The Moneychanger
Daily Commentary
Wednesday, 21 May a.d. 2014 Browse the commentary archive

Do y'all remember how, before you learned the rules, you watched your parents play cards & couldn't figure out what was happening? That's how I feel a lot of the time watching markets react to Federal Open Market Committee (FOMC) minutes. They don't even say as much as an Alan Greenspan speech, they mumble on about the same things, but whatever they say stocks rise. I ain't too bright, but I'm beginning to doubt this game makes sense. Whole point is to keep markets forever on tenterhooks. I miss the adults.

The US dollar index sure liked whatever the FOMC said. After making a double bottom with Monday's 79.90-ish low early in the day, about 5:00 a.m. New York time it began to climb, hitting at one point 80.37. Now on the chart that's a big range, and it jumped clean up to the downtrend line, but at the end of the day it nor more than a little mouse-burp because the dollar index only gained 3 basis points to close at 80.12. But that's kind of a key reversal, a break into new low territory with a higher close, except the cheesy low was at 79.94, same place as Monday's. So we're left with the same mulish dollar, balking. Won't rise, won't fall. MACD however, is positive, and today's fall & recovery probably cleaned out a bunch of shorts, making higher prices possible.

Euro sank another 0.11% to $1.3685. Mercy, if you owned euros your teeth would be aching sure enough. Hath fallen nearly to its 200 DMA ($1.3624). Destined for low places, soon. Yen today hit is 200 DMA (99.09) & crumpled. Fell 0.09% to close at 98.63 cents/Y100. That is only the first try, though, and the yen ought to return and breach that barrier.

After losing 137.55 today the Dow gained 158.75 (0.97%) today & closed at 16,533.06. In other words, it bounced off its 50 DMA (16,407) and up to recent resistance. Closed also barely above its 20 DMA (16,523.32). This gets it NEAR to accomplishing something meaningful, but "near to" only scores when you're playing with hand grenades.

S&P500 won back 15.2 points (0.81%) and closed at 1,888.03. 'Tis above the 20 DMA (1,880) but otherwise only at the threshold of recent resistance. Must climb through that that to count.

A workman should never blame his tools. That's the incompetent's way out, yet these charts have been bouncing back & forth like a tennis ball, forever drawing near some resolution without ever in fact resolving, & I'm stumped. Dow in gold crossed back above its 20 DMA (12.76 oz or G$263.77 gold dollars) and still has not cleanly broken down from its rising flat-topped triangle formation. It ushered out today up 1.46% to 12.84 oz (G$265.43 gold dollars).

Dow in silver has walked through its uptrend lines twice, but today also rose over its 20 DMA (849.92 oz or S$1,098.89 silver dollars) to stop at 854.95 oz (S$1,105.39).

After a hard day gold closed $1,288, $6.50 lower. Silver lost six cents to 1930.7c.

The days range was only about $14, from $1,296.3 to $1,282.90. Yes, yes, gold fell but not outside its even-sided triangle, and not below its uptrend line. Yet 'tis sorry form to stay below your 200 DMA ($1,299.21) & 20 DMA ($1,295.40), and leads onlookers to conclude you are weak and spineless. Other onlookers might say, though, "Lo! It broke not beneath the bloviating blatherstorm from the FOMC! Is that not a sign of strength?" Other onlookers say naught, having dozed off waiting for something to happen.

Nor did silver change greatly today. Yea, it fell to its uptrend line. So? So nothing meaningful has yet taken place.

Silver breaking below 1925c (the present uptrend line) or gold below roughly $1,278, lower boundary line of its triangle, would constitute a breakdown. Up above, gold closing over $1,316 or silver over 2005c (the last high) would mark an upside breakout. Meantime, all else merely spins wheels and digs in the mud.

Meanwhile, we wait.

My wife Susan had her pacemaker re-programmed last week & together with some medication seems greatly improved. At least that's what I deduce from waking up early this morning to find my bed empty & Susan downstairs trying to fix an outside screen door. This is more like her. Thank you for your prayers, and please don't stop just yet.

My daughter Liberty is 38 -- she was born when Susan and I were 2. She has made two summer mission trips to Rwanda as a teacher in a Vacation Bible School. Don't sneer, it's a huge event for these people. Mamas get up and walk two hours with their children to get there, carrying one and walking with the others. The preferred snack? Hard boiled eggs, because they get so little protein. Five thousand people show up for this school.

Now Liberty has a chance to go with another group that locates and promotes handmade Rwandan crafts. She wrote this in her entry essay: "I am just a run of the mill ordinary woman, one who has seen the power of a Rwandan mama sitting in a shady spot laughing while she weaves a basket, grateful for the opportunity of work to send her child to school. I've worn her cloth bead necklace and bright yellow earrings. I've had clothes made by the mamas who sit for 10 hours at sewing machines, and those women, they are anything but ordinary. I want to go to Rwanda to show them off to the world. People so extraordinary deserve a story."

This group, Noonday Collection, holds a voting contest to pick people for the Rwandan trip. It will help Liberty if you take three minutes & go to and vote for her. (She's my daughter. I love her, I couldn't say no. Besides, I approve of her big loving heart.)

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
21-May-14 Price Change % Change
Gold, $/oz 1,288.00 -6.50 -0.50%
Silver, $/oz 19.31 -0.01 -0.03%
Gold/Silver Ratio 66.712 -0.316 -0.47%
Silver/Gold Ratio 0.0150 0.0001 0.47%
Platinum 1,474.10 6.00 0.41%
Palladium 830.30 4.60 0.56%
S&P 500 1,888.03 15.20 0.81%
Dow 16,533.06 158.75 0.97%
Dow in GOLD $s 265.35 3.87 1.48%
Dow in GOLD oz 12.84 0.19 1.48%
Dow in SILVER oz 856.32 8.49 1.00%
US Dollar Index 80.12 0.03 0.04%
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SPOT GOLD: 1,291.60      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,327.12 1,336.81 1,336.81
1/2 AE 0.50 658.21 680.35 1,360.70
1/4 AE 0.25 329.10 346.63 1,386.53
1/10 AE 0.10 135.51 141.43 1,414.30
Aust. 100 corona 0.98 1,259.70 1,268.70 1,294.32
British sovereign 0.24 306.32 311.07 1,321.47
French 20 franc 0.19 242.95 245.99 1,317.58
Krugerrand 1.00 1,307.10 1,317.10 1,317.10
Maple Leaf 1.00 1,306.60 1,321.60 1,321.60
1/2 Maple Leaf 0.50 742.67 678.09 1,356.18
1/4 Maple Leaf 0.25 329.36 345.50 1,382.01
1/10 Maple Leaf 0.10 136.91 140.78 1,407.84
Mexican 50 peso 1.21 1,549.37 1,560.37 1,294.16
.9999 bar 1.00 1,296.12 1,310.60 1,310.60
SPOT SILVER: 19.35      
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 14,764.75 15,014.75 21.00
US 40% silver 1/2s 0.30 5,516.50 5,666.50 19.21
100 oz .999 bar 100.00 1,940.00 1,990.00 19.90
10 oz .999 bar 10.00 194.00 199.00 19.90
1 oz .999 round 1.00 19.45 19.95 19.95
Am Eagle, 200 oz Min 1.00 21.20 21.60 21.60
SPOT PLATINUM: 1,474.10      
Plat. Platypus 1.00 1,489.10 1,506.10 1,506.10
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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.

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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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