The Moneychanger
Daily Commentary
Tuesday, 21 January a.d. 2014 Browse the commentary archive

Markets sprang back into action today, but they blew an uncertain trumpet. Bewilderment reigns.

Stock indices all rose today -- except the senior Dow Jones Industrial average, which fell 0.27% or 44.12 points to 16,414.44. S&P500 rose by about the same amount, up 0.28% (5.1 points) to 1,843.80.

Dow's fall looks nastier because it rose to a new high for the move (not a new all-time high) then fell off to close lower, and below the 20 DMA (16,426.41). That's the first half of a key reversal, & if followed by a lower close tomorrow semaphores immediately lower prices.

S&P500's trading day looks much the same, cutting into but not closing below its 20 DMA, but it closed higher than Friday. None of this looks happy to me. Certainly stocks have not yet peaked, but they are blowing hot & cold out of both sides of the mouth. As with bankers & girlfriends, this is not a sign of future felicity.

Silver & gold gainsaid each other today, which left the Dow in Gold & Dow in Silver at odds, too. Dow in Gold rose a little 0.78% to 13.23 oz (G$273.49 gold dollars). It treadeth still below the 20 DMA and along the cliff edge of the trading channel and 50 DMA (13.01oz/G$268.94). A single misstep sends it plunging into the abyss.

Dow in silver rose 2% to 826.51 oz, touching the 20 DMA at 826.47. Remains near the bottom channel line and close to the 50 DMA (807.05 oz). Break through those 50 DMAs would rev up downward momentum, sort of like tying concrete blocks to somebody's feet before pushing him out of an airplane.

The festering US dollar index keeps trending up, sort of, but three steps forward and two back. Today it reached for the 200 DMA (81.57), made a high at 81.53, then fell back & closed 14 basis points (0.17%) lower than Friday. Headed up, but torturing its friends along the way. To your everlasting surprise, I beg to report that I am not among those friends.

Among the other loathsome, immoral, & corrupt fiat currencies used to decapitalize their captive economies, the Euro rose 0.16% to $1.3562, but this is like shaving a pig. Time the shave is done, he's still a pig. Euro is done broke down & beat up, and today's bounce weigheth no more than styrofoam chips in a windstorm.

Yen remains above its 20 DMA (95.70) but unenthusiastic. Rose 0.07% today to 95.93 cents/Y100. Indicators say it has turned up, yet the chart pelaseth not the eye, nor showeth any strength.

Ten year treasury yield is dancing with its 50 DMA (2.843) in a correction. Lost 0.07% to 2.825%. May head lower in the immediate future, but the 30 year trend in bonds turned up this summer. Bigger changes coming here, no matter how slowly they unfold. Higher rates will bring more severe migraines to Janet & the rest of the international central bank criminals.

Same old tricks attacked the gold market today after Friday's exuberant close. A little after New York opened somebody slammed it with sales, driving gold from $1,246 to $1,237 in five minutes. It found a foothold & climbed above $1,240 by noon-thirty, but flattened out the rest of the day. High came at $1,262 in overnight trading, low at $1,235.40. Comex closed down $9.40 (0.75%) at $1,242.30.

What's encouraging about that? Gold remained above the 50 DMA ($1240.38). What's discouraging? It made a new high for the move, but closed lower for the day, first half of a key reversal. Must close higher tomorrow or probe lower prices again.

Oh, silver! Plunged 42.9 cents (2.1%) today to 1983.8c. Range was 2043c to 1966c, and silver has fallen right back into the same old trading range without escaping through 2050c. Worse, it fell through the 50 DMA (2000c) and the 20 DMA (1988c) and through the uptrend line.

Be patient. Silver must hold above 1950c here. Gold must hold $1,210. Nobody is going anywhere until gold rises above $1,267.70, the December low.

Just to show you how times have changed, on 21 January 1908 New York City make smoking by women illegal, but the mayor vetoed the ordinance, whether as a libertarian partisan of the Nasty Weed & one's right to smoke or as a women's rights advocate, history sayeth not. Today the city has laws forbidding men AND women to smoke most places, spreading totalitarian control to both sexes with egalitarian glee.

On 21 January 1824 was born Thomas Jonathan "Stonewall" Jackson, a babe destined to become one of the mightiest warriors the world had ever seen, yet one of the tenderest Christians. He hated war, & that accounted for his relentless fierceness: he wanted to end it quickly.

Jackson was famous for his personal bravery in battle. When someone asked him what caused it, he said, "My religious belief teaches me to feel as safe in battle as in bed. God has fixed the time for my death. I do not concern myself about that, but to be always ready, no matter when it ay overtake me. That is the way all men should live, and then all would be equally brave." Had Providence not taken him away from us -- had he been at Gettysburg with Lee instead of Longstreet, well, y'all would need a passport now to drive from Washington to Fairfax.

Best Jackson biography came from James I Robertson, Jr. about 1994, "Stonewall Jackson: The Man, the Soldier, the Legend." Robertson superbly presents Jackson's quirky but authentic character, genius, and faith. Best movie is Ron Maxwell's 2003 "Gods & Generals" with Stephen Lang as Jackson.

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
21-Jan-14 Price Change % Change
Gold, $/oz 1,242.30 -9.40 -0.75%
Silver, $/oz 19.84 -0.43 -2.12%
Gold/Silver Ratio 62.622 0.862 1.40%
Silver/Gold Ratio 0.0160 -0.0002 -1.38%
Platinum 1,452.00 -0.60 -0.04%
Palladium 747.15 -0.50 -0.07%
S&P 500 1,843.80 5.10 0.28%
Dow 16,414.44 -44.12 -0.27%
Dow in GOLD $s 273.14 1.32 0.49%
Dow in GOLD oz 13.21 0.06 0.49%
Dow in SILVER oz 827.42 15.34 1.89%
US Dollar Index 81.24 -0.14 -0.17%
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SPOT GOLD: 1,241.10      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,272.13 1,284.54 1,284.54
1/2 AE 0.50 632.45 654.68 1,309.36
1/4 AE 0.25 330.18 333.55 1,334.18
1/10 AE 0.10 131.45 136.52 1,365.21
Aust. 100 corona 0.98 1,210.44 1,219.44 1,244.08
British sovereign 0.24 293.91 305.91 1,299.52
French 20 franc 0.19 233.45 236.51 1,266.81
Krugerrand 1.00 1,260.96 1,270.96 1,270.96
Maple Leaf 1.00 1,256.10 1,271.10 1,271.10
1/2 Maple Leaf 0.50 713.63 651.58 1,303.16
1/4 Maple Leaf 0.25 316.48 331.99 1,327.98
1/10 Maple Leaf 0.10 131.56 135.28 1,352.80
Mexican 50 peso 1.21 1,484.30 1,495.30 1,240.19
.9999 bar 1.00 1,245.44 1,257.10 1,257.10
SPOT SILVER: 19.88      
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 14,854.13 15,104.13 21.12
US 40% silver 1/2s 0.30 5,671.38 5,821.38 19.73
100 oz .999 bar 100.00 1,977.50 2,072.50 20.73
10 oz .999 bar 10.00 203.75 204.75 20.48
1 oz .999 round 1.00 19.98 20.48 20.48
Am Eagle, 200 oz Min 1.00 21.63 22.88 22.88
SPOT PLATINUM: 1,452.00      
Plat. Platypus 1.00 1,477.00 1,517.00 1,517.00
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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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