The Moneychanger
Daily Commentary
Wednesday, 14 May a.d. 2014 Browse the commentary archive

Surprise, surprise, the London Silver Fix Company announced today it will cease operations as of 14 August, after 117 years. No doubt this comes from heat stocked by the LIBOR interest rate fixing scandal. You have to wonder what sort of goofs or toadies government regulators must be if they don't get that "fix" means price fixing. If you and I conspired to fix the price of arm garters, regulators would be all over us like ugly on an ape, but you let gigantic corporations in London do it and acute regulatory blindness sets in.

After LIBOR exploded the London Gold Fix came under investigation. Durn! You mean -- nahh, it couldn't be -- that those venerable institutions might be manipulating gold's price in the gold FIX? To their own PROFIT?

Deutsche Bank, under fire for its role in the LIBOR scandal, withdrew from the Gold Fix and has withdrawn from the silver fix, leaving only two participants. Britain's regulators have asked DB to stay on until the August cessation.

This doesn't mark the end of government attempts to manipulate silver & gold prices, but it will make it more difficult, and it does bring us one small step closer to unfettered markets where the participants actually discover the price, rather than the government setting it.

Dear readers, think, ponder, savor this grand event! The smug scoundrels who have so long twisted markets in their favor with impunity have today taken a tire-iron across the teeth. Stop, wait, I shouldn't gloat. Readers will please disregard that last statement. Not a tire-iron, a Nerf stick.

Stocks today fell like your granddad's upper plate into a well, leaving behind that little stalk-thingey -- okay, "tower" -- formation that often marks a reversal. Dow dropped 101.47 points (0.61%) to 16,613.97. SP500 lost 8.92 (0.47%) to 1,888.53. Don't count stocks out yet, but they have fulfilled my time expectations. Might still make one higher high in the next few days.

NEVERTHELESS, LISTEN: It is time y'all ought to swap stocks for silver & gold. I know it seems a mite early, but today the Dow in Silver broke down through its 20 DMA and through its uptrend line, after a lower high last week than the May 1 high. Closed today down 1.69% at 840.15 oz (S$1,086.25). Dow in gold also fell through its 20 DMA (12.76 oz). Fell 1.5% to 12.72 oz (G$262.95 gold dollars).

Why rush things? Why not wait for further confirmation? Because stocks are running out of time to make new highs, and because silver & gold MAY have begun their next leg up today.

US dollar index stumbled back 7 basis points (0.09%) to 80.12. Needs yet to close above 80.40 to confirm a rally. Euro looks sick as a hound eating rat poison. Rose a pitiful 0.09% to $1.3715 today, but only after it has left two gaps behind. Euro's throat has been cut. Yen rose 0.36% but that still doesn't change much. It needs to close above 98.5 to punch through the upper boundary of its downtrending trading channel.

Today's most interesting development was the gap-down plunge of the 10 year treasury note index to its lowest level since November. This can't be good news for stocks. Generally lower rates help gold.

Gold today broke through the $1,295 barrier to race $11.10 (0.86%) up to the next resistance at $1,305. Closed $1,305.70. Silver jumped 23.1 cents (1.2%) to 1973.5c, through the 1950c level that has so long stymied it.

Silver now stands above its 20 DMA & today at its 2000c high punched into the 50 DMA (1999c). It is clean broken out above its downtrend line from the February 2218c high. Y'all are catching this, right? Broke out upside. MACD indicator positive, ROC positive, RSI positive, Full Stochastics positive. I'm positive it's positive.

Gold finally punctured its 200 DMA ($1,299.76) & at its $1,309.20 high bumped the upper boundary of its even-sided triangle. Okay, take stock: Above 20 DMA ($1,294.86)? check. Above 200 DMA? Check. Thrice bounced off lower triangle boundary line? Check. Ready to smash through 50 dma ($1,311.75)? Check. Volume rise today? Check. Other indicators pointing up? Check.

There it is, indicators all lined up and pointing skyward for silver & gold. Up above gold needs to better the last high at $1,315.80. Silver bettered its last high today ('twas 1977c) but didn't close there. Friends, it looks like the next rally has begun.

Whoops, one more little fact: Palladium & platinum both rose strongly, up $11.15 and $30.20. Today's breakout takes platinum over its downtrend line from it 2011 high. Palladium has been above that line since 1 March. So the white metals are agreeing with a silver & gold rally.

On 14 May 1796 Edward Jenner administered the first smallpox vaccination, using cowpox pus. Don't cringe, it worked.

My wife Susan had her pacemaker re-programmed in Columbia this morning, then travelled on to Nashville with my daughter Liberty.  She went shopping and reported, "I actually walked swiftly through Whole Foods while waiting for Liberty to finish up her doctor's appointment.  Walked to car and not nearly so out of breath as yesterday.  Can you imagine it's changing already?" I hope so.

We are praying that this pacemaker reprogramming would put a stop to Susan's atrial fibrillation. Thank you most kindly for your prayers.

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
14-May-14 Price Change % Change
Gold, $/oz 1,305.70 11.10 0.86%
Silver, $/oz 19.74 0.23 1.18%
Gold/Silver Ratio 66.162 -0.214 -0.32%
Silver/Gold Ratio 0.0151 0.0000 0.32%
Platinum 1,484.90 30.20 2.08%
Palladium 828.60 11.15 1.36%
S&P 500 1,888.53 -8.92 -0.47%
Dow 16,613.97 -101.47 -0.61%
Dow in GOLD $s 263.03 -3.88 -1.45%
Dow in GOLD oz 12.72 -0.19 -1.45%
Dow in SILVER oz 841.85 -15.17 -1.77%
US Dollar Index 80.12 -0.07 -0.09%
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: 1,305.40      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,341.95 1,351.09 1,351.09
1/2 AE 0.50 665.24 687.62 1,375.24
1/4 AE 0.25 332.62 350.34 1,401.35
1/10 AE 0.10 136.96 142.94 1,429.41
Aust. 100 corona 0.98 1,273.16 1,282.16 1,308.05
British sovereign 0.24 309.60 314.35 1,335.37
French 20 franc 0.19 245.55 248.57 1,331.38
Krugerrand 1.00 1,321.06 1,331.06 1,331.06
Maple Leaf 1.00 1,320.40 1,335.40 1,335.40
1/2 Maple Leaf 0.50 750.61 685.34 1,370.67
1/4 Maple Leaf 0.25 332.88 349.19 1,396.78
1/10 Maple Leaf 0.10 138.37 142.29 1,422.89
Mexican 50 peso 1.21 1,565.92 1,576.92 1,307.89
.9999 bar 1.00 1,309.97 1,324.40 1,324.40
SPOT SILVER: 19.75      
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 15,086.50 15,336.50 21.45
US 40% silver 1/2s 0.30 5,634.50 5,784.50 19.61
100 oz .999 bar 100.00 1,980.00 2,030.00 20.30
10 oz .999 bar 10.00 198.00 203.00 20.30
1 oz .999 round 1.00 19.85 20.35 20.35
Am Eagle, 200 oz Min 1.00 21.60 22.00 22.00
SPOT PLATINUM: 1,484.90      
Plat. Platypus 1.00 1,499.90 1,516.90 1,516.90
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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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