The Moneychanger
Daily Commentary
Tuesday, 27 May a.d. 2014 Browse the commentary archive

Break came in silver & gold today, more in gold than silver. Gold sank $26.20 (2.05%) while silver only fell 34.9 cents (1.8%.

Gold had built that long, narrow even-sided triangle which promises a breakout but always keeps shutmouthed about which way. Gold sold slowly off until it reached $1,282.50 where it began tumbling. Still, it was an orderly day, with no huge slam-downs.

Today's close came near the $1,264.30 low and matches the high in 2010. In other words, this correction that began in 2011 has rolled back four years' gains in gold. Y'all don't care about that, though, y'all want to know what gold will do tomorrow.

I don't know. Today's tumble took gold down to the April low. It might in fact stop here. Or it might repeat the pattern of the last 2 months and rally back, only to lose back in the following days.

There was also a $1,240 low in January. It might catch there if today is not a one-day clean out spike. Orthodox way to measure the target would be to subtract the $63 height of the triangle from today's breakout at $1,280 for a $1,217 target. Below that are all the points clustered between $1,210 and $1,180. I don't think it will reach $1,000, as those on Wall Street pontificate, but I'm jes' a nacheral born fool from Tennessee and too durned suspicious to trust central bank money printing.

Only two ways to play a break like this: you either grab it with both hands anticipating it is only a brief spike, or you wait several days to see how it shakes out. Momentum indicators look awful, but they always do at bottoms.

Silver broke through the bottom boundary of its uptrend that began May 1, but only fell to the same 1900c area that has been support for so long. It could drop again to 1890c - 1870c, or it might drop to 1750c. From what I saw today, I'm guessing that those buyers who have been waiting for something to happen will come out of the woodwork at these prices.

However this fall unrolls, I am glad to see it, because it will wash out the weak hands and set the final step in place for silver & gold to rally.

S&P500 rose 11.38 (0.6%) to a new all-time high at 1,911.91. At 16,675.50 (up 69.23 or 0.42%), the Dow did NOT make a new all time high. S&P500's rise today above the top resistance line has to be confirmed with higher prices still -- all the more so since it's failure after the last new all-time high.

Both the Dow in Gold and Dow in Silver broke out of consolidations and headed higher. I'm just waiting and watching. Dow in Gold closed at 13.20 oz (G$272.87 gold dollars) and Dow in Silver rose 2.66% to 875.58 oz (S$1,132.06 silver dollars). My target for the Dow in Silver is no higher than 912 oz (S$1,179.15).

After Friday's excitement, currency markets have gone back to sleep. US Dollar Index today lost one (1) basis point to 80.42, unable to keep on rising through its 200 DMA (80.49). Euro rose 0.1% to $1.3636 on comments yesterday by ECB head Alan Greensp -- No, wait, he only SOUNDS like Greenspan, his name is Draghi. Anyway, he made noises that maybe, perhaps, possibly the ECB might have to step up inflation. When Lenin's secret police chief asked him how he would get their counterrevolutionary opponents to bite on his scheme for a phony opposition, Lenin said, "Tell them what they want to hear." The communists who rule us are still using that same tactic today. (If y'all don't understand how central bank "capitalists" might really be "communists," I'll have to explain later. Just leave it at this: maybe they never were capitalists to begin with, or maybe they're just the other side of that dialectic "communism/capitalism" that keeps most of us confused.)

On 27 May 1564 Jean Calvin, a commanding leader in the Protestant Reformation (and Augustinian like Luther) died in Geneva. Like him or hate him, he helped form the modern age. He also was much less rigid than he usually gets credit for.

On 27 May 1668 Three colonists were expelled from Massachusetts for being Baptists. If we did that in Tennessee, we'd be empty, 'cause we've got more Baptists than we do people!

On 27 May 1332 was born the Great Italian writer Dante Alighieri.

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
27-May-14 Price Change % Change
Gold, $/oz 1,265.50 -26.50 -2.05%
Silver, $/oz 19.04 -0.35 -1.80%
Gold/Silver Ratio 66.469 -0.170 -0.26%
Silver/Gold Ratio 0.0150 0.0000 0.26%
Platinum 1,465.70 -10.50 -0.71%
Palladium 830.65 -0.80 -0.10%
S&P 500 1,911.91 11.38 0.60%
Dow 16,675.50 69.23 0.42%
Dow in GOLD $s 272.39 6.69 2.52%
Dow in GOLD oz 13.18 0.32 2.52%
Dow in SILVER oz 875.86 19.34 2.26%
US Dollar Index 80.42 -0.01 -0.01%
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SPOT GOLD: 1,265.40      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,300.20 1,309.69 1,309.69
1/2 AE 0.50 644.84 666.55 1,333.10
1/4 AE 0.25 322.42 339.60 1,358.41
1/10 AE 0.10 132.76 138.56 1,385.61
Aust. 100 corona 0.98 1,234.14 1,243.14 1,268.25
British sovereign 0.24 300.11 304.86 1,295.07
French 20 franc 0.19 238.02 241.10 1,291.38
Krugerrand 1.00 1,280.58 1,290.58 1,290.58
Maple Leaf 1.00 1,280.40 1,295.40 1,295.40
1/2 Maple Leaf 0.50 727.61 664.34 1,328.67
1/4 Maple Leaf 0.25 322.68 338.49 1,353.98
1/10 Maple Leaf 0.10 134.13 137.93 1,379.29
Mexican 50 peso 1.21 1,517.94 1,528.94 1,268.09
.9999 bar 1.00 1,269.83 1,284.40 1,284.40
SPOT SILVER: 19.04      
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 14,507.35 14,757.35 20.64
US 40% silver 1/2s 0.30 5,425.05 5,575.05 18.90
100 oz .999 bar 100.00 1,909.00 1,959.00 19.59
10 oz .999 bar 10.00 190.90 195.90 19.59
1 oz .999 round 1.00 19.14 19.64 19.64
Am Eagle, 200 oz Min 1.00 20.89 21.29 21.29
SPOT PLATINUM: 1,465.70      
Plat. Platypus 1.00 1,480.70 1,497.70 1,497.70
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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.

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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