The Moneychanger
Daily Commentary
Tuesday, 6 August a.d. 2013 Browse the commentary archive

Looks like all the buyers across the markets have left on vacation. Stocks dropped today, dollar index dropped, silver & gold dropped. Gravity had a field day.

Dow Jones Industrial Average tumbled 93.39 (0.6%) and closed at 15,518.74. S&P500 was not far behind, losing 9.77 (0.57%) to 1,697.37. That close took the Dow below its 20 DMA (15,522) and out of the channel line. S&P500's 20 dma (1,688.14) is right at its uptrend channel's bottom boundary, & it didn't quite meet that. MACD & RSI have turned down. Looking like a heavy buzzard searching for a low limb to roost.

Dow in gold has turned up, but remains below its 12.51 oz June high. It rose today 0.9% (gold fell more than stocks) to end at 12.094 oz (G$250.00 gold dollars). Above the 20 DMA, above the line where it broke down. Must change directions very quickly or risk another uptrend.

Dow in silver added only 0.4% to 795.22 oz, against a June high of 816.77 oz. Rate of change remains, however, negative. Talking out of both sides of its mouth.

Meanwhile to US dollar index rolled over on its back & gave back 23.2 basis points (0.3%). Dependency on Federal Reserve moves has the dollar acting like a schizo, filling its mouth one minute with uppers & the next with downers. Technically it's floating near its 200 Dma (81.55) and failed in its latest attempt to climb above 82 and its 50 DMA (82.55). Strong as skimmed milk.

Euro rose 0.37% to $1.3308, but 'tain't nothing to brag about, either. Has broken through its uptrend line & looks to be making a double top. Makes you think of the question, "What comes next after you open a second story window and step out?"

The yen, on the other hand, the only world currency to have announced its hari-kari in advance, is rising away. Gained 0.57% today to 102.35 cents/Y100. Of course that makes no sense, but welcome to the surreal world run by central bankers. Don't expect no sense because you won't get no sense.

Gold dove $19.40 (1.49%) to $1,283.20 while silver lost only 19.6 cents (0.99%), about what it gained yesterday, to 1951.5c. Back to the charts.

Gold day before yesterday made a low at $1,285 & today at $1,284.24. Below is support from about $1,270 up. Gold has fallen below its 20 DMA ($1,305.16), the MACD is rolling over, and so is the RSI. All points to lower prices.

Reversing their usual roles, silver has lately been less volatile than gold. Today's dip left silver above 1950 support and not too far below its 20 DMA (1982c). More support awaits at 1922c. MACD is flat, as is RSI.

If more weakness or another plunge lies in store for metals, 'twill probably come knocking soon. Of course, if they hang on here for a few days, that would whisper strength.

On 6 August 1774 the founder of the Shakers, Ann Lee, arrived from England in New York. The Shakers were a religious sect -- originally "Quaker Shakers" -- who worshipped, as their name implies, with lively dancing. They practiced community communism, forbade procreation, and practiced celibacy. Not surprisingly, after reaching a peak of about 20,000 converts, they died out.

On 6 August 183 the CSS Alabama, a Confederate raider, captured the USS Sea Bride near the Cape of Good Hope. Built in England, Confederate agents smuggled the Alabama out under the noses of yankee spies in August. Commanded by Raphael Semmes, the Alabama wreaked havoc on yankee shipping of all kinds, boarding 450 vessels, capturing or burning 65 union merchant ships, and taking over 2,000 prisoners without a single loss of life. Badly in need of refitting, she was caught in harbor at Cherbourg, France in June, 1864. Semmes went out to fight the USS Kearsarge, but the unrepaired Alabama was no match for her. As the Alabama sank, Semmes threw his sword into the sea and was rescued by the British yacht Deerhound.

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
6-Aug-13 Price Change % Change
Gold, $/oz 1,283.20 -19.40 -1.49%
Silver, $/oz 19.52 -0.20 -0.99%
Gold/Silver Ratio 65.755 -0.330 -0.50%
Silver/Gold Ratio 0.0152 0.0001 0.50%
Platinum 1,426.90 -20.30 -1.40%
Palladium 721.90 -12.40 -1.69%
S&P 500 1,697.37 -9.77 -0.57%
Dow 15,518.74 -93.39 -0.60%
Dow in GOLD $s 250.00 2.24 0.90%
Dow in GOLD oz 12.09 0.11 0.90%
Dow in SILVER oz 795.22 3.17 0.40%
US Dollar Index 81.62 -0.23 -0.28%
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: 1,284.30      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,312.55 1,326.04 1,326.04
1/2 AE 0.50 654.48 676.51 1,353.01
1/4 AE 0.25 327.24 344.67 1,378.70
1/10 AE 0.10 134.75 140.63 1,406.31
Aust. 100 corona 0.98 1,252.58 1,263.58 1,289.10
British sovereign 0.24 304.14 316.14 1,342.98
French 20 franc 0.19 239.78 246.78 1,321.79
Krugerrand 1.00 1,301.00 1,313.00 1,313.00
Maple Leaf 1.00 1,299.30 1,314.30 1,314.30
1/2 Maple Leaf 0.50 738.47 674.26 1,348.52
1/4 Maple Leaf 0.25 327.50 343.55 1,374.20
1/10 Maple Leaf 0.10 136.14 139.99 1,399.89
Mexican 50 peso 1.21 1,540.61 1,551.48 1,286.79
.9999 bar 1.00 1,288.80 1,299.80 1,299.80
SPOT SILVER: 19.48      
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 15,679.95 16,029.95 22.42
US 40% silver 1/2s 0.30 5,554.85 5,704.85 19.34
100 oz .999 bar 100.00 1,958.00 2,023.00 20.23
10 oz .999 bar 10.00 195.80 202.30 20.23
1 oz .999 round 1.00 19.58 20.33 20.33
Am Eagle, 200 oz Min 1.00 20.73 22.48 22.48
SPOT PLATINUM: 1,426.90      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,436.90 1,466.90 1,466.90
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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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