The Moneychanger
Weekly Commentary
Friday, 9 May a.d. 2014 Browse the commentary archive
Here's the weekly scorecard:
  2-May-14 9-May-14 Change % Change
Silver, cents/oz. 1,949.20 1,907.70 -41.50 -2.1
Gold, dollars/oz. 1,302.60 1,287.30 -15.30 -1.2
Gold/silver ratio 66.827 67.479 0.652 1.0
Silver/gold ratio 0.0150 0.0148 -0.0001 -1.0
Dow in Gold Dollars (DIG$) 262.05 266.30 4.25 1.6
Dow in gold ounces 12.68 12.88 0.21 1.6
Dow in Silver ounces 847.16 869.28 22.12 2.6
Dow Industrials 16,512.89 16,583.34 70.45 0.4
S&P500 1,881.14 1,878.48 -2.66 -0.1
US dollar index 79.56 79.93 0.37 0.5
Platinum 1,439.70 1,428.90 -10.80 -0.8
Palladium 812.55 799.80 -12.75 -1.6

Many thanks for your prayers on my wife Susan's account. Her eye surgery was over before I could finish my cup of coffee. This morning she woke up and looked up at our clerestory window & proudly announced, "I can see the blooms on the tulip poplar!" Bringing her home from Nashville yesterday I drove down Highway 31A from Franklin to Chapel Hill to pick up some meat from our processor. Tennessee is so charming in her spring dress that poems started popping into my head.

So one of Susan's eyes is fixed, but Monday she has an echocardiogram to see what's bothering her heart. Please continue to pray that God would heal her.

Thursday & Friday the US dollar unexpectedly & undeniably reversed. This week stocks continued to struggle and wallow sideways, striving but hard put to make gains. Gold & silver fell back, but have not broken recent support or improved recent strength. Looking closer alters the picture.

Stocks rose for the week but remain locked in a broadening top (Dow) or diamond (S&P500). These can also prove to be consolidation rather than topping patterns, to add further to your confusion.

Dow rose 32.37 (0.2% to 16,583.34, up 70.45 or 0.4% for the week. Not up much, but up. S&P500 rose 2.85 (0.15%) on Friday, but lost 2.66 points or 0.1% for the week. It's never a happy sign when markets that ought to agree in family harmony gainsay each other.

This wallowing, laboring action has the feel of a top, rolling over. Stocks will probably yet, soon, shoot to new marginal highs. In both metals and stocks I am impressed that nobody has much interest or enthusiasm, but that's only my impression and hardly measurable.

Dow in Gold & Dow in Silver aren't singing precisely in tune either. Dow in gold closed at 12.86 oz (G$265.84 gold dollars) & is trading sideways into a tightening rising flat-topped triangle. This suggest the Dow in Gold will surge to one last high, doubling the December high but lower, as stocks make new marginal highs while gold remains weakly flat or drops lower. If the DIG breaks out upside this way, 'twill happen next week.

Dow in silver rose 0.22% to 864.84 oz (S$1,118.18 silver dollars). It continues to build out a bearish rising wedge, pointing to a top soon around 880 - 890 oz (S$1,137.78 - $1,152).

Bottom line of these details is that a top is coming soon in the Dow in Gold & Dow in Silver which will change the trend from stocks gaining against metals to metals gaining against stocks.

As I have warned y'all in the past, stocks' rise in the past few years has been built, and today rests on, inflation and not economic strength. Just like an alcoholic, they can keep up a front for a while, but one day they show up drunk at work, & the deception ends.

Big news this week was the US dollar index' tergiversation. Thursday it hit a new low for the move (78.93) but instead of plunging headlong into the abyss it spread its wings, performed an Immelmann, & flew in the opposite direction. Friday it strongly confirmed a key reversal by rising 45 basis point s(0.57%) to 79.93, clearing its 20 (79.73) and 50 (79.88) day moving averages.

The strength of this reversal was mirrored in the weakness it occasioned in the euro and yen. Thursday the euro experienced a key reversal in the opposite direction, reaching a new high for the move ($1.3993) & collapsing, crumpling to close below its 20 DMA ($1.3841). Friday it gapped down, losing another 0.5% to close $1.3770 and left behind an unarguable failure & trend reversal. Well, unarguable in any unmanipulated market, but we all know that currency markets are NOT free markets. We can therefore conclude that the Nice Government Men & Central Bank Criminals have come to the conclusion that they cannot, for the nonce, allow the euro to appreciate more & choke off Germany's export-driven economy, or allow the dollar to sink to the molten mass at the earth's core. What a favorable time to crush and punish both dollar shorts and euro longs! Smack em all in the teeth and teach 'em a lesson. The yen hath not partaken quite so boldly in rising at the dollar's expense, so did not reverse as boldly. It lost 0.22% Friday to close 98.17 cents/Y100, right at the top of the boundary of the downtrend it had been trying to escape.

