The Moneychanger
Weekly Commentary
Friday, 25 April a.d. 2014 Browse the commentary archive
Here's the weekly scorecard:
  17-Apr-14 25-Apr-14 Change % Change
Silver, cents/oz. 1,958.60 1,969.10 10.50 0.5
Gold, dollars/oz. 1,293.40 1,300.70 7.30 0.6
Gold/silver ratio 66.037 66.056 0.019 0.0
Silver/gold ratio 0.0151 0.0151 -0.0000 -0.0
Dow in Gold Dollars (DIG$) 262.25 260.03 -2.22 -0.8
Dow in gold ounces 12.69 12.58 -0.11 -0.8
Dow in Silver ounces 837.77 830.91 -6.86 -0.8
Dow Industrials 16,408.54 16,361.46 -47.08 -0.3
S&P500 1,864.85 1,863.40 -1.45 -0.1
US dollar index 79.94 79.83 -0.11 -0.1
Platinum 1,428.10 1,422.80 -5.30 -0.4
Palladium 807.35 811.45 4.10 0.5

Over the last week silver & gold moved barely up, while stocks moved down, but the closing numbers don't quite tell the whole story.

While the world verges on war in Ukraine, the US dollar index and gold don't seem to care much, but stocks appear uneasy. O strange old world!

The US dollar index seems to have flunked the test this week at its coincident 20 and 50 day moving averages (both at 80.02). It reached up there twice, then flaked and fell back below 80. Fell today 5 basis points (0.06%) to 79.83. What might have been a double bottom March & April with the last at 79.39 appears not to have been. Expect the dollar to drop yet more.

Despite the dollar's woes, the euro has remained in an overall downtrend since March. Yes, tis above its 20 DMA ($1.3800) & 50 DMA ($1.3796, but showing little perkiness or appetite to climb mountains. Nor does the yen long to move higher. It closed today up 0.16% at 97.90, but still within its slightly declining three month range.

Ten year treasury yield fell today, 0.82% to 2.666% and fell for the week, back to its bottom channel line. Not much life.

Copper has bounced back from its brush with death at $2.877. Although it has climbed smartly since mid-March, today's close at $3.12 remains below the downtrend line at $3.15. A close clean above $3.32 will finally confirm copper has no intent of dropping further. Which is copper, a prognosticator for stocks or harbinger for commodities? I lean to the latter as what concerns us more here. Copper is probably the last of the metals to turn up.

Dow nervously dropped 140.19 (0.85%) today to 16,361.46, enough to turn it down 0.3% for the week. S&P500 dropped 15.21 (0.81%) to 1,863.40, barely lower for the week.

Stock charts are singing a dirge. Nasdaq Comp shows what appears to be a 5-month head and shoulders, S&P might be showing the same but definitely is in a month-long downtrend. Dow has the best chart, and it looks like a big double top. Everything is set up for a final high in May.

Dow in silver dropped a tad today, 0.2% to close the week at 838.03 (S$1,083.51 silver dollars). Appears to have topped, but needs to confirm still. Dow in Gold fell 0.78% to 12.69 oz (G$252.33 gold dollars). More confirmation needed to declare it reversed downward.

After yesterday's dramatic reversals gold gained another $10.20 to end at $1,300.70, barely above the 200 DMA ($1,300.31). Silver gained only 3/10 cent to close Comex at 1969.1. Well, it ain't much, but it's a higher close, so both metals confirmed their key reversals yesterday.

On its monthly and weekly charts gold has broken out upside through its intermediate term downtrend, but sill must conquer the downtrend line from 2011. On the daily chart gold yesterday spiked through its 100 day moving average to $1,268.40, then immediately reversed to close the day higher, and closed today higher as well.

Silver's reversal yesterday with a spike to 1893c was even starker, but today's tiny gain left silver mumbling out of both sides of its mouth. It ran today smack up against its downtrend line and the 20 DMA (1978c).

Silver & gold have both fulfilled their downside correction targets and smartly re-bounded. For all its lagging, silver did revisit its downtrend line from April 2013, the line it punched up through in February. That also points to a completed correction. Silver has broken to the upside on the weekly chart, but not yet on the monthly, though it's close.

I'll try to draw the conclusion in a few words: buy silver & gold. Now.

Milestones of American Culture: On 25 April Elvis Presley's song "Heartbreak Hotel" with its forgettable lyrics reached No. 1 on the charts.

On 25 April 1792 Madame Guillotine drank her first blood, executing a highwayman. She would soon drink the blood of noble and commoner alike, all those the Revolution would denounce.

On 25 April 1719 in London was published Daniel Defoe's novel, Robinson Crusoe.

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
25-Apr-14 Price Change % Change
Gold, $/oz 1,300.70 10.20 0.8
Silver, $/oz 19.69 0.00 0.0
Gold/Silver Ratio 66.056 0.518 0.8
Silver/Gold Ratio 0.0151 0.0000 0.0
Platinum 1,422.80 14.70 1.0
Palladium 811.45 8.90 1.1
S&P 500 1,863.40 -15.21 -0.8
Dow 16,361.46 -140.19 -0.8
Dow in GOLD $s 260.03 -4.27 -1.6
Dow in GOLD oz 12.58 -0.21 -1.6
Dow in SILVER oz 830.91 -7.25 -0.9
US Dollar Index 79.83 -0.05 -0.1
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SPOT GOLD: 1,302.60      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,336.47 1,348.19 1,348.19
1/2 AE 0.50 663.82 686.14 1,372.29
1/4 AE 0.25 331.91 349.59 1,398.34
1/10 AE 0.10 136.67 142.63 1,426.35
Aust. 100 corona 0.98 1,270.42 1,279.42 1,305.27
British sovereign 0.24 308.93 313.68 1,332.55
French 20 franc 0.19 245.02 248.05 1,328.58
Krugerrand 1.00 1,316.93 1,326.93 1,326.93
Maple Leaf 1.00 1,317.60 1,332.60 1,332.60
1/2 Maple Leaf 0.50 749.00 683.87 1,367.73
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1/10 Maple Leaf 0.10 138.08 141.98 1,419.83
Mexican 50 peso 1.21 1,562.56 1,573.56 1,305.10
.9999 bar 1.00 1,307.16 1,321.60 1,321.60
SPOT SILVER: 19.68      
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 14,997.13 15,247.13 21.32
US 40% silver 1/2s 0.30 5,612.38 5,762.38 19.53
100 oz .999 bar 100.00 1,972.50 2,022.50 20.23
10 oz .999 bar 10.00 197.25 202.25 20.23
1 oz .999 round 1.00 19.78 20.28 20.28
Am Eagle, 200 oz Min 1.00 21.18 22.38 22.38
SPOT PLATINUM: 1,422.80      
Platinum Platypus 1.00 1,437.80 1,454.80 1,454.80
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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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