The Moneychanger
Daily Commentary
Wednesday, 5 March a.d. 2014 Browse the commentary archive

Now I ain't no more'n a nacheral born fool from Tennessee but when I saw this headline, "EU offers Ukraine $15 billion over 7 years to avert default," my little pea-brain fell a-working. Friend of mine once told me when you don't understand what was going on, you jus' FOLLOW THE MONEY.

So, what is Ukraine gonna default on? Bonds, I reckon. And who likely owns them bonds? Banks, I reckon. So if I follow this money-trail like any good tracking dog, I tree a banker! The EU is offering to bail out the banks so they can give in to Putin and keep the gas flowing under Ukraine to Berlin, Brussels, & Paris. But folks, this ain't "working for whirled peas," this is just another sample of bailing out the banks, the real rulers of our world.

Ain't y'all glad that y'all have the honor of keepin' them bankers up in the style they're used to? Hey, pass them collards, Mama! We can't afford no fatback in 'em cause the bankers need caviar.

On Wall Street today sobriety broke out. Dow continues to lag and lost 35.7 (0.22%) to 16,360.18. S&P500 lost only 0.1 (0.01%) to 1,873.81. (Who could tell?) Several cycles point to tomorrow as a turning day, so watch out.

With stocks inching down and silver & gold inching up, the Dow in Metals backed off today. Yesterday's rise in the Dow in Gold took it to the downtrend line & above the 20 DMA, but today it fell away and ended below the 20 DMA at 12.19 oz (G$251.99 gold dollars), down 0.66%. I'm still bracing for reaction rally, but may be disappointed if stocks peak or turn down tomorrow, as I expect.

Dow in Silver dropped 0.31% or 2.42 oz to 771.89 oz. It remains above its 20 DMA but a long ways below it downtrend line.

The flakey US Dollar Index lost 3 basis points (0.04%) to 80.14. In spite of hopeful economic statistics today, the euro dropped 0.06 to $1.3733. In the last four months the euro has painted the chart with double peaks at $1.3847 and $1.3824. Looks like their banks need more subsidies. Yen keeps moving sideways. Lost 0.08% today & ended at 97.71 cents/Y100, sliding beneath its 20 DMA.

Silver gained 5.1 cents to close Comex at 2123.9c. Gold gained $2.40 and ended at $1,340.20.

I can't make up my mind any more than silver & gold can how far a correction might go. Gold's MACD is about to signal "sell" and silver's already has. Stochastics are rolling over downward. All that suggests the reaction has started, but tells us nothing about how long or how far it will carry. In any event, almost all the evidence argues that the lows are behind us with the double bottom seen as December ended. Thus the next big move should be up.

Sometimes I wonder why I bother trying to figure all this out. After all, the END is sure. History teaches -- and whales the tar out of those who won't learn -- that fiat money schemes always end catastrophically. Why do Americans think they are the exception? Because we grow such clever central bankers? Because we're so nice? Because we have Dancing with the Stars? None of that changes the iron laws of reality, and the iron law is that creating money out of thin air ends catastrophically.

On 5 March 1904 the inventor, electrical & mechanical engineer, and genius Nikola Tesla described the process of ball lightning formation. You quickly run out of superlatives describing Tesla. Born of Serbian parents in 1856, Tesla had a photographic memory, & could perform integral calculus in his head. His teachers thought he was cheating. He attended university, but never graduated. After considerable experience in electrical engineering, he moved in 1884 to New York City, where he went to work for Thomas Edison. Later he quit when Edison welched on a promise.

Tesla set up his own company and eventually invented the alternating current motor. Although the entire world operates today on alternating current, at that time direct current held sway. Although safer than AC, DC could not be transmitted over long distances. Edison later went to a war over which form of current would dominate, and sent his agents around the country electrocuting cats & dogs by AC to prove how dangerous AC was. Eventually he lost.

I don't have space to list even part of Tesla's inventions. Sadly Tesla's later life was lived in obscurity and poverty. About 1900 he became involved with the banker JP Morgan, who many say, later ruined him. He was working on wireless transmission of electricity.

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
5-Mar-14 Price Change % Change
Gold, $/oz 1,340.20 2.40 0.18%
Silver, $/oz 21.24 0.05 0.24%
Gold/Silver Ratio 63.101 -0.039 -0.06%
Silver/Gold Ratio 0.0158 0.0000 0.06%
Platinum 1,476.00 12.80 0.87%
Palladium 72.65 8.95 14.05%
S&P 500 1,873.81 -0.01 -0.00%
Dow 16,360.18 -35.70 -0.22%
Dow in GOLD $s 252.35 -1.00 -0.40%
Dow in GOLD oz 12.21 -0.05 -0.40%
Dow in SILVER oz 770.29 -3.54 -0.46%
US Dollar Index 80.14 -0.03 -0.04%
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SPOT GOLD: 1,337.40      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,374.85 1,384.21 1,384.21
1/2 AE 0.50 681.56 704.48 1,408.95
1/4 AE 0.25 340.78 358.92 1,435.70
1/10 AE 0.10 140.32 146.45 1,464.45
Aust. 100 corona 0.98 1,304.36 1,313.36 1,339.89
British sovereign 0.24 317.19 321.94 1,367.61
French 20 franc 0.19 251.57 254.54 1,363.38
Krugerrand 1.00 1,353.45 1,363.45 1,363.45
Maple Leaf 1.00 1,352.40 1,367.40 1,367.40
1/2 Maple Leaf 0.50 769.01 702.14 1,404.27
1/4 Maple Leaf 0.25 341.04 357.75 1,431.02
1/10 Maple Leaf 0.10 141.76 145.78 1,457.77
Mexican 50 peso 1.21 1,604.31 1,615.31 1,339.73
.9999 bar 1.00 1,342.08 1,356.40 1,356.40
SPOT SILVER: 21.19      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 25.50 27.50 35.95
VG+ Peace dollar 0.77 22.50 24.50 32.03
90% silver coin bags 0.72 15,687.10 15,937.10 22.29
US 40% silver 1/2s 0.30 6,059.30 6,209.30 21.05
100 oz .999 bar 100.00 2,124.00 2,174.00 21.74
10 oz .999 bar 10.00 212.40 217.40 21.74
1 oz .999 round 1.00 21.29 21.79 21.79
Am Eagle, 200 oz Min 1.00 22.69 23.89 23.89
SPOT PLATINUM: 1,476.00      
Plat. Platypus 1.00 1,491.00 1,508.00 1,508.00
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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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