 22.64 22.64
SPOT PLATINUM: 1,441.80      
Plat. Platypus 1.00 1,466.80 1,506.80 1,506.80
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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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