The Moneychanger
Weekly Commentary
Friday, 23 May a.d. 2014 Browse the commentary archive
Here's the weekly scorecard:
  16-May-14 23-May-14 Change % Change
Silver, cents/oz. 1,929.20 1,938.80 9.60 0.5
Gold, dollars/oz. 1,293.30 1,291.70 -1.60 -0.1
Gold/silver ratio 67.038 66.624 -0.414 -0.6
Silver/gold ratio 0.0149 0.0150 0.0001 0.6
Dow in Gold Dollars (DIG$) 263.59 265.76 2.17 0.8
Dow in gold ounces 12.75 12.86 0.10 0.8
Dow in Silver ounces 854.83 856.52 1.70 0.2
Dow Industrials 16,491.31 16,606.27 114.96 0.7
S&P500 1,877.86 1,900.53 22.67 1.2
US dollar index 80.11 80.43 0.32 0.4
Platinum 1,465.30 1,475.20 9.90 0.7
Palladium 814.80 831.45 16.65 2.0

Markets is people, and people don't make sense. Thus I will not torture myself over the apparent contradictions, I will just sit tight and wait till they go away, without pretending I can explain them.

Stocks struggled through the week and managed to rise a little by week's end. Metals are in the deadest slumber I can remember (but I'm getting old). White metals had a rotten day today but closed higher for the week. US dollar index got up off the mat & advanced to its 200 DMA. Pretty good for a nasty, scrofulous, parasitical fiat currency, but tough on the euro and yen.

The Dow & S&P500 are diverging here a bit. S&P500 nearly touched its last intraday high (1,902.17) but closing at a new all time high close, 1,900.53 (up 8.04 or 0.42% today). Meanwhile the Dow, up today 63.19 or 0.38% to 16,606.27, lags far behind. Its last intraday high was 16,735.51 and its all time high close 16715.44 (13 May, same as S&P500).

Other indices can't agree, either. The Nasdaq 100 broke out of its downtrend six days ago, but remains far below its all-time high. Russell 2000 remains in its downtrend but hit the downtrend line today. Wilshire 5000 remains below its all time high.

These are not smashing new highs but struggling highs. Signs of a top abound, head & shoulders patterns, broadening tops, diamonds. Stocks may have shot their wad today, or might make a slightly higher high next week, but I believe the end draweth nigh.

Dow in Gold continues to dither. Rose today 0.47% to 12.84 oz (G$265.43 gold dollars). It did close above the 20 DMA but remains locked in a sidewise range.

Dow in silver dithereth even more tightly than the Dow in gold. Rose 0.49% to 852.92 oz (S$1,102.77 silver dollars). A big break one way or the other approacheth. May get one more new high before this ends.

The US dollar index on 7 May turned up from a 78.93 low & shot clean up to its downtrend line in six days (about 80.40). Then it fainted. Last three days it has shown life again, & today broke above its downtrend line, touched its 2020 DMA (80.490 & closed higher by 14 basis points (0.17%).Dollar intends to move higher, but must climb the stile at 80.80. Euro has just plumb broke down beyond redemption. Touched its 200 DMA ($1.3627) today and closed down 0.16% at $1.3624. Appears the trend for the next few months will be higher dollar, lower euro. Great for you folks planning European vacations. Japanese yen three days hence struck its 200 DMA (98.95) and was knocked out cold. Lost another 0.23% today to 98.07c. Technically in an uptrend since April, but oh, Mercy! It's a slow one.

On Comex, where they take no prisoners, gold lost $3.30 to end at $1,291.70 while silver gave up 10.2 cents and closed at 1938.8. Past seven days have witnessed silver & gold as somnolent as I've ever seen them. Some big event is needed to break this impasse. Higher dollar doesn't help, but that doesn't always keep gold down. More help would come from stocks dropping sharply.

The last week hasn't changed anything for silver and gold. Gold remains in a narrow even-sided triangle bounded today by roughly $1,280 and $1,303.75, and it groweth narr'er by the day. Silver is in an uptrend that began in May but has since forgotten what it was doing. Silver can't even stay above its 20 day moving average, but then, neither can gold. Frankly, best thing that could happen now would be for silver & gold to fall sharply, clear out the shorts, and set the stage for another rally. This dead-in-the-water sidewise float is for the fowls.

Monday is a US holiday, Memorial Day, but Tuesday is not. Look for some fun to start next week.

By the way, British regulators today fined Barclays Bank $48 million for the actions of a trader in the London Gold Fix in June 2012. Barclays is one of four Banksters that participates twice daily in the London Gold FIX. In this case the trader bogused up enough orders to push gold below a threshold that would have forced Barclays to pay a customer $3.9 million and profited the bank $1.75 mn. This comes one day after Barclays was slapped with a $450 million fine for rigging LIBOR. Listen: you can always trust a bank. . . To act like a bank. After all, it stands for Bilk All Ninety-eight-point-six Kustomers.

On 23 May 1618 took place the Second Defenestration of Prague. That means they throw two Lord's Regent and their secretary out a window. It started the 30 years war. Some people get mad when you throw their friends out the window, but I think it is a colorful custom that we ought to revive in the United States. It's Defenestration Day! Throw a bureaucrat & a Banker out a window for America!

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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
23-May-14 Price Change % Change
Gold, $/oz 1,291.70 -3.30 -0.3
Silver, $/oz 19.39 -0.10 -0.5
Gold/Silver Ratio 66.624 -0.167 -0.2
Silver/Gold Ratio 0.0150 -0.0001 -0.5
Platinum 1,475.20 -20.30 -1.4
Palladium 831.45 -5.00 -0.6
S&P 500 1,900.53 8.04 0.4
Dow 16,606.27 63.19 0.4
Dow in GOLD $s 265.76 1.71 0.6
Dow in GOLD oz 12.86 0.08 0.6
Dow in SILVER oz 856.52 7.72 0.9
US Dollar Index 80.43 0.14 0.2
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: 1,292.90      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,327.81 1,338.15 1,338.15
1/2 AE 0.50 658.87 681.04 1,362.07
1/4 AE 0.25 329.43 346.98 1,387.93
1/10 AE 0.10 135.65 141.57 1,415.73
Aust. 100 corona 0.98 1,260.96 1,269.96 1,295.62
British sovereign 0.24 306.63 311.38 1,322.78
French 20 franc 0.19 243.19 246.23 1,318.88
Krugerrand 1.00 1,308.41 1,318.41 1,318.41
Maple Leaf 1.00 1,307.90 1,322.90 1,322.90
1/2 Maple Leaf 0.50 743.42 678.77 1,357.55
1/4 Maple Leaf 0.25 329.69 345.85 1,383.40
1/10 Maple Leaf 0.10 137.05 140.93 1,409.26
Mexican 50 peso 1.21 1,550.93 1,561.93 1,295.45
.9999 bar 1.00 1,297.43 1,311.90 1,311.90
SPOT SILVER: 19.40      
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 5,531.25 5,681.25 19.26
100 oz .999 bar 100.00 1,945.00 1,995.00 19.95
10 oz .999 bar 10.00 194.50 199.50 19.95
1 oz .999 round 1.00 19.50 20.00 20.00
Am Eagle, 200 oz Min 1.00 21.25 21.65 21.65
SPOT PLATINUM: 1,475.20      
Platinum Platypus 1.00 1,490.20 1,507.20 1,507.20
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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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