The Moneychanger
Daily Commentary
Thursday, 3 October a.d. 2013 Browse the commentary archive

Here's a quote from Sara Hoyt, "There are two types of people in the world. Those who want to tell everyone what to do & how to do it, and those who have fond fantasies of holding them underwater until bubbles stop coming up."

This slow market has been going on too long. I fell to watching paint dry on my office wall today and caught myself thinking, "This is the most excitement I've had in days."

This government shutdown wrestling match is hurting stocks worse than anything else, although it's liable to infect bonds soon. Dow fell 0.9% (136.60 points) to end the day below 15,000 at 14,996.54. S&P500 caught up with the Dow today by closing below its 50 DMA (1,679.84). It lost 0.9% (15.23) & ended at 1,678.64.

A rising support line will catch the S&P500 around 1,660. Analogous support on the Dow chart intersects about 14,850. Both flashed SELL signals several days ago. Once the sparring in Washington ends, stocks should turn up again for one last hurrah.

Dow in Gold and Dow in Silver both fell further today. Dow in Silver is perched on its 20 day moving average, ready to fall through. Dow in Gold has already fallen through. Appears to be the end of any upward motion for some time, and the major trend remains gravity-ward.

US dollar index keeps edging closer & closer to the cliff. Low came at 79.627, but it recovered enough to close at 79.763, down only 15.3 basis points (0.2%). A close below 79.50 is, technically, a fall off the cliff with no net below.

Euro gained 0.28% to $1.3620 and appears to be pulling away from that top channel line. If so, it might hit $1.3700. If currency markets moved on supply & demand instead of politics, I'd say the euro could move to $1.4400. However, we know currency markets have all the integrity of Gunsmoke's Miss Kitty, & a euro at that height would mean a US dollar at 75.00, alerting the whole world that the end is not only near, but scant minutes away. Plus a euro that high would crucify the European economy. So 'twon't happen.

Yen has been rallying and today hit 102.79. Sounds encouraging, but it ain't. Looks to be sketching a rising wedge, which climbs then disappoints by breaking down earthward.

Speaking of wedges, we come to silver & gold. They both fell back today, but not through any meaningful support. Gold peeled off 3.20 to wind up at $1,317.40. Silver scraped off 10.7 cents to 2173.9.

This sounds more respectable when you discover that Gold traded as low at $1,302.84, then leapt from $1,309 to $1,317 in a single bound. That whispers that abundant buyers await any decline to buy more, building a floor under the market.

Silver traded much the same, falling about 9:00 to 2143, but recovering two hours later to 2165c.

Of course, all of this is on a razor thin margin of stability. Push either metal much past the recent trading range & they'll jump a long way. What intrigues me more, however, are the falling wedges both silver & gold have traced. They don't measure to much gain, but would take them back to the August highs at least.

This is a waiting game. It will eventually work out to silver & gold's advantage, but it will wear your nerves down to nubbins in the meantime. Be patient.

Today Germany celebrates the Tag der Deutschen Einheit (Day of German Unity). In 1990, less than a year after East Germany opened its borders and took down the Berlin Wall, East Germany and West Germany became a single united and sovereign state -- 45 years after it had been partitioned at the end of World War II.

On 3 October 1776 the Continental Congress borrowed $5 million to halt the rapid depreciation of paper money in the Colonies. It didn't. Nothing ever changes with fiat money. It always goes bad, whatever country it infects.

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
3-Oct-13 Price Change % Change
Gold, $/oz 1,317.40 3.20 0.24%
Silver, $/oz 21.74 -0.11 -0.49%
Gold/Silver Ratio 60.601 0.443 0.74%
Silver/Gold Ratio 0.0165 -0.0001 -0.73%
Platinum 1,369.50 8.10 0.59%
Palladium 699.20 2.30 0.33%
S&P 500 1,678.64 -136.60 -7.53%
Dow 14,996.54 -58.56 -0.39%
Dow in GOLD $s 235.32 -1.49 -0.63%
Dow in GOLD oz 11.38 -0.07 -0.63%
Dow in SILVER oz 689.84 0.70 0.10%
US Dollar Index 79.76 -0.15 -0.19%
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: 1,317.20      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,351.45 1,360.01 1,360.01
1/2 AE 0.50 671.26 693.84 1,387.67
1/4 AE 0.25 335.63 353.50 1,414.01
1/10 AE 0.10 138.20 144.23 1,442.33
Aust. 100 corona 0.98 1,284.66 1,294.66 1,320.82
British sovereign 0.24 311.93 323.93 1,376.08
French 20 franc 0.19 245.92 252.92 1,354.69
Krugerrand 1.00 1,339.59 1,350.59 1,350.59
Maple Leaf 1.00 1,332.20 1,347.20 1,347.20
1/2 Maple Leaf 0.50 757.39 691.53 1,383.06
1/4 Maple Leaf 0.25 335.89 352.35 1,409.40
1/10 Maple Leaf 0.10 139.62 143.57 1,435.75
Mexican 50 peso 1.21 1,580.08 1,591.15 1,319.69
.9999 bar 1.00 1,321.81 1,332.81 1,332.81
SPOT SILVER: 21.67      
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 16,244.80 16,494.80 23.07
US 40% silver 1/2s 0.30 6,200.90 6,350.90 21.53
100 oz .999 bar 100.00 2,157.00 2,237.00 22.37
10 oz .999 bar 10.00 221.70 222.70 22.27
1 oz .999 round 1.00 21.77 22.57 22.57
Am Eagle, 200 oz Min 1.00 22.92 24.47 24.47
SPOT PLATINUM: 1,369.50      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,394.50 1,434.50 1,434.50
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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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