The Moneychanger
Weekly Commentary
Friday, 13 September a.d. 2013 Browse the commentary archive
Here's the weekly scorecard:
  5-Sep-13 13-Sep-13 Change % Change
Silver, cents/oz. 2,320.60 2,167.00 -153.60 -6.6
Gold, dollars/oz. 1,373.10 1,308.40 -64.70 -4.7
Gold/silver ratio 59.170 60.378 1.210 2.0
Silver/gold ratio 0.0169 0.0166 -0.0003 -2.0
Dow in Gold Dollars (DIG$) 224.88 242.93 18.05 8.0
Dow in gold ounces 10.88 11.75 0.87 8.0
Dow in Silver ounces 643.69 709.56 65.86 10.2
Dow Industrials 14,937.48 15,376.06 438.58 2.9
S&P500 1,655.08 1,687.99 32.91 2.0
US dollar index 82.64 81.47 -1.17 -1.4
Platinum 1,481.20 1,443.60 -37.60 -2.5
Palladium 685.50 697.50 12.00 1.8

What might make me interrupt my vacation to send you a commentary? Well, gold & silver falling to or past critical support levels.

Two interpretations present themselves, and they gainsay each other. Both can't be right.

Both silver & gold have been rallying and have formed an upside-down head & shoulders formation, which presages a rise at least the height of the head from the neckline, for silver 2650 cents and for gold $1,550. But what ho! They broke this week. What now?

Either the upside down H&S will vindicate itself and metals will grab here & reverse, OR metals face another plunge down to validate or exceed the 27 June lows.

If we're watching an upside-down H&S, silver & gold have sunk as far as they are allowed. Gold broke its 50 DMA (1333.31) & hit the neckline Silver hit the neckline, too, and touched its 50 DMA (2139c).

Gold lost $22 today to close Comex at $1,308.40. Silver lost 42.9 cents to end Comex at 2167c.

If this really is the correct interpretation, then silver & gold will both turn up next week. No time or room to tarry here.

The other interpretation says that the rally from the June lows has only been a countertrend rally, and the long correction from 2011 through 2013 needs one more leg down, perhaps to $1,280, perhaps lower than $1,180. If this is correct, silver & gold will suffer a weak September & an October low,.

Don't bother throwing any rocks at me, I don't know which the final outcome will be. I can only look at possibilities and humbly advance an opinion.

Now of this changes the dangerous world we live in, where all "authorities" sing that everything has been fixed and that we can print our way to prosperity, world without end, Amen. I may be no more than a natural born fool from Tennessee, but I ain't that big a dad burned fool, not by a long shot.

Dow in gold today closed at 11.752 oz, up today 2.2% (G$242.93 in gold dollars) Dow in silver closed up 2.5% or 17,19 oz at 707,56 oz. Dow in Gold has retraced its fall from the June 27 high back up to the downtrend line. That argues one of two things: either it's going lots higher, or the correction has exhausted itself and will very soon reverse.

Dow in silver isn't nearly as clear. Unlike the Dow in Gold, it has not climbed through its 20 & 50 DMAs, but only the 20 DMA. 50 lies above at 720.24 oz. Comparable downtrend line to gold's hits today about 780 oz., so it must climb considerably higher before it equals gold.

Both these indicators argue that the metals' decline is nearing an end. On the other hand, "a trend in force remains in force until proven otherwise." Neither gold nor silver have disproven the long correction's downtrend by closing above their April breakdowns ($1,550 & $27.00). Right now that seems the more powerful argument to me.

Another little fact is the strong rebound in the metals' aftermarket. Gold jumped up from $1,308.40 to $1,323.50 and silver from 2167c to 2219c. Of course, nothing more than traders covering their shorts after a profitable week might account for that.

US dollar index remains strangely weak, and has backed down to its major uptrend line again. Closed today 81.47, down 5.4 basis points but down 1.4% on the week. Euro & yen went nowhere big. Euro climbed to $1.3303 today (up 0.18%) and yen lost 0.37% to 99.21 cents/Y100.

Stocks proved a rally this week, or reacted positively to news that Syria would not immediately blow up the world. Dow closed up 75.42 today at 15,376.06 and S&P500 at 1687.99, up 4.57%. Heading up for a final top, I reckon.

I'm going back to the beach.

Y'all enjoy your weekend!

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
13-Sep-13 Price Change % Change
Gold, $/oz 1,308.40 -22.00 -1.7
Silver, $/oz 21.67 -0.43 -1.9
Gold/Silver Ratio 60.378 -1.003 -1.6
Silver/Gold Ratio 0.0166 -0.0003 -1.9
Platinum 1,443.60 1.80 0.1
Palladium 697.50 6.30 0.9
S&P 500 1,687.99 4.57 0.3
Dow 15,376.06 75.42 0.5
Dow in GOLD $s 242.93 5.21 2.2
Dow in GOLD oz 11.75 0.25 2.2
Dow in SILVER oz 709.56 17.19 2.5
US Dollar Index 81.47 -0.05 -0.1
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SPOT GOLD: 1,323.50      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,355.26 1,366.51 1,366.51
1/2 AE 0.50 674.48 697.15 1,394.31
1/4 AE 0.25 337.24 355.19 1,420.78
1/10 AE 0.10 138.86 144.92 1,449.23
Aust. 100 corona 0.98 1,290.81 1,300.81 1,327.08
British sovereign 0.24 313.42 325.42 1,382.42
French 20 franc 0.19 247.10 254.10 1,360.99
Krugerrand 1.00 1,339.38 1,350.38 1,350.38
Maple Leaf 1.00 1,338.50 1,353.50 1,353.50
1/2 Maple Leaf 0.50 761.01 694.84 1,389.68
1/4 Maple Leaf 0.25 337.49 354.04 1,416.15
1/10 Maple Leaf 0.10 140.29 144.26 1,442.62
Mexican 50 peso 1.21 1,584.44 1,598.74 1,325.99
.9999 bar 1.00 1,328.13 1,339.13 1,339.13
SPOT SILVER: 22.19      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 26.00 29.00 37.91
VG+ Peace dollar 0.77 24.00 27.00 35.29
90% silver coin bags 0.72 16,545.10 16,970.10 23.73
US 40% silver 1/2s 0.30 6,354.30 6,504.30 22.05
100 oz .999 bar 100.00 2,209.00 2,289.00 22.89
10 oz .999 bar 10.00 226.90 227.90 22.79
1 oz .999 round 1.00 22.29 23.09 23.09
Am Eagle, 200 oz Min 1.00 23.44 24.99 24.99
SPOT PLATINUM: 1,443.60      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Platinum Platypus 1.00 1,468.60 1,508.60 1,508.60
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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.
  • 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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