The Moneychanger
Daily Commentary
Tuesday, 20 August a.d. 2013 Browse the commentary archive

That good old "stabilizing" Fed was out there today again doing what it does best, roiling & boiling markets. First stocks & silver & gold went down when they heard the FOMC minutes, then gold and silver rose again, about where they had been. Stocks, on the other hand, never recovered. Then late in the day stocks dropped off more.

Trying to parse the hidden meaning in FOMC minutes is like trying to figure out the words to an Inya song. It appears markets could tell not tell from today's minutes whether the Fed will taper soon or not soon or even at all. Lesson everybody is missing? That the stock & bond markets are ADDICTED to Fed money creation, & that's almost as healthy as meth addiction, but not nearly as much fun.

More on the virtues and benefits of centralization & computerization. Goldman Sachs computer went haywire someway on Tuesday & flooded the stock options market with mistaken orders. Goldman Sachs, which has almost as much integrity as NY mayoral candidate Anthony Wiener, experienced the glitch along with four other specialists.

Enough of this fun. What else happened today?

Stocks lost badly. S&P500 coughed up 9.55 (0.58%) to land at 1,642.80. Dow broke 15,000 & morale by falling 105.44 (0.7%) to 14,897.55.

Chart now appears to say that the last few days pause was not a reversal but merely the halfway mark of the dive. Now seems certain the Dow will strike 14,650 and the S&P500 something near 1,590. I've been expecting another rally toward year end, but if the indices drop through those levels I'll have to re-think and call those May and August tops a "double top." Can't tell yet, though.

If the Dow in Gold and the Dow in Silver were people I'd kiss 'em. They are so reliable when everything else is lying and hem-hawing.

Dow in gold dropped 0.52% today (gold dropped, but stocks dropped faster & further) to 10.869 oz (G$244.69 gold dollars), lighter than yesterday by 0.52%. Plunging through space the Dow in Silver fell 0.24% or 1.53 oz to 648.90 oz.

US dollar index is stymied at 81.40. Today it did climb back above 81 to 81.273 (up 32.8 basis points or 0.42%). Better, but not the sort of action that triggers a mad rush to buy dollars.

Euro gave the lie to yesterday's gap-up rise by posting a lower low for the move with a lower close, first half of a key reversal. Tumbled 0.48% to $1.3354. Perky as Superman shoveling Kryptonite.

Yen lost 0.40% to 102.42 cents/Y100. Closed right at its 20 DMA, trying to break down.

Gold forked over $2.50 to end at $1,370.60 while silver coughed up 10.8 cents to close Comex, where the tape is always well painted, at 2295.8c.

I would prefer that silver & gold pull up & away from these levels, but they're taking their sweet time digesting the Brobdingnagian gains of the past two weeks. Today's down-then-up action upon the FOMC minutes I interpret as strong. Gold's $1,361.20 low came higher than yesterdays $1,355.09 low.

However, this can't go on forever. Time presses both metals to move forward or fall back. Today's action was indecisive, blowing hot & cold out of both sides of its mouth.

On 21 August 1864 Confederate General Nathan Bedford Forrest led a raid on Union held Memphis. His men rode into the Gayoso Hotel and scared the yankee general so bad he ran out without his clothes. Well, he had his nightshirt, maybe, or somebody's nightshirt.

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
21-Aug-13 Price Change % Change
Gold, $/oz 1,370.60 -2.50 -0.18%
Silver, $/oz 22.96 -0.11 -0.47%
Gold/Silver Ratio 59.700 0.171 0.29%
Silver/Gold Ratio 0.0168 -0.0000 -0.29%
Platinum 1,518.20 -6.40 -0.42%
Palladium 746.00 -2.75 -0.37%
S&P 500 1,652.80 -9.55 -0.57%
Dow 14,897.55 -105.44 -0.70%
Dow in GOLD $s 224.69 -1.18 -0.52%
Dow in GOLD oz 10.87 -0.06 -0.52%
Dow in SILVER oz 648.90 -1.53 -0.24%
US Dollar Index 81.27 0.33 0.41%
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: 1,369.30      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,402.16 1,413.80 1,413.80
1/2 AE 0.50 697.83 721.28 1,442.56
1/4 AE 0.25 348.92 367.49 1,469.94
1/10 AE 0.10 143.67 149.94 1,499.38
Aust. 100 corona 0.98 1,335.48 1,346.48 1,373.68
British sovereign 0.24 324.27 336.27 1,428.49
French 20 franc 0.19 255.65 262.65 1,406.79
Krugerrand 1.00 1,387.10 1,399.10 1,399.10
Maple Leaf 1.00 1,384.30 1,399.30 1,399.30
1/2 Maple Leaf 0.50 787.35 718.88 1,437.77
1/4 Maple Leaf 0.25 349.17 366.29 1,465.15
1/10 Maple Leaf 0.10 145.15 149.25 1,492.54
Mexican 50 peso 1.21 1,635.97 1,648.97 1,367.65
.9999 bar 1.00 1,374.09 1,385.09 1,385.09
SPOT SILVER: 23.01      
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 17,667.65 18,017.65 25.20
US 40% silver 1/2s 0.30 6,596.20 6,746.20 22.87
100 oz .999 bar 100.00 2,311.00 2,376.00 23.76
10 oz .999 bar 10.00 231.10 237.60 23.76
1 oz .999 round 1.00 23.11 23.86 23.86
Am Eagle, 200 oz Min 1.00 24.26 26.01 26.01
SPOT PLATINUM: 1,518.20      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,528.20 1,558.20 1,558.20
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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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