The Moneychanger
Daily Commentary
Thursday, 22 May a.d. 2014 Browse the commentary archive

Well, I never heard tell of such! In the last six trading days, save yesterday , gold closed within a $1.60 range. Yesterday's close was only $5.30 lower that that range. Yep, you all are witnessing a RARE freak o'Nature.

Not that stocks were too peppy today either. Dow traded in a lazy 76 point range. All the hot gas from the FOMC ("Feds Organized for Monetary Crimes") that inflated stocks yesterday just drifted off to the gas-o-sphere up above the ozone layer. Dow gained 10.02 (0.06%) to 16,543,08 (yawn) while the S&P500 inched up 4.46 (0.24%) to 1,892.49. That parked the Dow a few points above its 20 DMA (16,525), piddling, yet above.

As Yogi Berra said, "It's like déjà vu all over again." I've seen this before, markets struggling, reaching higher but seeming out of strength. It doesn't forecast vastly higher prices, but a top. But shucks! I'm such a hick from Tennessee, what do I know? I ain't near as smart as them hicks from Boston & New York who're running the Fed. Why, they're smart enough to keep printing money & keep the stock market rising forever. I know it's so, cause they told me.

Any way I jigger the uptrend line, the Dow in Gold (I just report what I see) has walked through the uptrend line. Yesterday it rose, and above its 20 DMA, bit only to touch that downtrend line. Today it eased off again, down 0.17% to 12.77 oz (G$263.98 gold dollars). It's moving sideways but tugging at breaking down.

Dow in silver hath behaved in like manner. Today it again closed beneath the 20 DMA (850.27 oz) & lost 0.58% to 847.49 oz (S$1,095.74). It's literally oscillating around that 20 DMA, but the indicators are all pulling it lower.

US dollar index did in fact rise today 17 basis points to end at 80.29. That bumps plumb up against the downtrend line, so maybe it will reach escape velocity tomorrow. Euro lost another 0.24% to end at $1.3654. Yen backed off 0.31% to 98.30, so it looks like our masters are re-aligning exchange rates.

I looked at gold early this morning & it stood at $1,304. Time I got to the office it was below $1,300, and closed the day at $1,294.90, within $1.60 of the last six days' closes, save yesterday.

Friends, let us assume for a moment that this is a natural phenomenon. If so, it means that gangs of sellers lurk around $1,305, while mobs of buyers lurk around $1,290, but the crowds are so evenly matched that they can't push the gold price around more than a couple of dimes a day. Meanwhile that even-sided triangle becomes narrower and narrower as the days pass, forcing some resolution soon.

Silver traded much like gold today, with a spike up toward midday, then erosion. Silver closed Comex at 1949, up 18.3 cents and above its 20 DMA (1944c), if that means anything in a market this directionless. Silver reached 1983c at today's high, but in the end closed only that piddling eighteen cents above yesterday.

Clearly one hurdle for silver & gold is that stocks and the last five weeks' sideways trading have drained away interest. People don't buy flat markets.

Be patient, be calm, just wait. Steady, steady!

My daughter Liberty asked me to thank all y'all who went and voted for her at to accompany the Noonday Collection trip to Rwanda. Apparently this voting works just like a New York City election, vote early, vote often, vote alive or dead. Hence it would be a favor for her if y'all vote for her again today. Scroll all the way down the page to see her picture & vote for her.

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
22-May-14 Price Change % Change
Gold, $/oz 1,294.90 6.90 0.54%
Silver, $/oz 19.49 0.18 0.95%
Gold/Silver Ratio 66.439 -0.272 -0.41%
Silver/Gold Ratio 0.0151 0.0001 0.41%
Platinum 1,495.50 13.20 0.89%
Palladium 836.30 6.00 0.72%
S&P 500 1,892.49 4.46 0.24%
Dow 16,543.08 10.02 0.06%
Dow in GOLD $s 264.09 -1.25 -0.47%
Dow in GOLD oz 12.78 -0.06 -0.47%
Dow in SILVER oz 848.80 -7.53 -0.88%
US Dollar Index 80.29 0.17 0.21%
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: 1,293.40      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,328.97 1,338.67 1,338.67
1/2 AE 0.50 659.12 681.30 1,362.60
1/4 AE 0.25 329.56 347.12 1,388.46
1/10 AE 0.10 135.70 141.63 1,416.27
Aust. 100 corona 0.98 1,261.45 1,270.45 1,296.11
British sovereign 0.24 306.75 311.50 1,323.28
French 20 franc 0.19 243.29 246.33 1,319.38
Krugerrand 1.00 1,308.92 1,318.92 1,318.92
Maple Leaf 1.00 1,308.40 1,323.40 1,323.40
1/2 Maple Leaf 0.50 743.71 679.04 1,358.07
1/4 Maple Leaf 0.25 329.82 345.98 1,383.94
1/10 Maple Leaf 0.10 137.10 140.98 1,409.81
Mexican 50 peso 1.21 1,551.53 1,562.53 1,295.95
.9999 bar 1.00 1,297.93 1,312.40 1,312.40
SPOT SILVER: 19.46      
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 14,879.15 15,129.15 21.16
US 40% silver 1/2s 0.30 5,548.95 5,698.95 19.32
100 oz .999 bar 100.00 1,951.00 2,001.00 20.01
10 oz .999 bar 10.00 195.10 200.10 20.01
1 oz .999 round 1.00 19.56 20.06 20.06
Am Eagle, 200 oz Min 1.00 21.31 21.71 21.71
SPOT PLATINUM: 1,495.50      
Plat. Platypus 1.00 1,510.50 1,527.50 1,527.50
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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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