The Moneychanger
Daily Commentary
Wednesday, 11 December a.d. 2013 Browse the commentary archive

Better pay attention to those key reversals & descending peaks. Otherwise, they'll come back to bite you like they did stocks today.

Stocks gained 204.02 in two days last week, in one day alone adding 198.69 points. In the last two days, they've lost 182 points, and that's not over. Another caveat: got to watch those B-waves. Markets often correct in a wave down, wave up, wave down pattern -- ABC. B-wave corrections are often so strong they'll fool you into believing the correction has passed. It hasn't.

Dow today lost 129.6 (0.81%) to 15,843.53. S&P500 misplaced some 20.4 points (1.13%) to land on 1,782.22. All the other indices I watch fell today, too, and ended at the lows.

What's stacked against stocks? Both indices closed beneath their 20 day moving average (15,970 & 1,796). S&P500 is heading for the upper boundary line of its former trading range where it "threw over" (crossed above the upper boundary). Dow closed right at that line today. MACD honked a SELL signal on 1 December, RSI is falling, Rate of Change for both has gone into negative territory. All this witnesses that momentum points firmly down & lower prices will come.

Now let us turn to my fav-O-rite indicators, the Dow in Gold & the Dow in Silver. Oh, yes, both dropped today, yea, and both stand well below their 20 DMA (12.77 oz & 800 oz). MACD, RSI, RoC all point down. Dow in gold ended the day at 12.6 oz (G$260.46 gold dollars), lower by 0.49%. Dow in silver fell to 778.32 oz, losing 0.55% from yesterday.

Yea, I confess, it is too early to proclaim with certainty that silver & gold have turned up against stocks, but that appears to be the case. (Remember, these indicators RISE as stocks gain value against silver & gold, and FALL when stocks are weaker than silver & gold.) Both indicators have traced double tops, and now turned down. Closes below the 50 & 200 day moving averages will add confirmation, but the big confirmation comes when they close once more beneath the long term downtrend line. For DiS that's about 595 oz right now, for DiG about 10.2 oz.

YO! Nice Government Men! YO! Don't y'all care about the US dollar index? It's dropping like your glasses into the lake when they slip off your face fishing. Today the dollar index lost 8 more basis points (0.11%) to 79.88, and sits below that support line that stretches back to late 2011. This does not look promising. If it falls, nothing stands underneath to catch the buck except, oh, 78, or 74.75.

The mighty euro, Franken-currency extraordinaire, rose 0.19% today to $1.3786, pushing hard for the downtrend line at $1.3800 +. I know all those German manufacturers are just thrilled to see the rising euro price their exports out of the market against the US and Japan.

Yen continued a two day winning streak -- two day? -- rising 0.40% to 97.65 cents/Y100. It might have caught, but must rise a long way to confirm that change of heart.

Gold gave up $3.90 to $1,258.50 while silver added 4.2 cents to 2029.8c.

This was a satisfactory day, despite gold's retreat. Gold merely touched back to its 20 DMA ($1,252) and stopped. This came after a brisk three-day climb. That's sound, that's solid. Also, volume dropped today.

On Comex silver actually added 4.2 cents but at day's end it was down 14 cents to 2027c, still way above the 20 dma (1997c). All other indicators still point in the same direction: up.

What I missed telling y'all yesterday is that over the last three to four days both metals have pierced the downtrend line from the November highs.

That downtrend line forms the top of a falling wedge, by the way, and these have fooled us in the past. They ought to break out upside, and they have been doing that for the last year and more, but then they keep failing & falling back. Wherefore, let us demand more confirmations, such as

1. A close above the 50 day moving averages, now $1,278 & 2113c.

2. Closes above the last highs, 2309c & $1,362.

3. Remaining above support about 2000c & $1,252.

So what can I say to all this? That we tentatively have a bottom, 6 December's closes at 1946.5c & $1,230.30, AS LONG AS they continue to meet the hurdles above.

I bought a tiny bit today. This is getting better day by day, but I am still braced against a disappointment.

