The Moneychanger
Daily Commentary
Thursday, 29 August a.d. 2013 Browse the commentary archive

Randolph Bourne once wrote, "War is the health of the state." That's what bothers me. Having run out of other options to "fix" the economy, will the US administration now avail itself of the ultimate economy fixer, war? Talk about boosting demand!

Five day chart argues that the US dollar index bottomed on Tuesday and has one more thrust up in this upleg. That probably will take it through 82.00 resistance. Today the dollar index rallied 50.3 basis points (0.65%) to 81.94. This cuts through the 200 DMA at 81.65, but not through that internal resistance at 82. Not the final word, but argues that the dollar has reversed skyward.

That euro was laid low today like a hound that had been eating peaches. It gapped down below its 20 DMA ($1.3330) & nearly reached its 62 DMA ($1.3243), losing 0.73% to $1.3243. A serious confirmation of a downtrend comes when the euro plunges through its 200 DMA, now at $1.3243. That should come quickly.

Yen looked like it had been taking castor oil, too. Gapped down, lost 0.62%, and closed at 101.77 cents/Y100. Worse yet, it closed right on the bottom boundary of its uptrend channel and right near the 50 DMA (101.42c).

Mercy, what a world where the sorry, scrofulous, scabby US dollar looks good.

With the breathtaking speed of a somnolent snail, stocks raced ahead today. Dow gained 16.44 (0.11%) to 14,840.95. S&P500 also blasted forward 3.21 (0.2%, be still, my beating heart!) to 1,638.17.

Stocks have drawn near the point where they ought to reverse & turn up. Perhaps they will rally up to, say, 15,000 on the Dow then make one last dive to 14,600. But should it keep on climbing through 15,000, we'd have to conclude a rally hath begun.

'Twasn't a particularly good day for silver & gold, but then again not bad enough to make me reach for my wastebasket. Silver lost 30.1 cents to close Comex at 2409c and gold forked over $5.70 to land on $1,412.90.

Worse than the Comex closes were the aftermarket slides to $1,408.80 and 23.88.

No doubt we are seeing a little correction here of the most recent upmove. A 50% correction in gold would carry it back to $1,350 (not below!) and silver to 2210 cents.

Friends, markets swing like a clock pendulum. If you can't stand that, better get a government job. It's the same every day.

Should gold close above $1,425 or silver above 2465c, any correction will have been nixed.

On 29 August 1933 the English parliament passed the Factory Act to settle child labor laws. It provided that children 14 - 18 must work no more than 12 hours a day with an hour lunch break, children 9-13 must not work more than 8 hours a day, and children under 9 could not be employed in the textile industry. Children under 18 must not work nights. While all that sounds pretty good, it had unintended consequences, as all child labor laws do: some children, deprived of work, starved. Have to wonder which is worse, a child working or starving.

On 29 August 1521 the Ottoman Turks captured Belgrade in modern day Serbia. Five years later to the day in 1526 the flower of Hungarian nobility was destroyed and Hungary mostly conquered by the Turks in the battle of Mohacs (pron. Mo-hatch). On 29 August 1541, the Turks captured Buda, capital of Hungary. When the fate of Europe hung in the balance, Hungary stood in the gap.

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-Aug-13 Price Change % Change
Gold, $/oz 1,412.90 -5.70 -0.40%
Silver, $/oz 24.09 -0.30 -1.23%
Gold/Silver Ratio 58.651 0.490 0.84%
Silver/Gold Ratio 0.0171 -0.0001 -0.84%
Platinum 1,521.50 -17.70 -1.15%
Palladium 737.75 -8.30 -1.11%
S&P 500 1,638.17 3.21 0.20%
Dow 14,840.95 16.44 0.11%
Dow in GOLD $s 217.13 1.11 0.51%
Dow in GOLD oz 10.50 0.05 0.51%
Dow in SILVER oz 616.06 8.28 1.36%
US Dollar Index 81.94 0.50 0.62%
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: 1,408.80      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,441.20 1,454.59 1,454.59
1/2 AE 0.50 717.98 742.09 1,484.17
1/4 AE 0.25 358.99 378.09 1,512.35
1/10 AE 0.10 147.82 154.26 1,542.64
Aust. 100 corona 0.98 1,374.00 1,385.00 1,412.98
British sovereign 0.24 333.62 345.62 1,468.23
French 20 franc 0.19 263.02 270.02 1,446.29
Krugerrand 1.00 1,422.89 1,434.89 1,434.89
Maple Leaf 1.00 1,423.80 1,438.80 1,438.80
1/2 Maple Leaf 0.50 810.06 739.62 1,479.24
1/4 Maple Leaf 0.25 359.24 376.85 1,507.42
1/10 Maple Leaf 0.10 149.33 153.56 1,535.59
Mexican 50 peso 1.21 1,686.56 1,699.56 1,409.60
.9999 bar 1.00 1,413.73 1,424.73 1,424.73
SPOT SILVER: 23.88      
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 17,967.95 18,467.95 25.83
US 40% silver 1/2s 0.30 6,852.85 7,002.85 23.74
100 oz .999 bar 100.00 2,398.00 2,463.00 24.63
10 oz .999 bar 10.00 239.80 246.30 24.63
1 oz .999 round 1.00 23.98 24.73 24.73
Am Eagle, 200 oz Min 1.00 25.13 26.88 26.88
SPOT PLATINUM: 1,521.50      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,531.50 1,561.50 1,561.50
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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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