The Moneychanger
Weekly Commentary
Friday, 13 December a.d. 2013 Browse the commentary archive
Here's the weekly scorecard:
  5-Dec-13 13-Dec-13 Change % Change
Silver, cents/oz. 1,946.50 1,955.90 9.40 0.5
Gold, dollars/oz. 1,230.30 1,235.70 5.40 0.4
Gold/silver ratio 63.206 63.178 -0.028 -0.0
Silver/gold ratio 0.0158 0.0158 0.0000 0.0
Dow in Gold Dollars (DIG$) 269.18 263.57 -5.61 -2.1
Dow in gold ounces 13.02 12.75 -0.27 -2.1
Dow in Silver ounces 823.03 805.53 -17.50 -2.1
Dow Industrials 16,020.20 15,755.36 -264.84 -1.7
S&P500 1,805.09 1,775.82 -29.27 -1.6
US dollar index 80.27 80.21 -0.06 -0.1
Platinum 1,355.40 1,362.00 6.60 0.5
Palladium 735.45 715.75 -19.70 -2.7

The worm turned this week, but not without speaking out of both sides of his mouth. Stocks dropped for the second week in a row, while gold and silver rose (slightly). Dollar index flatlined.

Dow managed a face saving little rise today after losing 286.1 the three days before. Added 15.93 or 0.1% to 15,755.36. S&P500 lost still, down 0.18 to $1,775.32, after making a new high on Monday.

The Dow "threw over," that is, climbed above & outside its upper trading channel line, back on 13 November, a month ago. Yesterday it fell cut through that line like a bag of mothballs pushed out of a C130 cargo jet. It's way below its 20 DMA (15,960) & hovering not far above its 50 DMA (15,655). Nothing in other indicators suggests it plans to turn up any time soon. I suspect this one's going to hurt

S&P 500 offers much the same picture as the Dow -- below its 20 DMA (1795) & nearing its 50 DMA (1762), but it hasn't quite fallen back into that trading channel. The line is about where the 50 DMA is. (It climbed out of that trading channel on 18 October.) So far there's no reason to say "This is The Big One" but stocks are lining up a painful correction.

Y'all may not put as much stock in the Dow in Gold & Dow in Dollars as I do, but only because you haven't followed them as long as I have and witnessed their reliability.

Now a natural born fool from North Carolina wants to know about the Dow in Gold & Dow in Silver. I just divide the price of the Dow by the Gold or Silver price to get the indicator. It is very sensitive -- USUALLY -- to changes in the course of stocks against silver or gold. That's why I've been sweating bullets and spitting iron filings since these indicators crossed above their long term downtrend line. Waiting now for both to drop back under those lines. Charts can be seen here: http://bit.ly/IUCIqo & here, http://bit.ly/JotRyC They sometimes turn before prices turn, or before you can be sure they've turned.

After rising barely through their 20 DMAs yesterday, they dropped back through them today. DiS closed lost 0.92% to close the day at 801.39 oz. DiG ended at 12.73 oz, lower by 0.98%. Both have established downtrends, the first sign that silver & gold are about to turn up against stocks. The move is just starting, so we need to see more confirmation, but all indicators point down.

US Dollar index rose 1.4 basis point today (0.04%) to 80.21. Best you can say for it is that it's no longer under support at 80, and it bumped against its 50 DMA (80.39) today. Otherwise it lacks confidence and decisiveness.

Euro, one of the dollar's three competitors for "Rottenest Fiat Currency on the Earthball," fell a tiny 0.7% to $1.3743. Might make another run for $1.3800.

Yen crashed 0.92% yesterday, and added back 0.15% today, ending at 96.62 cents per Y100. I wish those Japanese Nice Government Men would make up their minds whether they're going to push the yen off the cliff or not.

Today gold and silver bounced back, moderately. Gold gained $9.70 to a Comex close at $1,235.70. Silver found 15.7 cent to raise it to 1955.9, not much given the high came at 1974c. On a weekly chart gold flashed an MACD buy signal two weeks ago, but it's a near thing.

On the daily chart gold broke out over the downtrend line from the October high on Monday, and today's action merely took it back to that line for a Kiss Good-Bye. Yeah, that sounds loony, but there 'tis. Other indicators pointing up, too, but we need some confirmation. First I'd like to see gold above that 20 DMA (1,245) next week early then closing above $1,257.50 (last high) and $1,295 (where it broke down).

Silver's monthly chart is a cliffhanger, with silver dead on the uptrend line. On a weekly chart it's just beneath the downtrend line.

Today like gold silver merely moved back to that downtrend line it had burst though on 6 December. Everything but the Rate of Change points up.

Next week will be interesting. We'll either see a big metals slide below recent lows, or gains confirming that bottom on 6 December.

ON 13 December 1642 Dutch navigator Abel Tasman arrived in New Zealand.

To the delight of millions of thumb fingered men too clumsy to tie their ties and women tired of tying them, on 13 December 1928 the clip-on tie was designed. Personally, I hate them clip on ties. Get caught on my overalls.

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
13-Dec-13 Price Change % Change
Gold, $/oz 1,235.70 9.70 0.8
Silver, $/oz 19.56 0.16 0.8
Gold/Silver Ratio 63.178 0.491 0.8
Silver/Gold Ratio 0.0158 0.0001 0.8
Platinum 1,362.00 -1.50 -0.1
Palladium 715.75 -4.05 -0.6
S&P 500 1,775.32 -0.18 -0.0
Dow 15,755.36 15.93 0.1
Dow in GOLD $s 263.57 -1.79 -0.7
Dow in GOLD oz 12.75 -0.09 -0.7
Dow in SILVER oz 805.53 -5.70 -0.7
US Dollar Index 80.21 0.01 0.0
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GOLD Fine Tr.Oz. BID ASK $/oz
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US 40% silver 1/2s 0.30 5,581.40 5,731.40 19.43
100 oz .999 bar 100.00 1,947.00 2,007.00 20.07
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1 oz .999 round 1.00 19.67 20.17 20.17
Am Eagle, 200 oz Min 1.00 21.32 22.57 22.57
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PLATINUM Fine Tr.Oz. BID ASK $/oz
Platinum Platypus 1.00 1,387.00 1,427.00 1,427.00
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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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