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Daily Commentary
Thursday, 30 January a.d. 2014 Browse the commentary archive

Well, I reckon the question we all ought to ask ourselves is, How big a sucker are you? In a world where most everything is staged for propaganda purposes, financial & political & cultural, we also have to ask, Is it real, or Memorex?

Before I launch my boat upon the stormy sea of doped-up markets, I realized something spooky this morning as I was waking. On 22 & 23 January several stock market indices were making new all time highs. That was the day the Dow reiterated its non-confirmation by falling the second day in a row. On the 23rd its Niagara began.

Why is that spooky? Because the Dow topped at 11,722 on 22 January 2000, before the rest of the indices topped in March. And because there was a stock market high in 2000, again in 2007, and now, seven years later, in 2014, exactly two times seven years from the 2000 top.

Here's another, smaller spook. Silver & gold bottomed on 28 June 2013, then again on 31 December 2013, right nearly six months to the day or halfway around the year from each other.

But today the sun shone bright in Stockland again. Dow jumped up 109.82 (0.7%) to 15,848.61 & the S&P500, like a giant running its course, leapt 19.99 (1.13%) to 1,794.19.

The raw numbers sound good until you look at the charts, or Dow managed to climb back to support it had broken through, but no more. S&P500 remains way below its 1,812.60 50 DMA, ready to drop through a long term uptrend line. Sure, both indices might catch here, but they need to rise above their 50 DMAs to do that (1,812.60 & 16,153.57).

Gold's tumble today floated the Dow in Gold up a little, 2.76% to 12.76 oz (G$263.77 gold dollars). As yet that amounts to nothing but a tiny countertrend move in a very long downtrend.

Dow in silver rose 3.72% to 828.64 oz, above its 20 and 50 DMAs (817.42 & 815.61). This is an iffier proposition, but needs to close above the 853.15 oz high on 31 December to disprove the downtrend.

US Dollar index, hideous spawn of central banking, rose today 53 basis points (0.66%) to 81.19. This takes it out of immediate danger of visiting the earth's magma core, but not much more. It is trying to turn up again to validate its sluggish uptrend. Did close above the 20 & 50 day moving averages, which at least turns momentum up.

Euro, hideous spawn of central banking & eurocratic bureaucratic tyranny, gapped down below all its moving averages, proving its downtrend once again. Plunged 0.79% to $1.3556. Hope the euro has packed its parachute.

Yen, hideous spawn of central banking & corporatism, fell back 0.49% to 97.21, but remains above its 20 & 50 DMAs & in an uptrend. Why, I can't imagine, since the Japanese Nice Government Men stand ready to stab anybody in the back who trusts a rising yen.

Alas, today was not the day gold burst the bonds of surly earth. Instead, it hit that downtrend line from the April 2013 high at $1,267.70 & fell back as low as $1,237.50. Gold shuttered the Comex $20 (1.64%) lighter at $1,242.20. Silver shucked 42.5 cents (2.18%) to 1911.1c. Today witnessed an 1897c low.

Gold's low took it to but not through its 50 DMA, and closed slightly below the uptrend line. This itself is not fatal, but the 12 day rate of changed went negative today, & the MACD might be rolling over downward.

No way to predict what will happen here. Gold has been very strong, so the 50 DMA which in past months has acted as a barrier to stopping it might now support it. Or we might see lower prices still. I am watching the $1,210 line as the shoulder line of what might be a upside-down head & shoulders. As long as that $1,210 line at the top of the shoulders remains intact, the pattern remains valid & presages an upside breakout. See chart at

Silver's low at 1897c today shattered the little uptrend it had going, but stopped about where declines stopped through December at 1889c & 1910c. Remember the December intraday low came at 1872c, so that's silver's drop-dead line. MACD & RoC & RSI all point downward, I am sad to report.

Not sure why, but I really don't expect another waterfall out of silver & gold from here. Might be too big a natural born fool from Tennessee to see it coming.

On 30 January 1647 the Scots agreed to sell King Charles I to the English Parliament for 400 pounds. Frankly, they got more than he was worth.

Getting their revenge, on 30 January 1661 the newly restored Charles II had the chief rebel against his Stuart father, Lord Protector Of the Commonwealth of England Oliver Cromwell, ritually executed after he had been dead for two years. Must not have been a very exciting execution.

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
30-Jan-14 Price Change % Change
Gold, $/oz 1,242.20 20.00 1.64%
Silver, $/oz 19.11 -0.43 -2.18%
Gold/Silver Ratio 64.999 2.438 3.90%
Silver/Gold Ratio 0.0154 -0.0006 -3.75%
Platinum 1,380.70 -25.80 -1.83%
Palladium 706.65 -4.30 -0.60%
S&P 500 1,794.19 19.99 1.13%
Dow 15,848.61 109.82 0.70%
Dow in GOLD $s 263.74 -2.46 -0.92%
Dow in GOLD oz 12.76 -0.12 -0.92%
Dow in SILVER oz 829.29 23.66 2.94%
US Dollar Index 80.66 0.08 0.10%
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SPOT GOLD: 1,242.20      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,274.50 1,283.19 1,283.19
1/2 AE 0.50 633.01 654.64 1,309.28
1/4 AE 0.25 318.06 333.53 1,334.12
1/10 AE 0.10 130.33 136.02 1,360.21
Aust. 100 corona 0.98 1,211.52 1,220.52 1,245.17
British sovereign 0.24 294.17 306.17 1,300.63
French 20 franc 0.19 233.66 236.72 1,267.91
Krugerrand 1.00 1,260.83 1,270.83 1,270.83
Maple Leaf 1.00 1,257.20 1,272.20 1,272.20
1/2 Maple Leaf 0.50 714.27 652.16 1,304.31
1/4 Maple Leaf 0.25 316.76 332.29 1,329.15
1/10 Maple Leaf 0.10 131.67 135.40 1,354.00
Mexican 50 peso 1.21 1,485.62 1,496.62 1,241.28
.9999 bar 1.00 1,246.55 1,261.20 1,261.20
SPOT SILVER: 19.11      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 23.00 25.00 32.68
VG+ Peace dollar 0.77 20.00 22.00 28.76
90% silver coin bags 0.72 14,307.87 14,557.87 20.36
US 40% silver 1/2s 0.30 5,446.00 5,596.00 18.97
100 oz .999 bar 100.00 2,411.10 1,956.10 19.56
10 oz .999 bar 10.00 191.11 197.11 19.71
1 oz .999 round 1.00 19.11 19.66 19.66
Am Eagle, 200 oz Min 1.00 20.36 21.81 21.81
SPOT PLATINUM: 1,380.70      
Plat. Platypus 1.00 1,405.70 1,445.70 1,445.70
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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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