The Moneychanger
Weekly Commentary
Friday, 7 February a.d. 2014 Browse the commentary archive
Here's the weekly scorecard:
  31-Jan-14 7-Feb-14 Change % Change
Silver, cents/oz. 1,910.50 1,992.00 81.50 4.3
Gold, dollars/oz. 1,240.10 1,263.30 23.20 1.9
Gold/silver ratio 64.910 63.419 -1.491 -2.3
Silver/gold ratio 0.0154 0.0158 0.0004 2.4
Dow in Gold Dollars (DIG$) 261.69 258.44 -3.25 -1.2
Dow in gold ounces 12.66 12.50 -0.16 -1.2
Dow in Silver ounces 821.71 792.88 -28.84 -3.5
Dow Industrials 15,698.85 15,794.08 95.23 0.6
S&P500 1,782.59 1,797.02 14.43 0.8
US dollar index 81.37 80.74 -0.63 -0.8
Platinum 1,374.10 1,377.60 3.50 0.3
Palladium 703.00 708.60 5.60 0.8

That shoe's on the other foot now. Gold & silver rose strongly this week, stocks tumbled and only came back the last two days. US dollar index is floundering while even platinum & palladium rose.

Still not clear to me whether we've seen the ultimate top in stocks or not. Either way, you can expect these countertrend rallies to be strong as a garlic milkshake. That bullish mentality still reigns o'er stocks, & will buy at the drop of a hat, and they'll drop the hat.

Yesterday stocks had their best day of 2014, and didn't slouch today,. Dow climbed 165.55 (1.06%) to 15,794.08. S&P500 scaled 23.59 (1.33%) to 1,797.02. Rally might carry to the top channel boundary, now about 16,000 where also today the 20 DMA lies (1,001) or to the 50 DMA (16,101.34). Not much higher. Analogues for those numbers on the S&P500 are 1804.25 & 1809.35.

Y'all ought to pause to remember that a bear market likes to pull the maximum number of victims into his den before he mauls them at his leisure.

Whoops, the debt limit fight is back. Aww, SHOOT! The yankee government's gonna run out of money unless congress acts by end February to let it borrow more. What if congress did nothing & the whole blasted thing shut down. Hush! I reckon I can dream, can't I?

US dollar index lost 0.30% (24 basis points) to 80.74, below the 20 DMA and barely above the 50 DMA. The dollar is doing nothing until it breaks out of the 81.50 - 79.50 range. Internally the dollar has an uptrend line at about 80.40, so breaking that would send it lower. Dollar's must-hold line is 80.

The Frankencurrency (euro) climbed back to the top of its downtrend channel and to its 50 DMA, which spot also coincides with the uptrend line the euro crashed through back in January. I am not impressed.

The Yen is atoning for its recent rally. Fell 0.24% to 97.49, but still in rally mode.

Gold refuses to yield, and gained another $5.70 today to close Comex at $1,263.30 after a $1,272 high. Silver gained 1.2 cents (why bother?) to 1992c.

Gold has literally WALKED through it downtrend line from last April, just steadily trading sideways till it crossed that downtrending line. Gold wants badly to close above $1,267.50, the December low, but can't quite get through. Ended today at $1,267. Mercy.

Since December 23 gold has closed every week higher than the last, except for last week. Very promising.

Silver remains above its 20 & 50 DMA, but without attacking 2050c can go nowhere. It must break out of that range.

Gold/Silver ratio has been dropping all this month, hinting of higher metals' prices.

Other markets remain hopeful for silver & gold. Gold/Bank Stocks is falling (gold is gaining strength against banks). Gold stock indices HUI, GDX, & XAU have all turned up after a puking-sick year.

One final spike down for silver & gold cannot be ruled out until gold climbs above $1,267.50 AND $1,314, the 200 day moving average -- and stays there. Still, this is the best horizon for metals we've seen in a year.

On 7 February 1947 the main cache of the Dead Sea Scrolls, dating to 150 BC - 68 AD was found in caves by the Jordan River.

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
7-Feb-14 Price Change % Change
Gold, $/oz 1,263.30 5.70 0.5
Silver, $/oz 19.92 0.01 0.1
Gold/Silver Ratio 63.419 0.286 0.5
Silver/Gold Ratio 0.0158 0.0000 0.1
Platinum 1,377.60 4.30 0.3
Palladium 708.60 -1.55 -0.2
S&P 500 1,797.02 23.59 1.3
Dow 15,794.08 165.55 1.1
Dow in GOLD $s 258.44 1.58 0.6
Dow in GOLD oz 12.50 0.08 0.6
Dow in SILVER oz 792.88 7.84 1.0
US Dollar Index 80.97 -0.11 -0.1
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: 1,268.10      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,299.80 1,309.95 1,309.95
1/2 AE 0.50 646.22 668.29 1,336.58
1/4 AE 0.25 324.69 340.48 1,361.94
1/10 AE 0.10 133.05 138.86 1,388.57
Aust. 100 corona 0.98 1,236.78 1,245.78 1,270.94
British sovereign 0.24 300.30 312.30 1,326.69
French 20 franc 0.19 238.53 241.55 1,293.81
Krugerrand 1.00 1,284.59 1,294.59 1,294.59
Maple Leaf 1.00 1,283.10 1,298.10 1,298.10
1/2 Maple Leaf 0.50 729.16 665.75 1,331.51
1/4 Maple Leaf 0.25 323.37 339.22 1,356.87
1/10 Maple Leaf 0.10 134.42 138.22 1,382.23
Mexican 50 peso 1.21 1,519.65 1,530.65 1,269.51
.9999 bar 1.00 1,272.54 1,287.10 1,287.10
SPOT SILVER: 20.05      
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 82,260.75 82,510.75 115.40
US 40% silver 1/2s 0.30 5,723.00 5,873.00 19.91
100 oz .999 bar 100.00 2,505.00 2,050.00 20.50
10 oz .999 bar 10.00 200.50 206.50 20.65
1 oz .999 round 1.00 20.05 20.60 20.60
Am Eagle, 200 oz Min 1.00 21.30 22.75 22.75
SPOT PLATINUM: 1,377.60      
Platinum Platypus 1.00 1,402.60 1,442.60 1,442.60
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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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