The Moneychanger
Daily Commentary
Monday, 4 November a.d. 2013 Browse the commentary archive

Here's a little clue as to why and how so much industry -- and industrial jobs -- have been exported from the USA.

In Bangladesh, the worlds second largest clothing exporter, garment workers have been striking because an April collapse of one garment factory killed more than 1,100 garment workers. A new government wage board has proposed wages be raised 77% to 5,300 taka ($68 or 78 taka=US$1) monthly, but factory bosses are holding out for 4200 taka ($54).

If 5300 taka is a 77% rise, then the minimum wage now is about 3,000 taka ($54)/month, then the workers would be making about 22-1/3 cents an hour if they work (ha-ha) a 40 hour week. (3000/4.33 weeks/40/78)

Now maybe some of y'all can explain how US garment factories paying $10 an hour plus a social security, insurance, tax-tax-tax load of say, 35%, above the hourly wage or $13.50 net cost per hour, can compete with a factory paying 22.3 cents an hour. Whoops -- they can't.

Average monthly wage for Bangladeshi workers is about half that of its rivals Vietnam & Cambodia, and about one-fourth that of top exporter China.

But after all, price is the only thing that counts when you buy clothes, right? And people wonder why these folks vote communist!

Today's markets were subdued. Stocks rose a little, gold rose barely, US Dollar index gave back some of its preposterous gains from last week. Stock market smugness remains at all time highs, as does margin debt, P/Es, & dividend yields. It is scenario written by Daffy Duck, or maybe the Three Stooges. If Moe were around today, they'd make HIM the head of the federal reserve.

Stocks barely moved today. Dow rose 23.57 (0.15%) to 15,63910 while the S&P500 rose 0.36% (6.29) to 1,767.93. S&P500 & other indices remain in a "thrown over" condition above their top channel lines.

That might not mean much to y'all unless you know that when a market has been rising a long, long time the "throw-over" or trading above its upper trend line generally sounds a honking big alarm that the rise is over. Generally. Usually. Normally.

Dow in gold and silver rose again today & is starting to bother me just a little. Dow in gold today closed 11.90 oz, up 0.23% & Dow in silver closed 722.53 oz, up 1.15%. Compare these against the June highs at 12.514 oz & 816.77 oz. Trend still down, but both indicators stand above their 20 day moving averages, pointing momentum up.

US Dollar index broke a six day winning streak today by giving up 14.8 basis points (0.19%) to 80.574. Since it is close to its 50 dma (80.66), odds say it has turned up & will rally toward 81 (where it failed today) toward its 200 DMA at 81.77. Y'all tell me why it's rallying -- beats me. However, I am reporting to you what it is doing technically. Fundamentally, the US dollar has less value than all that gravel & fish dung at the bottom of your fish tank.

Euro looks even sicker than the US dollar. Lo! How is the mighty euro fallen, from $1.3825 a few days ago, gapping down twice, to close today at $1.3514. Sitting above its $1.3494 50 day moving average. Euro was also enjoying a big, long (since mid-September) throw-over, but has now come back to the channel line. Drops could be dramatic from here, since the 200 DMA stands at $1.3229.

Yen didn't wiggle today. Closed 101.43 cents/Y100, and going nowhere but sideways. It's in a crab race with the US dollar.

Ominously for the dollar, that upside breakout of the 10 year treasury yield that took place in June & relented in September has now lifted its head again. Yes, the higher interest rate will attract buyers, but it will also cost the US treasury dearly AND it violates the Fed's Zero Interest Rate Policy. In other words, it squeezes the fed and suggests bond buyers aren't so sure the dollar is worth what they presently must pay for it.

Just a little bird-chirp in the wind, but worth hearkening to.

Gold & silver gainsaid each other today. Gold rose $1.50 to $1,314.60 while silver lost 12.6 cents & ended at 2167.8c.

Let's review the facts, since they never lie -- you can't always parse what they're saying, but they never lie.

Silver bottomed at 1817c on 27 June, traded as high as 2512 cents (end August) and sank back to a mid-October low at 2050c. That uptrend remains intact, and today the line hits about 2100c under the silver market.

Relative Strength Indicator is pointing down, MACD just rolled over downside. Rate of change also turned down today, after rising since Mid-October.

But silver has drawn a line in the sand, today's low at 2158c. Draw a line from the 2050 October low to that and you have and uptrend. If it breaks that 2060cent mark, it will sink toward 2100c. However, it if holds here silver will be turning in the teeth of all pessimism.

Gold's case is much the same, with an uptrend line from the June low at $1,179,.40 to the October low at $1,250. Today that uptrend offers support about $1,260. Friday's low was lower than today's, so there's also an uptrend from mid-October until now. Close below $1,312 tomorrow violates that support.

A friend today whom I know to be a successful trader told me he bought more metals because today marked a 60 year anniversary of 1953 lows. Maybe he knows something I don't know.

4 November 1862 was a rotten day for humanity. That day Dr. Richard Gatling patented his machine gun.

On 4 November 1884 Grover Cleveland beat James G. Blaine for his first presidential term. He remains the only US president to serve two non-consecutive terms, and was probably the last statesman, maybe the last decent man, to serve as president. Before him you'd have to go back to Jefferson Davis or James Buchanan.

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
4-Nov-13 Price Change % Change
Gold, $/oz 1,314.60 1.50 0.11%
Silver, $/oz 21.68 -0.13 -0.58%
Gold/Silver Ratio 60.642 0.419 0.70%
Silver/Gold Ratio 0.0165 -0.0001 -0.69%
Platinum 1,453.90 18.00 1.25%
Palladium 748.95 2.45 0.33%
S&P 500 1,767.93 6.29 0.36%
Dow 15,639.12 23.57 0.15%
Dow in GOLD $s 245.92 0.09 0.04%
Dow in GOLD oz 11.90 0.00 0.04%
Dow in SILVER oz 721.43 5.25 0.73%
US Dollar Index 80.57 -0.15 -0.18%
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: 1,314.30      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,349.79 1,360.30 1,360.30
1/2 AE 0.50 669.78 693.29 1,386.59
1/4 AE 0.25 349.67 353.22 1,412.87
1/10 AE 0.10 139.21 144.57 1,445.73
Aust. 100 corona 0.98 1,279.26 1,289.26 1,315.30
British sovereign 0.24 311.24 323.24 1,373.16
French 20 franc 0.19 247.22 250.18 1,340.01
Krugerrand 1.00 1,336.64 1,347.64 1,347.64
Maple Leaf 1.00 1,329.30 1,344.30 1,344.30
1/2 Maple Leaf 0.50 755.72 690.01 1,380.02
1/4 Maple Leaf 0.25 335.15 351.58 1,406.30
1/10 Maple Leaf 0.10 139.32 143.26 1,432.59
Mexican 50 peso 1.21 1,576.60 1,587.65 1,316.79
.9999 bar 1.00 1,318.90 1,330.30 1,330.30
SPOT SILVER: 21.62      
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 16,026.73 16,276.73 22.76
US 40% silver 1/2s 0.30 6,184.68 6,334.68 21.47
100 oz .999 bar 100.00 2,151.50 2,221.50 22.22
10 oz .999 bar 10.00 221.15 222.15 22.22
1 oz .999 round 1.00 21.72 22.27 22.27
Am Eagle, 200 oz Min 1.00 23.37 24.12 24.12
SPOT PLATINUM: 1,453.90      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,478.90 1,518.90 1,518.90
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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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