The Moneychanger
Daily Commentary
Tuesday, 25 March a.d. 2014 Browse the commentary archive

If you want to see a picture of "financialization of the economy," go to http://read.bi/1ixWea3 for the Business Insider Chart of the Day entitled "The Rise of the $156 Trillion Market for Global Financial Assets."

From about $10 trillion in 1980, global financial assets have grown from to $156 trillion. Between 2000 and 2013, debt markets tripled in size. The reasons cited in the article are not the causes, only footnotes. The real cause is twofold, (1) an enormous debt increase and (2) "financialization." Financialization occurs when financing, the parasitical, useless, and mischievous trafficking in paper, crowds production (agriculture and industry) out of the economy. Financialization is simply churning debt, securitizing everything in sight, to profit the financializers, who add no value to the world's wealth, only to their own. And the chart doesn't show the OTC derivatives market, with a notional value of $693 trillion.

Briefly stated, the chart reveals the hyperbolic growth of a tapeworm. My, my, you all are looking a mite pale and peaked. Y'all wouldn't be suffering from economic tapeworms, would you?

Stocks teetered the other way today, up instead of down, but little changed. The two big indices did manage to close above their 20 day moving averages, while yesterday they closed below. Dow added 91.19 (0.6%) to 16,388.77. S&P500 augmented 8.18 (0.4%) to 1,865.62

S&P500 remains within an even-sided triangle whose upper boundary hovers right above today 1,872 high. That triangle tells us naught about a breakout's direction up or down, only that one looms. S&P500 remains with (for now) a double top while the Dow shows a series of declining tops or double tops. This is not the matter from which great rallies are spun, but the Dow's MACD is trying -- trying -- to flash a buy signal.

Dow in metals continued to rise. Dow in Gold climbed 0.385 to 12.48 oz (G$257.98 gold dollars) & closed above its 50 DMA (12.40). About time to about face. Dow in Silver ascended 0.36% for an 819.25 oz close (S$1,059.23) and is well above its 50 DMA and an internal resistance line. A 75% correction would carry it to 823.58 oz (S$1,064.83).

US dollar index tagged along with stocks, teetering the other way today but after an 80.42 high, it closed at 80.09, up only 3 basis points. That smells weak. Anyway, the dollar does nothing until it bursts through 80.50.

Bad news for the Frenken-currency today. Euro fell 0.09% to $1.3825, slap on its 20 DMA. This adds to a series of lower lows. If support at $1.3750 gives, the euro will be diving off a dock with cast iron shoes. Media reasons given for the euro's decline were disappointing business confidence, plus ECB jawboning & posturing.

Yen fell a meaningless 0.04% to 97.80 cents/Y100. Locked in a 99.24 - 96.38 trading range. All inbetween is meaningless noise.

O'Bama today said Russia's further encroachment into Ukraine would be "a bad choice." Face it: Teddy Roosevelt he ain't. He ain't even Millard Fillmore.

Gold rose -- are y'all ready for this -- twenty cents today, to close Comex at $1,311.40. The range was from $1,335.70 to $1,308.50.

Gold traced out a strange pattern today, like a cross section of a volcano. From yesterday's lows around $1,308 it ramped up, flattened out, then dropped to the day's low suddenly, and just as suddenly rose back to the mouth of the caldera. Rest of the day it trailed off down hill. Silver trading today looked much the same, only moreso.

Silver gave up 8.8 cents to close Comex at 1995.5c.

Bollinger Bands are a gauge of volatility over the last 20 or so days of trading. When a market hits the top band, it's pushing its luck, & when it hits the lower band it's a candidate for rallying. Both silver & gold are trading at or below their bottom Bollinger Bands. No magic there to prevent a market from punching far through those lines, just less likely. This makes both look ready for some sort of countertrend rally. However, I note that on the way up, both kept punching into that top BB for a long time.

Remember to watch on the gold chart that triple confluence of the 200 DMA, 50 DMA, and $1,300 resistance/support. In silver watch for a spike toward 1950c.

Today is independence day in Greece, celebrating their wining independence from Turkey in 1821. Now if they could just win independence from the banks. . .

On 25 March 1634 Maryland was founded by English colonists sent by Lord Baltimore to found a refuge for English Roman Catholics. Most of y'all don't realize it, but Maryland is a Southern state. Lincoln arrested much of its legislature and send troops to occupy it and keep it from seceding. Maryland's motto is the Italian Fatti maschii, parole femine, "Manly deeds, womanly words." Maryland has the nation's highest median household income, making it the wealthiest state. I reckon being close to the source of all that government money makes it easier to soak up.

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
25-Mar-14 Price Change % Change
Gold, $/oz 1,311.40 0.20 0.02%
Silver, $/oz 19.96 -0.09 -0.44%
Gold/Silver Ratio 65.718 0.299 0.46%
Silver/Gold Ratio 0.0152 -0.0001 -0.45%
Platinum 1,420.90 -10.30 -0.72%
Palladium 789.40 -5.95 -0.75%
S&P 500 1,865.62 8.18 0.44%
Dow 16,367.88 91.19 0.56%
Dow in GOLD $s 258.01 1.40 0.54%
Dow in GOLD oz 12.48 0.07 0.54%
Dow in SILVER oz 820.24 8.15 1.00%
US Dollar Index 80.06 0.03 0.04%
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: 1,311.70      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,345.80 1,357.61 1,357.61
1/2 AE 0.50 668.46 690.94 1,381.88
1/4 AE 0.25 334.23 352.03 1,408.11
1/10 AE 0.10 137.62 143.63 1,436.31
Aust. 100 corona 0.98 1,279.30 1,288.30 1,314.32
British sovereign 0.24 311.09 315.84 1,341.72
French 20 franc 0.19 246.73 249.74 1,337.68
Krugerrand 1.00 1,326.13 1,336.13 1,336.13
Maple Leaf 1.00 1,326.70 1,341.70 1,341.70
1/2 Maple Leaf 0.50 754.23 688.64 1,377.29
1/4 Maple Leaf 0.25 334.48 350.88 1,403.52
1/10 Maple Leaf 0.10 139.04 142.98 1,429.75
Mexican 50 peso 1.21 1,571.90 1,582.90 1,312.84
.9999 bar 1.00 1,316.29 1,330.70 1,330.70
SPOT SILVER: 19.96      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 26.25 28.25 36.93
VG+ Peace dollar 0.77 22.25 23.75 31.05
90% silver coin bags 0.72 14,982.83 15,232.83 21.30
US 40% silver 1/2s 0.30 5,694.98 5,844.98 19.81
100 oz .999 bar 100.00 2,000.50 2,050.50 20.51
10 oz .999 bar 10.00 200.05 205.05 20.51
1 oz .999 round 1.00 20.06 20.56 20.56
Am Eagle, 200 oz Min 1.00 21.46 22.66 22.66
SPOT PLATINUM: 1,420.90      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,435.90 1,452.90 1,452.90
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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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