For a while, at least as long as it suits the criminal conspiracy of the central bank criminals, expect the dollar to rise. Their tactic is always to depreciate slowly with random raids on shorts & longs so no panics are precipitated -- as cowboys herd cattle, keep 'em moving without any stampedes. Moooo-ooooo!

Friday silver lost 1.7 cents & closed Comex at 1907.7c while gold lost ten cents [sic] to close at $1,287.30. Volume has dried up. That suggests both waning interest in metals & waning strength in the decline. Gold silver ratio rose to 67.479 ounces of silver equal to one ounce of gold (good time to swap overvalued gold for silver).

Backing away from the chart a little, since January gold has formed a roughly even-sided triangle, the infamous equivocal equilateral that can break out either way. Since the April high gold has formed a much tighter long triangle. Those always indicate a market "coiling up the spring" for a big move, but with their tight lips such triangles whisper not whether it will break up or down.

Only two interpretations stand up. Either silver & gold will undergo one last spike down to new lows for the 2011-2013 correction, or the double bottoms of June 2013 & December 2013 will hold and therefore we have already seen the lows. Until proven otherwise by lower lows, I will continue to assume that the lows have been seen, and the next big moves will be skyward. However, I continue looking nervously over my shoulder at the $1,434 & 2512c peaks in August 2013. Eventually metals must conquer these heights to prove beyond quibble that they have turned around.

The weekly silver & gold charts are positive but not speaking in a very loud voice. Gold is dancing back & forth a above and below its downtrend line from the August 2011 high. Silver is copying that cat.

The more things change, the more they remain the same. NO FUNDAMENTAL CHANGE HAS BEEN MADE IN THE FINANCIAL & MONETARY SYSTEM. Chew on that, digest that. Nothing has been fixed, nothing reformed, none of the criminals who caused the 2008 & earlier crises (for 100 years) removed. If the cause remains, the outcome will remain. Inflation, the cause, remains, so the outcome, economic turmoil, panic, decline, and the death of the inflated currency will remain. Let not the reigning complacency fool you. Nothing has changed, impoverishment awaits.

On 9 May 1785 in England Joseph Bramah patented the beer pump handle -- another one of those little heralded benefactors of mankind.

On 9 May 1864 Union General John Sedgwick was shot & killed by a Confederate sharpshooter at Spotsylvania. His last words were, "They couldn't hit an elephant at this dist--."

Always keep watching out for life's little surprises.

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
9-May-14 Price Change % Change
Gold, $/oz 1,287.30 -0.10 -0.0
Silver, $/oz 19.08 -0.02 -0.1
Gold/Silver Ratio 67.479 -0.005 -0.0
Silver/Gold Ratio 0.0148 -0.0000 -0.1
Platinum 1,428.90 -8.20 -0.6
Palladium 799.90 -4.30 -0.5
S&P 500 1,878.48 2.85 0.2
Dow 16,583.34 32.37 0.2
Dow in GOLD $s 266.30 0.57 0.2
Dow in GOLD oz 12.88 0.03 0.2
Dow in SILVER oz 869.28 2.47 0.3
US Dollar Index 79.93 0.45 0.6
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: 1,290.20      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,325.04 1,335.36 1,335.36
1/2 AE 0.50 657.49 679.61 1,359.23
1/4 AE 0.25 328.75 346.26 1,385.03
1/10 AE 0.10 135.37 141.28 1,412.77
Aust. 100 corona 0.98 1,258.33 1,267.33 1,292.93
British sovereign 0.24 305.99 310.74 1,320.05
French 20 franc 0.19 242.69 245.73 1,316.18
Krugerrand 1.00 1,305.68 1,315.68 1,315.68
Maple Leaf 1.00 1,305.20 1,320.20 1,320.20
1/2 Maple Leaf 0.50 741.87 677.36 1,354.71
1/4 Maple Leaf 0.25 329.00 345.13 1,380.51
1/10 Maple Leaf 0.10 136.76 140.63 1,406.32
Mexican 50 peso 1.21 1,547.69 1,558.69 1,292.77
.9999 bar 1.00 1,294.72 1,309.20 1,309.20
SPOT SILVER: 19.21      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 26.50 28.50 37.25
VG+ Peace dollar 0.77 22.50 23.75 31.05
90% silver coin bags 0.72 14,771.90 15,021.90 21.01
US 40% silver 1/2s 0.30 5,475.20 5,625.20 19.07
100 oz .999 bar 100.00 1,926.00 1,976.00 19.76
10 oz .999 bar 10.00 192.60 197.60 19.76
1 oz .999 round 1.00 19.31 19.81 19.81
Am Eagle, 200 oz Min 1.00 21.06 21.46 21.46
SPOT PLATINUM: 1,428.90      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Platinum Platypus 1.00 1,443.90 1,460.90 1,460.90
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© 2015 Little Mountain Corporation, d.b.a. The Moneychanger. All rights reserved. May not be republished in any form, including electronically, without our express permission.

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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