The Moneychanger
Daily Commentary
Tuesday, 24 September a.d. 2013 Browse the commentary archive

Y'all will get a kick out of this. Bloomberg reports that US regulators are investigating how trading in gold financial instruments in New York & Chicago happened so fast after the release of the FOMC statement last week. Trading in gold futures & ETFs intensified within one millisecond of 2:00 pm Eastern Time on 18 September. Buddy, them folks have some reflexes if they can read that statement & hit that button within one millisecond, especially when it takes 7 milliseconds to travel to Chicago from Washington, where the FOMC statement is released.

What's that? Somebody leaked the statement in advance to traders who might profit? Why, perish the thought! Surely y'all wouldn't tarnish the reputation of our Nice Government Men by thinking such thoughts!

Friends, it's ALL for sale, and it's all bought & sold.

'Pears that this time around the debt ceiling debacle is depressing all markets, even gold. Me, I'd be happy as a hog in slop if they all locked horns & the yankee government went out of business come 1 October. What would happen? They would stop sending out "swarms of Officers to harass our people, and eat out their substance"? Stop "keeping among us, in times of peace, Standing Armies"? Stop "subjecting us to a jurisdiction foreign to our constitution, & unacknowledged by our laws, giving assent to their acts of pretended legislation"? Stop "imposing taxes on us without our consent"? Stop "abolishing our most valuable Laws, & altering fundamentally the Forms of our government"?

So, exactly how would we lose by that?

But back to markets. Stocks keep inching toward their 50 Day Moving Averages (15,300 & 1,679). The Dow peeled off 66.79 points (0.43%) for a close at 15,334.59. S&P500 scraped off 4.42 points (0.26%) to land at 1,697.42.

Dow in gold is playing above its 50 DMA, still falling. Ended today practically unchanged at 11.652 oz (G$240.58 gold dollars).

Dow in silver just hit its 50 DMA yesterday, peeked through it today. 50 DMA stands at 707.78, Dow in Silver closed at 711.95 oz, up 0.8% or 5.62 oz.

Big Picture: In May both indicators broke upwards through their ca. 14 year downtrend lines, rallied to a high on 27 June, rolled over, then dropped like a hammer in a beer vat. Toward the end of August both hit their long term downtrend lines, and bounced up in a reaction that has recovered 1/2 to 2-3 of the fall. About time for that reaction to end. Still need both to close below their long term downtrends to breathe completely freely.

No slightest facet of the US dollar index chart inspires confidence or optimism, except statements like, "Well, at least the bottom hasn't fallen out yet!" Dollar gained 13.7 basis points (0.18%) today & ended at 80.590. Should the dollar index fall through 79.5, twill look like a man trying to swim with a 200 lb. anvil for a life preserver.

All that love fest for the euro that poured out of Ferkel's election victory washed away pretty quick. Euro today closed $1.3473, down 0.15% and back beneath its upper channel trading boundary. If I had to name a candidate as catalyst for the next financial panic, it would be the Eurozone. Just bear in mind, a mountebank remains a mountebank even if he speaks Italian or French. A central banking criminal by any other name . . .

Yen rose 0.9% to 101.28 cents/Y100. Directionless. Both Gold in euros & gold in Yen have established & thrice tested uptrends, by the way.

Silver & gold closed lower today, but without much effect on the charts, which have traded sideways for two days. Silver lost 26.6 cents to 2153.9. Gold misplaced $10.90 & ended Comex at $1,316.00. In the aftermarket they are trading $1,323 and 2167.5c, little lower than yesterday.

What do you make of markets like these? On an end-of- the-day chart, not Comex closes, gold has actually bounced up today and closed 50 cents higher. More, it has bounced off an uptrend line from the June low. See it at http://bit.ly/14EO1eu

If gold is so weak, why doesn't it break down? Where are all the sellers hiding Of course, that it hasn't broken down YET doesn't' guarantee that it won't break down at all. Still, it made a low today at $1,312.35 & seems to strengthen whenever it drops down around $1,315 - $1,305.

