The Moneychanger
Weekly Commentary
Friday, 22 November a.d. 2013 Browse the commentary archive
Here's the weekly scorecard:
  15-Nov-13 22-Nov-13 Change % Change
Silver, cents/oz. 2,071.70 1,986.20 -85.50 -4.1
Gold, dollars/oz. 1,287.80 1,244.10 -43.70 -3.4
Gold/silver ratio 62.162 62.637 0.480 0.8
Silver/gold ratio 0.0161 0.0160 -0.0001 -0.8
Dow in Gold Dollars (DIG$) 256.22 266.93 10.71 4.2
Dow in gold ounces 12.39 12.91 0.52 4.2
Dow in Silver ounces 770.46 808.82 38.36 5.0
Dow Industrials 15,961.70 16,064.77 85.48 0.5
S&P500 1,798.18 1,804.76 7.56 0.4
US dollar index 80.82 80.70 -0.12 -0.2
Platinum 1,437.10 1,380.90 -56.20 -3.9
Palladium 732.30 714.05 -18.25 -2.5

Whew. It was quite a week, whatever you own. Rough if you own silver & gold, exhilarating if you own stocks, boring if you own dollars.

Every day it gets funnier and funnier. On Wednesday the ECB Head Criminal Mario Draghi suggested the ECB might pay NEGATIVE interest rates, that is, charge you to hold your money. Not much to anybody's surprise, the euro tanked on that news. Draghi did a supersonic crabwalk then to announce he was just kidding about the negative interest rates. What's a central banker to do when his own currency keeps appreciating against his biggest competitor's? How's he gonna beggar his neighbor?

So the euro rose today on news of strong German economic data. If you were talking to anyone with an attention span greater than a gnat, which would leave out currency traders, you would ask what that means for Spain, Italy, Greece, and the other European countries mired in depression. No matter, the gnats abound.

Euro rose 0.53% to $1.3554 while the US dollar stumbled 31.3 basis points (0.4%) to 80.696. That's a long drop from critical 81 support/resistance and nearly to the 80.68 20 day moving average. How about it, dollar index? You going up or down? You appear to be rolling over to the downside. Maybe this is merely the dollar reacting after a jump, but maybe not. If not, what is the dollar expecting? What's it worried about?

Meanwhile the yen fell another 0.11% today to 98.74 cents/Y100. If it stoppeth not here, 'twill sink to 96.5 cents.

Stocks appear to be unstoppable. Dow made a new high today, rising 54.78 or 0.34% to 16,064.77. S&P500 joined in with its own new high, up 8.91 (0.5%) to 1,804.76. Today's higher levels don't altogether remove my doubts expressed yesterday about a coming correction, but I just have to put my hand on my mouth. When a market enters a mania like this, nobody can tell you where it will stop.

Dow in Gold rose 0.29% today to a new high at 12.93 oz (against June's 12.514. Dow in Silver rose to 810.74, not quite to the June 816.77 oz high. Until these indicators turn down again, stocks have not finished their move. It is possible, however, that gold & silver might bottom without that turndown, if they merely trade sideways. Anyway, it's the most reliable indicator I know, so I can't buck it. I'm a fool, but not that big a fool.

Gold added a momentous fifty cents to close Comex at $1,244.10. Silver lost 7.2 cents & closed 1986.2c. Who-ray.

Today's ranges were ever narrower & deader than yesterday's. Gold peaked at $1,248.30 and troughed at $1,242.30, silver 2005c to 1981c.

Most positive sign in silver & gold is what appears to be a spike peak in the gold silver ratio (ratio rises when silver & gold are falling, falls when they are rallying). Yesterday's break was not confirmed as a key reversal, but the ratio didn't go far -- 62.637, up 0.4%. It should retreat from here.

Then there are the Bollinger Bands for silver & gold. Both metals are scuttling along the bottom band. At the June low a puncture through the bottom Bollinger Band marked the bottom. Bollinger bands are volatility bands above and below a moving average. The bands widen and narrow with volatility.

Both silver & gold are dithering around below or at support lines. That usually doesn't promise great thing. However, silver lost 4.1% this week and gold lost 3.4%. Gold has now given back about 75% of its rise from last June's low. And even if silver & gold catch here, what's to raise them? The stock market is sucking all the money in the world into itself. No help for it but to patiently wait for the cracks to appear in Bernanke's playhouse and the public mood to change.

But change it will. Silver & gold bull market has not ended yet. The best is yet to come, croakers, whiners, and doomsayers notwithstanding.

I have to share with y'all a friend's discovery. She's a piano teacher & was having terrible pain & stiffness clasping her hands. She began rubbing castor oil into her knuckles and in three days the pain was gone. When she told me about this, I though, Well, I might try that. I did, with amazing results. Right, I know castor oil isn't a pharmaceutical & doesn't have the FDA stamp of approval so some drug company can make zillions a year off it, but maybe that's why we don't know about it. My grandmother told me to use it on warts -- it works. For age spots, too. Turns out it has potent anti-inflammatory qualities, just rub it in. We use organic castor oil, but my friend just went down to Wal-Mart & bought it.

Who knows? Castor oil might work for y'all.

Y'all enjoy your weekend!

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
22-Nov-13 Price Change % Change
Gold, $/oz 1,244.10 0.50 0.0
Silver, $/oz 19.86 -0.07 -0.4
Gold/Silver Ratio 62.637 0.027 0.0
Silver/Gold Ratio 0.0160 -0.0001 -0.4
Platinum 1,380.90 -9.00 -0.6
Palladium 714.05 0.85 0.1
S&P 500 1,804.76 8.91 0.5
Dow 16,064.77 54.78 0.3
Dow in GOLD $s 266.93 0.83 0.3
Dow in GOLD oz 12.91 0.04 0.3
Dow in SILVER oz 808.82 5.67 0.7
US Dollar Index 80.70 -0.31 -0.4
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SPOT GOLD: 1,241.70      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,277.71 1,285.16 1,285.16
1/2 AE 0.50 632.76 655.00 1,309.99
1/4 AE 0.25 330.34 333.71 1,334.83
1/10 AE 0.10 131.51 136.59 1,365.87
Aust. 100 corona 0.98 1,207.38 1,217.38 1,241.97
British sovereign 0.24 294.05 306.05 1,300.13
French 20 franc 0.19 233.56 236.63 1,267.41
Krugerrand 1.00 1,264.05 1,275.05 1,275.05
Maple Leaf 1.00 1,256.70 1,271.70 1,271.70
1/2 Maple Leaf 0.50 713.98 651.89 1,303.79
1/4 Maple Leaf 0.25 316.63 332.15 1,328.62
1/10 Maple Leaf 0.10 131.62 135.35 1,353.45
Mexican 50 peso 1.21 1,485.02 1,500.12 1,244.19
.9999 bar 1.00 1,246.05 1,257.70 1,257.70
SPOT SILVER: 19.83      
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 14,857.70 15,107.70 21.13
US 40% silver 1/2s 0.30 5,658.10 5,808.10 19.69
100 oz .999 bar 100.00 1,973.00 2,043.00 20.43
10 oz .999 bar 10.00 203.30 204.30 20.43
1 oz .999 round 1.00 19.93 20.48 20.48
Am Eagle, 200 oz Min 1.00 21.58 22.83 22.83
SPOT PLATINUM: 1,380.90      
Platinum Platypus 1.00 1,405.90 1,445.90 1,445.90
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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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