The Moneychanger
Weekly Commentary
Friday, 27 December a.d. 2013 Browse the commentary archive
Here's the weekly scorecard:
  20-Dec-13 27-Dec-13 Change % Change
Silver, cents/oz. 1,941.80 2,001.30 59.50 3.1
Gold, dollars/oz. 1,205.10 1,216.10 11.00 0.9
Gold/silver ratio 62.061 60.766 -1.295 -2.1
Silver/gold ratio 0.0161 0.0165 0.0003 2.1
Dow in Gold Dollars (DIG$) 278.25 280.11 1.86 0.7
Dow in gold ounces 13.46 13.55 0.09 0.7
Dow in Silver ounces 835.36 823.39 -11.98 -1.4
Dow Industrials 16,221.08 16,478.41 257.33 1.6
S&P500 1,818.52 1,841.40 22.88 1.3
US dollar index 80.71 80.50 -0.21 -0.3
Platinum 1,331.90 1,376.00 44.10 3.3
Palladium 697.85 711.05 13.20 1.9

Here's a turn around: stronger week for metals than for stocks, although the Dow today broke a six day streak of new highs. US dollar lost ground as it continues vacillating between heaven & hell.

Both the Dow and the S&P 500 painted the first half of a key reversal -- new high for the move with a lower close. To complete the reversal that must be followed tomorrow by lower closes. After a six day streak of new highs, that's not hard to imagine.

What interests me more is this: the Dow in Gold & Dow in Silver are both FALLING against that backdrop of strong stocks. A few days ago they made new highs, 13.629 oz and 841.56 oz. Today they stand at 13.58 oz & 820.43 oz, and silver is hovering right above its 20 day moving average (816.10 oz). MACD has flashed a sell signal in DiS but not yet in DiG. Rate of Change in both have turned positive.

Once again I remind y'all, I watch these sensitive indicators to pinpoint a turn in silver & gold early. They turned down this week, but will they confirm?

US DOLLAR INDEX fell sharply today, 14 basis points (0.17%) to 80.50. Cut clean through its 20 & 50 DMAs (80.41 & 80.42) at one point & visited a low of 79.82, but recovered to close down only those 14 basis points. Maybe it was a light market today and the Europeans came back from the holiday full of Christmas cheer, but in any event, why can't the dollar break through its downtrend line. Euro managed a huge gain, 0.42% to $1.3749, erasing the losses of the past three weeks. Could not hold at the $1.3800+ downtrend line, but touched it. Yen made a new low for the move at 95.10, down 0.35%.

Gold rose again today, $2.00 to $1,216.10. Silver rose 12.8 cents to 2001.3c.

Now behold & consider. In June the gold intraday low was 1179.40 but it never closed below $1,200. Silver's June intraday low was 1817c, but its low close was 1853.3c.

In December's trading silver has made intraday lows at 1889c (early in the month) and at 1910c (six trading days ago). Low close has been 1914.3c.

Gold's December trading showed an early intraday low at $1,210.10 with a low 6 days ago at $1,186. Low close has been $1,195.40 with two closes below $1,200.

All that is enough to paint a double bottom on the chart, but that needs confirming, like gold's MACD gave a buy signal crossover today. Silver's gave one on the 23rd. Rate of change is climbing out of the hole for both.

But of course the ultimate confirmation is HIGHER PRICE. Silver must climb above its last high at 20.48, then 2100c resistance, and the last peak in October at 2309c.

Gold needs to scale its way clean to $1,267.50 December's high, and beyond. It catches my eye that both Platinum & Palladium have jumped sharply and are at or near their 20 day moving averages.

Silver & gold are lined up better than I've seen them in a long time. That may be an upside down head and shoulders forming in gold and a double bottom in silver. Confirmation! That's what we need. Wait! Is this some of it? HUI and XAU gold stock indices have also turned up.

Let's see what happens when we return to full markets after the New Year holiday.

On 27 December 1845 Dr. Crawford Williamson Long of Jefferson, Georgia used anesthesia in childbirth for the first time, delivering his own child. Another first for the South & Southern ingenuity.

On 27 December 1900 Carrie Nation staged her first raid on a saloon at the Carey Hotel in Wichita, Kansas, smashing every liquor bottle that could be seen. Y'all understand that the excuse for this was "A good cause (here, prohibition) justifies violence." The American public bought this. To confess the truth, their standards of critical judgment are not too high today, and weren't much better back then. And where did Carrie Nation's "Let us do evil, that good may come" philosophy take America? Why the 18th Amendment was passed in 1919 and from 1920 until repeal in 1933 the country was dry as a desert. Well, not really. Those who once slaked their thirst on relatively mild beer were taught to drink bathtub gin. Most important, the mobs found a sound and permanent financial footing bootlegging, & remain with us today.

Yessir, let us do evil, that good may come! Wait. What did you say? War on Drugs? What does that have to do with anything?

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
27-Dec-13 Price Change % Change
Gold, $/oz 1,216.10 2.00 0.2
Silver, $/oz 20.01 0.13 0.6
Gold/Silver Ratio 60.766 0.096 0.2
Silver/Gold Ratio 0.0165 0.0001 0.6
Platinum 1,376.00 13.30 1.0
Palladium 711.05 11.20 1.6
S&P 500 1,841.40 -0.62 -0.0
Dow 16,478.41 -1.47 -0.0
Dow in GOLD $s 280.11 -0.46 -0.2
Dow in GOLD oz 13.55 -0.02 -0.2
Dow in SILVER oz 823.39 -5.37 -0.6
US Dollar Index 80.50 -0.14 -0.2
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SPOT GOLD: 1,215.90      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,249.95 1,258.46 1,258.46
1/2 AE 0.50 619.60 641.39 1,282.77
1/4 AE 0.25 323.47 326.77 1,307.09
1/10 AE 0.10 128.78 133.75 1,337.49
Aust. 100 corona 0.98 1,185.87 1,195.87 1,220.02
British sovereign 0.24 287.94 299.94 1,274.17
French 20 franc 0.19 228.71 231.81 1,241.61
Krugerrand 1.00 1,237.79 1,248.79 1,248.79
Maple Leaf 1.00 1,230.90 1,245.90 1,245.90
1/2 Maple Leaf 0.50 699.14 638.35 1,276.70
1/4 Maple Leaf 0.25 310.05 325.25 1,301.01
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Mexican 50 peso 1.21 1,455.63 1,469.01 1,218.39
.9999 bar 1.00 1,220.16 1,231.90 1,231.90
SPOT SILVER: 20.02      
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 14,954.23 15,204.23 21.26
US 40% silver 1/2s 0.30 5,712.68 5,862.68 19.87
100 oz .999 bar 100.00 1,991.50 2,051.50 20.52
10 oz .999 bar 10.00 205.15 206.15 20.62
1 oz .999 round 1.00 20.12 20.62 20.62
Am Eagle, 200 oz Min 1.00 21.77 23.02 23.02
SPOT PLATINUM: 1,376.00      
Platinum Platypus 1.00 1,401.00 1,441.00 1,441.00
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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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