It's a messy chart, but you can see silver here: http://bit.ly/18UnFbC Maybe silver made an upside down head & shoulders & completed it in early August, maybe it's completing the bottom of a right shoulder presently. Whichever, as long as it can hold on about 2130c (low today 2144.2c), it's still flying like a bumblebee.

If silver & gold did not bottom on 27 June & intend one last push down, we will see it by end-October. Otherwise, it's a little hard to picture that the goofs & incompetents in Washington won't drive gold up with their debt ceiling squabble.

Whenever I have a question, I go to my readers 'cause y'all are the cleverest people in the world. I leave all my plumbing to my wife, not because I am a slouch but because she loves plumbing. However, she has played her last trick, & can't solve this problem.

Back of the hot water knob, the part behind the shower wall, is leaking where the brass fixture connects to the PVC pipe. She has coated it several times with some epoxy material that looks like chewing gum but sets like granite, yet it leaketh still. Last she tried the shrinking black tape, yet it leaketh still? Do any of y'all have any suggestion how to stop this leak. I'm afraid that epoxy gum she put on will require a low-level nuclear blast to remove. If you have a solution, email me at .

On 24 September 1862 the "Great Liberator" Abraham Lincoln suspended the write of habeas corpus. During the war his regime jailed over 50,000 dissidents. Y'all didn't read that in your history books, did you? Or about Ohio Democratic politician Clement Vallandingham, whom Lincoln exiled for opposing his war?

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
24-Sep-13 Price Change % Change
Gold, $/oz 1,316.00 -5.60 -0.42%
Silver, $/oz 21.54 -0.27 -1.22%
Gold/Silver Ratio 61.098 0.489 0.81%
Silver/Gold Ratio 0.0164 -0.0001 -0.80%
Platinum 1,425.90 0.00 0.00%
Palladium 718.35 3.06 0.43%
S&P 500 1,697.42 -4.42 -0.26%
Dow 15,334.59 -66.79 -0.43%
Dow in GOLD $s 240.88 -0.02 -0.01%
Dow in GOLD oz 11.65 -0.00 -0.01%
Dow in SILVER oz 711.95 5.62 0.80%
US Dollar Index 80.59 0.14 0.17%
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SPOT GOLD: 1,323.00      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,354.75 1,366.00 1,366.00
1/2 AE 0.50 674.22 696.89 1,393.78
1/4 AE 0.25 337.11 355.06 1,420.24
1/10 AE 0.10 138.81 144.87 1,448.69
Aust. 100 corona 0.98 1,290.32 1,300.32 1,326.59
British sovereign 0.24 313.30 325.30 1,381.92
French 20 franc 0.19 247.00 254.00 1,360.49
Krugerrand 1.00 1,341.52 1,352.52 1,352.52
Maple Leaf 1.00 1,338.00 1,353.00 1,353.00
1/2 Maple Leaf 0.50 760.73 694.58 1,389.15
1/4 Maple Leaf 0.25 337.37 353.90 1,415.61
1/10 Maple Leaf 0.10 140.24 144.21 1,442.07
Mexican 50 peso 1.21 1,583.84 1,598.14 1,325.49
.9999 bar 1.00 1,327.63 1,338.63 1,338.63
SPOT SILVER: 21.68      
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 16,141.13 16,391.13 22.92
US 40% silver 1/2s 0.30 6,202.38 6,352.38 21.53
100 oz .999 bar 100.00 2,157.50 2,237.50 22.38
10 oz .999 bar 10.00 221.75 222.75 22.28
1 oz .999 round 1.00 21.78 22.58 22.58
Am Eagle, 200 oz Min 1.00 22.93 24.48 24.48
SPOT PLATINUM: 1,425.90      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,450.90 1,490.90 1,490.90
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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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