The Moneychanger
Daily Commentary
Wednesday, 16 October a.d. 2013 Browse the commentary archive

I have to wonder, if the rumor of a deal on the debt ceiling ran stocks up today, what the news will do tomorrow. Whence will the next emotional high arise to send stocks higher? Both reversed upward today strongly. Dow added 205.82 or 1.36%, closing at 15,373.83. S&P500 gained 23.48 (1.38%) to end the day at 1,721.54.

Eye-catching how the Dow is lagging the S&P500. S&P500 is only 4.5 points (0.26%) away from its 18 September 2013 all-time high of 1,725.52. From its 18 September high at 15,676.34 the Dow languishes 302.51 points or 2% below. S&P500 also draweth nigh to its all time intraday high at 1,729.86 in September, as well as its top trading channel line, which actually is the top line of a rising wedge. Not so the Dow.

None of this says stocks can't go higher, & they probably will. It only warns that their days are numbered.

Stocks gained lots in nominal terms, but not so much compared to gold & silver. Dow in gold rose 0.65% to 11.992 oz (G$247.90 gold dollars), still a half ounce below its June 12.514 oz high. Dow in silver's close today at 721.10 oz was 0.53% higher than yesterday's and a long was from its June 816.77 oz. high.

US dollar index closed 80.57, up 0.04%. Euro rose, but can't get above its 20 DMA. Yen fell out of bed -- again. No clarity here, because the seeming week won't break down, and the seeming strong won't make good their threat.

Mostly I am wondering how silver & gold will take the news of the debt ceiling "settlement" (the quotation marks indicate that the so called deal only pushed the crisis forward to January). In the aftermarket both were stronger. That's not all. Both silver & gold made key reversals yesterday on the End of Day charts. Both remain in falling wedges, which usually but not always resolve with an upside breakout. If silver & gold are going to make good that upside down Head & Shoulders that appears on their charts, tomorrow would be a meet day for rallying.

Once again, gold must hold $1,272 and silver 2090c on a closing basis, otherwise they will plumb the depths of the June lows again.

Premiums on gold coins, usually very stable, are rising, especially on the normally low premium Krugerrands (up from 1 to 1.5% to 2.05% at wholesale buy) and American Eagles (up from 2.5% to 2.9% at wholesale buy). That suggests relentless buying pressure on physical gold.

I don't like uncertain trumpets, and my has probably been tooting pretty low-toned in recent months. I don't like this bumping along the bottom & waiting any more than y'all do, but get this much clear: silver & gold have NOT ended their long bull market, and are nearing a final & positive end of the 2011 - 2013 correction. Every day brings us closer, & when it happens all those goofs now touting stocks will be clueless why metals are rallying. Also, stocks within the next 3 -4 months will hit the final top of a 300 year primary trend. Blood will copiously flow when that collapse begins. Make sure it's not yours.

Did I say, "Get out of debt"? That, too.

On 16 October 1555 Protestant bishops Hugh Latimer & Nicholas Ridley were burned at the stake in England. As they approached the stake, Master Ridley; we shall this day light such Latimer said to Ridley, "Play the man, Master Ridley; we shall this day light a candle, by God's grace, in England as I trust shall never be put out." They did.

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
16-Oct-13 Price Change % Change
Gold, $/oz 1,282.00 9.00 0.71%
Silver, $/oz 21.32 0.17 0.82%
Gold/Silver Ratio 60.131 -0.069 -0.11%
Silver/Gold Ratio 0.0166 0.0000 0.12%
Platinum 1,395.20 14.80 1.07%
Palladium 712.55 7.25 1.03%
S&P 500 1,721.54 23.48 1.38%
Dow 15,373.83 205.82 1.36%
Dow in GOLD $s 247.90 1.59 0.65%
Dow in GOLD oz 11.99 0.08 0.65%
Dow in SILVER oz 721.10 3.80 0.53%
US Dollar Index 80.51 0.05 0.07%
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: 1,280.40      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,317.53 1,322.01 1,322.01
1/2 AE 0.50 652.49 674.45 1,348.90
1/4 AE 0.25 326.25 343.63 1,374.51
1/10 AE 0.10 134.34 140.20 1,402.04
Aust. 100 corona 0.98 1,248.77 1,258.77 1,284.20
British sovereign 0.24 303.21 315.21 1,339.06
French 20 franc 0.19 239.05 246.05 1,317.89
Krugerrand 1.00 1,306.71 1,317.71 1,317.71
Maple Leaf 1.00 1,295.40 1,310.40 1,310.40
1/2 Maple Leaf 0.50 736.23 672.21 1,344.42
1/4 Maple Leaf 0.25 326.50 342.51 1,370.03
1/10 Maple Leaf 0.10 135.72 139.56 1,395.64
Mexican 50 peso 1.21 1,535.93 1,546.78 1,282.89
.9999 bar 1.00 1,284.88 1,295.88 1,295.88
SPOT SILVER: 21.39      
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 16,008.85 16,258.85 22.74
US 40% silver 1/2s 0.30 6,118.30 6,268.30 21.25
100 oz .999 bar 100.00 2,129.00 2,209.00 22.09
10 oz .999 bar 10.00 218.90 219.90 21.99
1 oz .999 round 1.00 21.49 22.29 22.29
Am Eagle, 200 oz Min 1.00 22.64 24.19 24.19
SPOT PLATINUM: 1,395.20      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,420.20 1,460.20 1,460.20
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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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