The Moneychanger
Daily Commentary
Tuesday, 14 January a.d. 2014 Browse the commentary archive

Why did the libertarian cross the road? None of your business. Am I being detained? (That's the theory -- the performance is another thing.)

Markets rise & markets fall. Trick is to figure out whether either is lasting or a feint.

Stocks, for example, rose today amidst general jubilatin'. They might have pulled the trigger on that a mite early. Dow levitated 115.92 or 0.71% to 16,373.86 while the S&P500 waxed even fatter, boated by 19.68 or 1.08% to 1,838.88.

Only problem is, those rises changed not the chart. The Dow, it's true, rallied, but only to the downtrend line it busted yesterday on its way down. Nothing big, likely merely a kiss good-bye before diving deeper. SPX did the same. Jubilatin' is a mite previous.

Neither the Dow in Gold nor the Dow in Silver (despite both metals' dips) did more than jiggle upward, nervously bouncing off the 50 DMA. Such bounces are to be expected when any sort of support is hit, 50 DMA or channel line or support/resistance. Only the followthrough unfolds the meaning. DiG & DiS both point earthward.

Another example of parsing a fall: US dollar index rallied out through its downtrend channel line, fell back to its 50 & 20 DMAs, which coincided with the downtrend line, & today turned up again. Oh, only 12 basis points (0.15%) but the point is that the downtrend's support held. Dollar continues to lift its finger toward the sun, attempting to fly. It will likely succeed, but, like Icarus, come to a tragic end when its paper wings fall apart.

Euro balked at its 20 DMA. Edged up 0.7% to $1.3679. Trajectory is earthward. Yen flopped back today 1.1% to 95.99 cents per Y100, but only to fill the gap left behind yesterday. Has a double bottom at 94.83 and has broken through the downtrend lie and the 20 DMA. Headed higher, heaven only knoweth why.

More important is the 10 year treasury note yield, which in the last three days broke down through its 20 DMA & uptrend line. Now it has bounced off the 50 DMA which might contain the fall. Remember we are watching interest rates because they turned up in June & will eventually wreck the Fed's Zero Interest Rate Policy & the rest of its garden party.

Silver & gold shaved a little off today, silver backing 11 cents to 2025.1c and gold dwindling $5.70 to $1,245.20.

Silver is acting more like a market tapping at a ceiling than one about to faint. Today silver made the first half of a key reversal with a new high for the move but a lower close. To verify that it must close lower tomorrow. However, today it fell back to the 50 DMA it broke through yesterday & bounced back. Remains above it. Next upward barrier is 2048c. Silver could fall all the way to 2000c without breaking this uptrend.

Gold is playing footsie with its 50 DMA, now at 1,246. There's a resistance/support band from about $1,245 to $1,267.50. Gold is merely slogging its way through that area. Wait, though! Gold did close near its short term uptrend line, so mustn't drop lower than $1,241.40 (today's low) tomorrow.

Silver & gold continue to look stronger than they have lo, these many months. I have bought some and will buy more as it rises, lots more on a close over $1,267.50.

On 14 January 1641, bringing the benefits of Western civilization to the city of Malacca, the United East India Company won the city with only 7,000 killed.

On 14 January 1919 peasants in central Russia rose up against the Bolsheviks. Not everyone wanted to be a communist.

On 14 January 1920 in the US the Dry Law took effect, making it illegal to sell liquor and beer. Many of the peasants in the US didn't want to be dry, either.

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
14-Jan-14 Price Change % Change
Gold, $/oz 1,245.20 -5.70 -0.46%
Silver, $/oz 20.25 -0.11 -0.54%
Gold/Silver Ratio 61.488 0.052 0.09%
Silver/Gold Ratio 0.0163 -0.0000 -0.08%
Platinum 1,431.90 -10.00 -0.69%
Palladium 738.00 -1.10 -0.15%
S&P 500 1,838.88 19.68 1.08%
Dow 14,373.86 115.92 0.81%
Dow in GOLD $s 238.62 3.00 1.27%
Dow in GOLD oz 11.54 0.15 1.27%
Dow in SILVER oz 709.79 9.53 1.36%
US Dollar Index 80.72 0.12 0.15%
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: 1,242.10      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,278.12 1,285.57 1,285.57
1/2 AE 0.50 632.96 655.21 1,310.42
1/4 AE 0.25 330.44 333.81 1,335.26
1/10 AE 0.10 131.56 136.63 1,366.31
Aust. 100 corona 0.98 1,211.42 1,221.42 1,246.09
British sovereign 0.24 294.14 306.14 1,300.53
French 20 franc 0.19 233.64 236.70 1,267.81
Krugerrand 1.00 1,263.22 1,274.22 1,274.22
Maple Leaf 1.00 1,257.10 1,272.10 1,272.10
1/2 Maple Leaf 0.50 714.21 652.10 1,304.21
1/4 Maple Leaf 0.25 316.74 332.26 1,329.05
1/10 Maple Leaf 0.10 131.66 135.39 1,353.89
Mexican 50 peso 1.21 1,485.50 1,500.60 1,244.59
.9999 bar 1.00 1,246.45 1,258.10 1,258.10
SPOT SILVER: 20.15      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 22.50 25.00 32.68
VG+ Peace dollar 0.77 19.50 22.00 28.76
90% silver coin bags 0.72 15,158.00 15,408.00 21.55
US 40% silver 1/2s 0.30 5,752.50 5,902.50 20.01
100 oz .999 bar 100.00 2,005.00 2,100.00 21.00
10 oz .999 bar 10.00 206.50 207.50 20.75
1 oz .999 round 1.00 20.25 20.75 20.75
Am Eagle, 200 oz Min 1.00 21.90 23.15 23.15
SPOT PLATINUM: 1,431.90      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,456.90 1,496.90 1,496.90
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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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