The Moneychanger
Daily Commentary
Monday, 11 November a.d. 2013 Browse the commentary archive

Nothing happened in markets today, so let's think about something else.

Let's suppose the Fed does taper, slow down its $85 billion a month asset purchases. What next? To whom will they sell all those assets on that bloated balance sheet? Answer: Nobody. They can't do it without overwhelming the market & deflating the money supply. Hence, they won't.

And like the first swallow at Capistrano, or the first rat running down the mooring line off the ship to the dock, I read today that British Columbia just floated a bond issue denominated in yuan to raise 2.5 bn yuan (about US$400 million). This is the first time a foreign government has issued offshore yuan bonds, and the issue was largely oversubscribed.

One of the most frequently heard retorts whenever I doubt the dollar's future out loud is "But the dollar is the world's reserve currency! The dollar will always be the reserve currency!" I may not be crazy after all. By the way, the translation of that retort is, "That's too scary to think about so I will just ignore it and suppress the horrible truth."

Not much point in trying to infer anything from today's trading. Even though markets were open (doors of the temple of Mammon & Greed must always remain open for its worshippers) a holiday in the US & London trimmed trading to a minimum.

But it was not too light a day for SOMEBODY to miss trashing gold & silver in London. Every day is a good day for that. Silver closed Comex down 3.5 cents at 2127.2 after a 2122.7c low. Gold close down $3.50 at $1,281 after a $1,279.21 low.

Silver is drawing close to that drop-dead uptrend line about 2100c, and gold toward the same about $1,260. Looks like lower prices are coming.

Stocks crept up. Dow gained 21.32 (0.14%) to 15,783.1. S&P500 inched ahead 1.28 (0.07%) to 1,771.89. Both may be rolling over.

US dollar index lost 14.9 basis points (0.19%) to 81.089. Still trending up, could reach 83, IF it can breach its 200 DMA at 81.80.

Euro has lots further to fall. Rose 0.31% today to $1.3413, but with the ECB dropping interest rates & the market (not the Fed, who factually controls little more than their own mouth but want to make you believe they control everything) is raising interest rates in the US, euro has no reason to rise against the buck.

Yen lost 0.15% to 100.81 cents/Y100. Eventually those in charge in Japan will wreck the Japanese economy, if they just keep working at it with poisonous monetary policy.

On 11 November 1647 Massachusetts passed the first compulsory school attendance law in what was to become the United States. Massachusetts has always run far ahead of other states in socialism, but its tough to imagine a deeper insult to freedom & a free society than compulsory education. Responsibility for raising children is stolen from its natural owners, the parents, and given to the unnatural state. And state run education can never be "value neutral," because SOMEbody chooses what will be taught, and how, & that will inevitably embody the chooser's values. Want to restore freedom in the US? Take your children out of public schools, and save the next generation for self-government.

On 11 November 1839 the Virginia Military Institute was founded in Lexington, Virginia. If you ever get a chance, don't miss the museum there and parade. My grandsons loved both.

On 11 November 1933 the Great Black Blizzard occurred, the fist great dust storm on the Great Plains. You can mess with Mother Nature for a while, but in the end she'll slap you. Settlers took off the sod on the prairie and ploughed it -- sod that had been growing & accumulating for 100 years. Sod that had been keeping in the soil. The land was perfect for grazing (witness the vast herds of buffalo) but lousy for ploughing. Sooner or later, the soil was going to go, and it 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
11-Nov-13 Price Change % Change
Gold, $/oz 1,281.00 -3.50 -0.27%
Silver, $/oz 21.27 -0.04 -0.16%
Gold/Silver Ratio 60.220 -0.065 -0.11%
Silver/Gold Ratio 0.0166 0.0000 0.11%
Platinum 1,430.60 -10.50 -0.73%
Palladium 754.05 -3.20 -0.42%
S&P 500 1,771.89 1.28 0.07%
Dow 15,783.10 21.32 0.14%
Dow in GOLD $s 254.70 1.04 0.41%
Dow in GOLD oz 12.32 0.05 0.41%
Dow in SILVER oz 741.97 2.22 0.30%
US Dollar Index 81.09 -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: 1,282.60      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,317.23 1,327.49 1,327.49
1/2 AE 0.50 653.62 676.57 1,353.14
1/4 AE 0.25 341.23 344.70 1,378.80
1/10 AE 0.10 135.85 141.09 1,410.86
Aust. 100 corona 0.98 1,248.40 1,258.40 1,283.82
British sovereign 0.24 303.74 315.74 1,341.27
French 20 franc 0.19 241.26 244.26 1,308.31
Krugerrand 1.00 1,306.97 1,317.97 1,317.97
Maple Leaf 1.00 1,297.60 1,312.60 1,312.60
1/2 Maple Leaf 0.50 737.50 673.37 1,346.73
1/4 Maple Leaf 0.25 327.06 343.10 1,372.38
1/10 Maple Leaf 0.10 135.96 139.80 1,398.03
Mexican 50 peso 1.21 1,535.48 1,549.43 1,285.09
.9999 bar 1.00 1,287.09 1,298.60 1,298.60
SPOT SILVER: 21.36      
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 15,769.33 16,019.33 22.40
US 40% silver 1/2s 0.30 6,107.98 6,257.98 21.21
100 oz .999 bar 100.00 2,125.50 2,195.50 21.96
10 oz .999 bar 10.00 218.55 219.55 21.96
1 oz .999 round 1.00 21.46 22.01 22.01
Am Eagle, 200 oz Min 1.00 23.11 23.86 23.86
SPOT PLATINUM: 1,430.60      
Plat. Platypus 1.00 1,455.60 1,495.60 1,495.60
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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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