In one of the stupidest acts in a war loaded with stupid acts, on 11 December 1862 Union General Ambrose Burnside occupied Fredericksburg and prepares to attacked Confederate forces under General Robert E. Lee entrenched on Marye's heights. He kept throwing his troops against these impregnable positions, and lost 12,653 men, a bit more than 1/10 of the 114,000 union troops engaged.

On 11 December 1816 Indiana became the union's 19th state. I've visited the Indiana Alps in Indianapolis. One fine thing I've noticed about folks from Indiana: they keep their word, with few exceptions.

I heard about a documentary, "Money For Nothing: Inside the Federal Reserve," and could I resist anything with that title? Not likely. I got to watch it two nights ago, and it was really good and not so good.

Really good, because it has very serious adults -- Paul Volcker, Jim Grant, Jeremy Grantham, Alan Blinder, among others -- laying out the history & errors of the Fed, especially the lunacy of the Greenspan & Bernanke years. This part is superb.

However, the film shrinks from the logical conclusion, that the Fed itself is the error and must be abolished. This is a not so good, but in a world where we Fed opponents can't get a hearing, I'll take what I can get.

Don't let my criticism fool you. This is the best film about the Fed I've seen in years, & I've seen 'em all. Y'all will profit from seeing it, since very few people know "sic 'em" from "come here" about the Fed. Most people think it's a government agency, but it's privately owned by the banks. It would be a good idea to buy a copy & invite your friends over to see it, or to pass it around.

Here's the good part: from now through 24 December if you use the promo code HOLIDAY, you can get the movie on DVD, Blu-ray, or digital download at 10% off. Go to www.moneyfornothingthemovie.org.

I have no financial interest in recommending this film.

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
10-Dec-13 Price Change % Change
Gold, $/oz 1,262.40 27.10 2.19%
Silver, $/oz 20.26 0.61 3.12%
Gold/Silver Ratio 62.322 -0.562 -0.89%
Silver/Gold Ratio 0.0160 0.0001 0.90%
Platinum 1,387.80 -7.20 -0.52%
Palladium 738.00 -1.30 -0.18%
S&P 500 1,802.62 -5.75 -0.32%
Dow 15,973.13 -52.40 -0.33%
Dow in GOLD $s 261.56 -6.61 -2.47%
Dow in GOLD oz 12.65 -0.32 -2.47%
Dow in SILVER oz 788.56 -27.23 -3.34%
US Dollar Index 79.98 -0.18 -0.22%
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: 1,261.30      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,299.14 1,305.45 1,305.45
1/2 AE 0.50 642.75 665.34 1,330.67
1/4 AE 0.25 335.55 338.97 1,355.90
1/10 AE 0.10 133.59 138.74 1,387.43
Aust. 100 corona 0.98 1,227.67 1,237.67 1,262.67
British sovereign 0.24 298.69 310.69 1,319.84
French 20 franc 0.19 237.25 240.28 1,287.01
Krugerrand 1.00 1,281.48 1,292.48 1,292.48
Maple Leaf 1.00 1,276.30 1,291.30 1,291.30
1/2 Maple Leaf 0.50 725.25 662.18 1,324.37
1/4 Maple Leaf 0.25 321.63 337.40 1,349.59
1/10 Maple Leaf 0.10 133.70 137.48 1,374.82
Mexican 50 peso 1.21 1,508.46 1,523.75 1,263.79
.9999 bar 1.00 1,265.71 1,277.30 1,277.30
SPOT SILVER: 20.27      
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 15,136.55 15,386.55 21.52
US 40% silver 1/2s 0.30 5,787.90 5,937.90 20.13
100 oz .999 bar 100.00 2,017.00 2,077.00 20.77
10 oz .999 bar 10.00 207.70 208.70 20.87
1 oz .999 round 1.00 20.37 20.87 20.87
Am Eagle, 200 oz Min 1.00 22.02 23.27 23.27
SPOT PLATINUM: 1,387.80      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,412.80 1,452.80 1,452.80
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© 2015 Little Mountain Corporation, d.b.a. The Moneychanger. All rights reserved. May not be republished in any form, including electronically, without our express permission.

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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