The Moneychanger
Daily Commentary
Monday, 19 August a.d. 2013 Browse the commentary archive

I meant to mention that yesterday US interest rates (reciprocal of bond prices) hit a two year high. They backed off a little today, and the dollar of course dropped with them. Ten year note yield ended today at 2.814% while the US dollar index broke 38.1 basis points (0.5%) to 80.902. US dollar index is right at the "fish or cut bait" line where it must either grab hold and reverse or drop as low as 79. Nothing at all attractive about the dollar right now.

Of course, the yen & the euro don't look any better. Both have faces that would curdle the waves on a bucket of slop. Yen rose 0.34% to 102.86 cents/Y100, but still has no bragging rights. Above its 20 & 50 DMAs, but has no momentum at all to speak of. Euro waxed vigorous today, gapped up, probably on some news that in truth hath no substance, but it rose anyway, 0.62% to $1.3421. This marks a new high for the move and puts the euro right at the upper limit of the six month's trading. I reckon it's possible it could burst through $1.3500 & fly, just doesn't seem likely.

Stocks were bewildered today, Dow down, S&P500 up. Dow lost 7.75 (0.5%) to draw as close to closing below 15,000 as it could -- 15,002.99. S&P500 rose 0.38% or 6.29 to 1,652.35. Both remain below their 50 DMAs (15,272.16 & 1,657.65). They have corrected about 40 - 42% of their preceding rise, so might turn around here, but all indicators still point down.

Dow in gold lost 0.55% today to 10.941 oz (G$226.17 gold dollars). Less than half an ounce takes it back under the long term downtrend line, & it shows no sign of turning up.

Dow in silver gained 0.36% or 2.34 oz to close at 651.3 oz. About another 38 ounces takes it below the long term downtrend line.

Silver & gold contradicted each other today, silver down, gold up. Silver backed off 9.5 cents to 2306.6c while gold rose $6.90 to $1,373.10. We may yet see one more little dip before they begin rising again in earnest, but much higher prices will appear before any large drop occurs.

I'm beginning to suspect silver will beat its way clean to 2650c where it fell away in April before this rally ends. It would be surprising if silver could burst through that resistance on the first try.

Gold has an upside down head and shoulder that measures a target of $1,550, right where the April massacre began. As with silver, 'twould surprise if it broke down that resistance at the first try.

Right now, silver & gold see no storm clouds on their horizon. We ought to see higher prices this week.

On 20 April 1667 John Milton published his epic poem "Paradise Lost" about the fall of Adam & Eve. Like some fabulously lavish literary ice cream, Milton is too rich for most people today, but O, he is good. When Satan first spies Adam & Eve from a distance and decides that their undoing will be his revenge on God, Milton writes, "So spake the Fiend, and with necessitie, the tyrant's plea, excus'd his devilish deeds." Milton's genius cuts right through to the tyrant's nature as they always excuse their crimes with the plea that necessity -- emergency -- forces them to do it.

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
20-Aug-13 Price Change % Change
Gold, $/oz 1,373.10 6.90 0.51%
Silver, $/oz 23.07 -0.10 -0.41%
Gold/Silver Ratio 59.529 0.542 0.92%
Silver/Gold Ratio 0.0168 -0.0002 -0.91%
Platinum 1,524.60 16.50 1.09%
Palladium 748.75 -3.25 -0.43%
S&P 500 1,652.35 6.29 0.38%
Dow 15,022.99 -7.75 -0.05%
Dow in GOLD $s 226.17 -1.26 -0.55%
Dow in GOLD oz 10.94 -0.06 -0.55%
Dow in SILVER oz 651.30 2.34 0.36%
US Dollar Index 80.90 -0.38 -0.47%
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SPOT GOLD: 1,371.40      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,402.94 1,415.97 1,415.97
1/2 AE 0.50 698.90 722.38 1,444.77
1/4 AE 0.25 349.45 368.05 1,472.20
1/10 AE 0.10 143.89 150.17 1,501.68
Aust. 100 corona 0.98 1,337.53 1,348.53 1,375.77
British sovereign 0.24 324.76 336.76 1,430.61
French 20 franc 0.19 256.04 263.04 1,408.89
Krugerrand 1.00 1,389.23 1,401.23 1,401.23
Maple Leaf 1.00 1,386.40 1,401.40 1,401.40
1/2 Maple Leaf 0.50 788.56 719.99 1,439.97
1/4 Maple Leaf 0.25 349.71 366.85 1,467.40
1/10 Maple Leaf 0.10 145.37 149.48 1,494.83
Mexican 50 peso 1.21 1,638.48 1,656.50 1,373.89
.9999 bar 1.00 1,376.20 1,387.20 1,387.20
SPOT SILVER: 23.03      
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 17,681.95 18,031.95 25.22
US 40% silver 1/2s 0.30 6,602.10 6,752.10 22.89
100 oz .999 bar 100.00 2,313.00 2,378.00 23.78
10 oz .999 bar 10.00 231.30 237.80 23.78
1 oz .999 round 1.00 23.13 23.88 23.88
Am Eagle, 200 oz Min 1.00 24.28 26.03 26.03
SPOT PLATINUM: 1,524.60      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,534.60 1,564.60 1,564.60
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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.
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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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