The Moneychanger
Daily Commentary
Wednesday, 20 November a.d. 2013 Browse the commentary archive

Mercy, don't y'all love the gall of those central bankers? Any confidence man worth his con-game changes up his pitch from time to time, but these shameless crooks just keep thumping the same old tabor, the dreaded "Taper."

'Tis only a smokescreen to hide the noose they've hung around their own necks: they have now addicted the stock market to big doses of new dough, so they can't stop, & surely can't sell any of those bonds they've been buying without tanking the entire earth-ball into deflation.

So what do these con-men do? They publish notes that "hint," "suggest," "forecast," or "project" when they'll start tapering. Then they send one of their "presidents" or other high Grand Muckety-mucks to make a speech speculating when & under what circumstances they will/can/might taper.

And the media, who haven't asked a central banker or a president a hard-ball question since Garfield was assassinated? Like a big mouth bass leaping out of the water, they swallow hook, line, & sinker. Don't even mention the investing public and the hoi polloi. If it came from the Fed, it must be gospel, although Fed officials couldn't pour corn meal out of a boot if it had instructions printed on the heel.

This is really starting to get amusing.

Today the Fed released the October FOMC minutes which said they MIGHT reduce the $85 billion monthly bond purchases "in coming months." That propped up the dollar while it knocked stocks, gold, & silver in the head.

Apparently the public really believe that Fed QE really is good for the stock market long term, at least they are spooked by any hint of tapering. Today the Dow lost 66.21 (0.41%) to 15,900.82 while the S&P500 slipped 6.5 or 0.36% to 1,781.37.

While divers pundits ascribed this stumble to the FOMC minutes/taper threat, I remind y'all this started not today but three days ago when the Dow made its new all-time high but the other indices fell. The cause and the apparent cause are not always identical. This sets stocks up for a longer correction. Expect lower prices for the next couple of weeks, BICBW.

The stock plunge didn't help the Dow in Silver or the Dow in Gold, since both metals plunged further themselves. Dow in gold closed up 0.08% at 12.645 oz., above its June high at 12.514 for the second day. Dow in silver added 0.96% to close 793.06 oz, still below the June 816.77 high. Long as those are rising it will be tough for silver & gold to turn around. However, both indicators are severely overbought, DiS worse than DiG.

That bull flag in the US dollar chart I mentioned yesterday snapped into action today. On the taper rumor the dollar index leapt 52.8 basis points or 0.68% to 81.065. That carries the dollar above crucial 81 resistance & to the downtrend line from the September highs. Once it crosses that line, as probably will tomorrow, it will race for 82.50 - 83.

Euro fell out of that rising wedge with a boom. Tumbled 0.75% to $1.3435, below the 20, 50, & 62 day moving averages. Down, down points the chart.

Yen rose 0.2% today to 100.04, but that only brought it to the downtrend line that has ruled since mid- October. If the yen intends ever to rise, it gives no hint, not even in its body language.

Gold broke today before the FOMC minutes were published. At Comex close it had been stripped of $15.50 (1.2%) to end at $1,257.90. However, in the aftermarket it dove another $17.5 (at one point it was $1,240.20), a maximum intraday loss of 2.5%

Silver was down 27.6 cents or 1.35% to 2005c at Comex close, then lost another 18 cents in the aftermarket. As I write Gold is back up to $1,244.80 & silver to 1992c.

Looking over the shoulder of other investors' shoulders is a lot like cheating on a test in high school. Before you do it, you'd better make sure the fellow you're cheating from knows more than you do. With that warning, however, I watch some of my customers who seem usually to make exceptionally good decisions. Several showed up buying today and one remarked casually, "Gold & silver look cheap to me." I wouldn't use that for a rope to swing over hell on, but it's worth noticing.

Specifically gold dropped below the October $1,251 low on an intraday basis, not to mention ending the day down there. Now there's a line of support that runs from that low today through the October low back to the August low all the way to the April low. So there's some support there, But gold would have to hang on here, not fall any lower, & begin climbing within a couple of days to validate that. that.

Silver broke a similar support line today, which technically points silver toward the last low at 1910 or even the June low at 1817c.

This may sound crazy here, but silver does lie within that November window where lows occur. Hardest part of parsing markets is keeping yourself from being seduced by other people's opinion. Right now, the world seems universally bearish on silver & gold. Whenever opinion is that unanimous, our fingers ought to start itching, searching for a place to pull that reversal trigger. Besides, seasonally December is usually an up month.

On 20 November 1789 New Jersey became the first state to ratify the Bill of Rights.

On 20 November 1861 Kentucky's Confederate government filed a secession ordinance.

On 20 November 1862 the Confederate armies of Mississippi & Kentucky merged into the Army of Tennessee under Genl. Braxton Bragg. Good merger, bad leader. The fine Army of Tennessee seldom had a general who was worthy of it.

On 1923 inflation exhausted Germany replaced the Reichsmark with the Rentenmark a the rate of one billion to one. On the 8th & 9th that same month also saw Hitler's abortive Beer Hall Putsch in Munich. Misery & resentment brought on by the Great Inflation helped pave the way for Hitler's rise to power ten years later.

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
20-Nov-13 Price Change % Change
Gold, $/oz 1,257.90 -15.50 -1.22%
Silver, $/oz 20.05 -0.28 -1.36%
Gold/Silver Ratio 62.738 0.089 0.14%
Silver/Gold Ratio 0.0159 -0.0000 -0.14%
Platinum 1,397.80 -20.30 -1.43%
Palladium 713.65 -7.95 -1.10%
S&P 500 1,781.37 -6.50 -0.36%
Dow 15,900.82 -66.21 -0.41%
Dow in GOLD $s 261.31 2.11 0.81%
Dow in GOLD oz 12.64 0.10 0.81%
Dow in SILVER oz 793.06 7.51 0.96%
US Dollar Index 81.07 0.53 0.66%
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: 1,244.80      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,280.90 1,288.37 1,288.37
1/2 AE 0.50 634.34 656.63 1,313.26
1/4 AE 0.25 331.16 334.54 1,338.16
1/10 AE 0.10 131.84 136.93 1,369.28
Aust. 100 corona 0.98 1,210.39 1,220.39 1,245.04
British sovereign 0.24 294.78 306.78 1,303.25
French 20 franc 0.19 234.15 237.20 1,270.51
Krugerrand 1.00 1,267.21 1,278.21 1,278.21
Maple Leaf 1.00 1,259.80 1,274.80 1,274.80
1/2 Maple Leaf 0.50 715.76 653.52 1,307.04
1/4 Maple Leaf 0.25 317.42 332.98 1,331.94
1/10 Maple Leaf 0.10 131.95 135.68 1,356.83
Mexican 50 peso 1.21 1,488.73 1,503.86 1,247.29
.9999 bar 1.00 1,249.16 1,260.80 1,260.80
SPOT SILVER: 19.92      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 25.00 26.50 34.64
VG+ Peace dollar 0.77 22.00 24.25 31.70
90% silver coin bags 0.72 14,850.55 15,100.55 21.12
US 40% silver 1/2s 0.30 5,684.65 5,834.65 19.78
100 oz .999 bar 100.00 1,982.00 2,052.00 20.52
10 oz .999 bar 10.00 204.20 205.20 20.52
1 oz .999 round 1.00 20.02 20.57 20.57
Am Eagle, 200 oz Min 1.00 21.67 22.92 22.92
SPOT PLATINUM: 1,397.80      
Plat. Platypus 1.00 1,422.80 1,462.80 1,462.80
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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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