The Moneychanger
Weekly Commentary
Friday, 7 March a.d. 2014 Browse the commentary archive
Here's the weekly scorecard:
  27-Feb-14 7-Mar-14 Change % Change
Silver, cents/oz. 2,131.40 2,089.70 -41.70 -2.0
Gold, dollars/oz. 1,331.60 1,338.10 6.50 0.5
Gold/silver ratio 62.475 64.033 1.558 2.5
Silver/gold ratio 0.0160 0.0156 -0.0004 -2.4
Dow in Gold Dollars (DIG$) 252.62 254.17 1.55 0.6
Dow in gold ounces 12.22 12.30 0.08 0.6
Dow in Silver ounces 763.47 787.32 23.85 3.1
Dow Industrials 16,272.65 16,452.72 180.07 1.1
S&P500 1,854.29 1,878.04 23.75 1.3
US dollar index 80.32 79.73 -0.59 -0.7
Platinum 1,452.15 1,483.00 30.85 2.1
Palladium 742.25 781.60 39.35 5.3

I was expecting that last week put a little cap on silver & gold for a while, & another week makes that look accurate, even though gold gained this week. Stocks continue to rise, probing how much air hot government money can blow into a balloon. Unrest in southern African & Russia, home to most of the world's platinum & palladium, pushed up the white metals. Their piper often plays a different tune than gold & silver's. US dollar index set itself up for a trip to 79.

S&P500 made another new high this week, but the Dow laggeth still. Oddly, most indices (Nasdaq, Nasdaq 100, Russell 2000) dropped but the Dow rose 30.83 (0.2%) today to 16,452.72. S&P500 climbed 1.01 (0.05%) to end up at 1,878.04. Is the Dow making up its mind to play catch-up? If so, stocks can go higher into May.

Dow in Gold rose 0.97% to 12.28 oz (G$253.85 gold dollars), & punched a little hole in the downtrend line and the 20 DMA (12.24). This whisper & today's gold drop tends to confirm my suspicion that the DiG is ripe for a rally to correct briefly its long fall from December.

Dow in silver rose 3% to 787.40 oz, but unlike DiG remains below its downtrend line. Right now that coincides with the 50 DMA (795.56 oz). Both the DiS & DiG will move higher for a while.

US Dollar Index rose an embarrassing five basis points (0.06%) today, just enough to avoid classification with the Zimbabwean dollar. It's a bad week indeed when a Russian invasion of Ukraine can't raise the dollar index.

Dollar Index has formed a falling wedge. Wedges usually resolve with a breakout in the opposite direction they point, so that suggests the dollar should soon begin some rally, but perhaps not before visiting 79.

The euro settled questions about its short term future by rising 0.15% to $1.3882. Well, really I am anticipating because the Euro closed smack on its old upper trend line, but I think a two day close above the last high ($1.3847) will probably carry it higher. Technically it could run to $1.4000 or $1.4200, but 'tis hard to picture how the eurocrats could stand that much downward pressure on their exports. Maybe the Fed is strong-arming them?

The yen, on the other hand, has tanked this week, and today lost another 0.14% to 96.84, below its 50 DMA (96.97). Wait to buy your Japanese dinner china, as it will be cheaper next week.

Gold lost 1% or $13.60 today in a steep drop to $1,338.10 while silver tumbled 3% (64.5 cents) to 2089.7c. Owch! Below 2100c.

Right now it appears that gold is entering a correction that will fall to the bottom of the trading channel, right now about $1,320 and rising, or even to the 200 DMA at $1,303.14. Conceivable is a drop to the neckline of the upside down head and shoulders it broke down in February, now about $1,280.

I find gold corrections almost as much fun as rubbing down my feet with broken glass & salt, but we've got to live through them. I expect this one to be minor, and to offer an opportunity to buy a bushel at a sale price.

On the monthly chart Gold has three months' running rise. On the weekly chart gold just this week closed ABOVE the downtrend line from the August 2011 high. That's a milestone.

Silver today at last dropped below its 200 DMA (2100c) to the upper border of the trading range that contained it form November's end through February's middle. First target for a reversal is 2036c, the 50 day moving average.

Get your money can down off the shelf and get ready. Very soon silver & gold will offer you a buying opportunity. Watch closely.

On 7 March 1847 US General Winfield Scott occupied Vera Cruz, Mexico. On 7 March 1911 after a Mexican revolution the US sent 20,000 troops to the Mexican border. I can't figure out why those Mexicans don't trust the United States.

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-Mar-14 Price Change % Change
Gold, $/oz 1,338.10 -13.60 -1.0
Silver, $/oz 20.90 -0.65 -3.0
Gold/Silver Ratio 64.033 -0.631 -1.0
Silver/Gold Ratio 0.0156 -0.0005 -3.0
Platinum 1,483.00 24.60 1.7
Palladium 781.60 10.75 1.4
S&P 500 1,878.04 1.01 0.1
Dow 16,452.72 30.83 0.2
Dow in GOLD $s 254.17 3.06 1.2
Dow in GOLD oz 12.30 0.15 1.2
Dow in SILVER oz 787.32 25.00 3.3
US Dollar Index 80.14 -0.03 -0.0
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: 1,340.05      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,377.57 1,386.95 1,386.95
1/2 AE 0.50 682.92 705.87 1,411.74
1/4 AE 0.25 341.46 359.64 1,438.54
1/10 AE 0.10 140.60 146.74 1,467.35
Aust. 100 corona 0.98 1,306.95 1,315.95 1,342.53
British sovereign 0.24 317.81 322.56 1,370.28
French 20 franc 0.19 252.06 255.04 1,366.03
Krugerrand 1.00 1,356.13 1,366.13 1,366.13
Maple Leaf 1.00 1,355.05 1,370.05 1,370.05
1/2 Maple Leaf 0.50 770.53 703.53 1,407.05
1/4 Maple Leaf 0.25 341.71 358.46 1,433.85
1/10 Maple Leaf 0.10 142.05 146.07 1,460.65
Mexican 50 peso 1.21 1,607.49 1,618.49 1,342.36
.9999 bar 1.00 1,344.74 1,359.05 1,359.05
SPOT SILVER: 20.91      
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 15,486.90 15,736.90 22.01
US 40% silver 1/2s 0.30 5,976.70 6,126.70 20.77
100 oz .999 bar 100.00 2,096.00 2,146.00 21.46
10 oz .999 bar 10.00 209.60 214.60 21.46
1 oz .999 round 1.00 21.01 21.51 21.51
Am Eagle, 200 oz Min 1.00 22.41 23.61 23.61
SPOT PLATINUM: 1,483.00      
Platinum Platypus 1.00 1,498.00 1,515.00 1,515.00
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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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