The Moneychanger
Daily Commentary
Wednesday, 4 September a.d. 2013 Browse the commentary archive

Please note that next week, from 9 September through 13 September 2013, I will be away vacationing with my family. From 6 September, this Friday, I will not be sending commentaries again until Monday, 16 September.

One bad thing about writing a market commentary every day is that some days you really don't have much to say. Worse than that is when you believe you do have something to say every day and it really is important. Cut to the bone: what did markets do today?

Silver & gold gave back all that spongy jump they gained yesterday. Stocks rose a bit more strongly -- if that proves anything, it's that the nearer certainty of war is good for the American economy in the market's eyes. Wow. That's a heart-stopper. Dollar drooped, but it probably doesn't mean anything much.

I'm getting conflicting messages on silver & gold. The five day chart appears to have completed a leg down today, or might have one additional small leg-of-a-leg to go. Completed, as in "no further to drop." Yet in an A-B-C correction, you'd expect the C-down to drop lower than the bottom of A-down, but sometimes in VERY strong markets that doesn't happen. It's further complicated because many times corrections extend sideways and repeat. Still I suspect this correction may reach $1,350 still, & maybe 2250c in silver.

Today silver lost 101.3 cents (4.2%) to end Comex at 2336.9c, versus gaining 91.9 cents yesterday. Gold lost $22.10 (1.6%) to end at $1,389.90. Yesterday it had gained $15.90. Thus all yesterday's gains were simply wheel-spinning that got no traction.

Correction -- that's what it's all about, correcting the excess of a previous move.

Both the S&P500 & the Dow are approaching downtrend lines. Dow gained 0.65% today (96.91) to 14,930.87. S&P500 rose 0.81% (13.31) to 1,653.08. For the S&P500 that fills a gap left behind when it fell. Downtrend line today looms above about 1,675, along with the 50 & 20 day moving averages (1,663.13 and 1,660.69). Dow's downtrend line blocks its progress about $1,525, way below the 20 DMA (15,082.25) or the 50 DMA (15,245).

I suspect stocks have completed their long correction from the first of August, but even if that's true, they will bounce off that downtrend line first try.

Stocks measured in silver & gold are rising, but nothing to brag on. Dow in gold gained 2.25% to 10.742 oz (G$222.07 gold dollars). Dow in Silver gained 30.52 oz (5.02%) to 638.92 oz.

After their long, steep fall a reaction upward is predictable. Both had become astonishingly oversold, so no surprise has caught us here.

US dollar index tumbled 0.30% today, 23.2 basis points, to 82.144. Noise. Signifieth nothing, only the dollar falling back towards where it broke out for that last good-bye kiss.

Euro bounced today off its 200 DMA and rose 0.29% to $1.3139, yet this, too, is vanity. Gravity has the euro in its relentless, merciless grip, and will not be disappointed.

Yen paused today at 100.15 cents per Y100, absorbing the shock of breaking down out of the uptrend & building inertia to break through 100 cents.


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Argentum et aurum comparanda sunt —
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— Franklin Sanders, The Moneychanger

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Market Snapshot See more charts and market data
4-Sep-13 Price Change % Change
Gold, $/oz 1,389.90 -22.10 -1.57%
Silver, $/oz 23.37 -1.01 -4.15%
Gold/Silver Ratio 59.476 1.565 2.70%
Silver/Gold Ratio 0.0168 -0.0005 -2.63%
Platinum 1,493.80 -43.50 -2.83%
Palladium 696.60 -19.60 -2.74%
S&P 500 1,653.08 13.31 0.81%
Dow 14,930.87 96.91 0.65%
Dow in GOLD $s 222.07 4.89 2.25%
Dow in GOLD oz 10.74 0.24 2.25%
Dow in SILVER oz 638.92 30.52 5.02%
US Dollar Index 82.14 -0.23 -0.28%
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SPOT GOLD: 1,393.20      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,426.64 1,438.48 1,438.48
1/2 AE 0.50 710.02 733.87 1,467.74
1/4 AE 0.25 355.01 373.90 1,495.60
1/10 AE 0.10 146.18 152.56 1,525.55
Aust. 100 corona 0.98 1,358.79 1,369.79 1,397.46
British sovereign 0.24 329.93 341.93 1,452.54
French 20 franc 0.19 260.11 267.11 1,430.69
Krugerrand 1.00 1,407.13 1,419.13 1,419.13
Maple Leaf 1.00 1,408.20 1,423.20 1,423.20
1/2 Maple Leaf 0.50 801.09 731.43 1,462.86
1/4 Maple Leaf 0.25 355.27 372.68 1,490.72
1/10 Maple Leaf 0.10 147.68 151.86 1,518.59
Mexican 50 peso 1.21 1,667.88 1,680.88 1,394.11
.9999 bar 1.00 1,398.08 1,409.08 1,409.08
SPOT SILVER: 23.51      
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 17,592.58 18,092.58 25.30
US 40% silver 1/2s 0.30 6,742.23 6,892.23 23.36
100 oz .999 bar 100.00 2,360.50 2,425.50 24.26
10 oz .999 bar 10.00 236.05 242.55 24.26
1 oz .999 round 1.00 23.61 24.36 24.36
Am Eagle, 200 oz Min 1.00 24.76 26.51 26.51
SPOT PLATINUM: 1,493.80      
Plat. Platypus 1.00 1,503.80 1,533.80 1,533.80
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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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