The Moneychanger
Weekly Commentary
Monday, 16 June a.d. 2014 Browse the commentary archive
Here's the weekly scorecard:
  6-Jun-14 16-Jun-14 Change % Change
Silver, cents/oz. 1,896.30 1,970.20 73.90 3.9
Gold, dollars/oz. 1,252.10 1,274.90 22.80 1.8
Gold/silver ratio 66.029 64.709 -1.319 -2.0
Silver/gold ratio 0.0151 0.0155 0.0003 2.0
Dow in Gold Dollars (DIG$) 279.42 272.10 -7.32 -2.6
Dow in gold ounces 13.52 13.16 -0.35 -2.6
Dow in Silver ounces 892.49 851.74 -40.75 -4.6
Dow Industrials 16,924.28 16,781.01 -143.27 -0.8
S&P500 1,949.44 1,937.38 -12.06 -0.6
US dollar index 80.43 80.54 0.11 0.1
Platinum 1,455.00 1,441.10 -13.90 -1.0
Palladium 843.95 810.10 -33.85 -4.0

Here's an update for the past ten days I've been travelling.

Mark well that stocks are rolling over downward and metals rolling over upward. Stocks lost about 0.8% over the last 10 days, while silver gained 3.9% and gold 1.8%. More than that, throw an eye over that gold/silver ratio, a whopping, pregnant two percent lower. Platinum & palladium have fallen, but they're a special case. About 75% of world platinum output comes from South Africa, where a 5 month strike has crippled mining. Friday a possible settlement was announced, & that motivated selling. In a limited way, palladium can be substituted for platinum, & about 25% of palladium comes from South Africa, so when platinum sneezes, palladium catches the croup. Let's look closer.

"Rolling over" is a euphemism for "torturing observers by glacially reversing". Nothing could be truer of stocks. A series of new highs, each eking out its superiority by only a few points, speaks of topping, not continuation.

Dow today gained 5.27 or 0.03% and S&P500 added 1.62 (0.08%) to 1.937.38. Both are virtually motionless, both are hovering above a 20 Day Moving Average. If they fall through that trapdoor, well, it's a long slide. MACD for both indices has crossed over to the downside, and both are coming down from extremely overbought states. Both will find support around the 50 DMA (16,552.23 & 1,889.73). No indication yet that THE ultimate top has been hit, but stocks are struggling.

Listen carefully: if you have a big position in stocks in your IRA, today not tomorrow is when you ought to be cashing in those stocks and putting the proceeds into silver & gold. This will take a little time, because you have to transfer your IRA from the present trustee to New Direction IRA, our recommended IRA trustee, www.newdirectionira.com. Email specific question to PMAT@ndira. I make nothing by recommending New Direction, but if you open an account there by 1 July 2014 you'll receive 50% off your first transaction fee. (Enter promo-code "Money Changer 2014" on your application). Time you get this set up, it'll be time to shift from stocks to metals.

Shocking declines in the Dow in Gold and Dow in Silver! Dow in gold has dropped from 13.517 oz (G$279.42 gold dollars) to 13.14 oz (G$271.63), and fallen below its 20 DMA. Dow in silver has skidded from 892.49 oz (S$1,153.93 silver dollars) to 853.29 oz (S$1,103.24) today. Not only has it pierced its 20 DMA, but it is also about to puncture the 50 DMA (852.19 oz).

It would NOT be unusual for the Dow in Metals to peak BEFORE the raw Dow. That's the pattern the DiG has followed before, very reliably.

US dollar Index fell 8 basis points to 80.54, down 0.09%. It is clogged up just above its 20 DMA (80.49), vibrating back and forth without progress. Since the 200 DMA stands below at 80.43, the dollar risks a sizeable fall from here.

Strengthening suspicions of the dollar's course, the euro rose 0.31% today. It appears to have carved out an exhaustion bottom six days ago with a gap down followed by sidewise trading. Today it perked up and could from here stage at least a rally to the 200 DMA ($1.3646).

Yen also rose today, 0.14% to 98.21. That's above the 20 & 50 DMAs, but the 200 is above at 98.61, so this looks more like a stretch for that 200 DMA before the yen flakes.

Both silver & gold have staged impressive rallies since June began -- impressive, but are they serious?

Today gold rose $1.20 to $1,274.90 and silver rose 6.5 cents to 1970.2c.

Since June opened her beflowered days, silver has climbed over a dollar, from 1861.5c to 1970.2c, a $1.087 (5.8%) rally. Not bad, and silver has thrown a leg over my 1950c goal. Since silver has risen the last six days, and mostly for the last 16, chance is it will make some small correction soon. It has punched through its 20 DMA (1918c) and 50 DMA (1943c), but until it clears the May high at 2000c, nothing is proven, nothing confirmed.

Gold's June rally hasn't been quite as spectacular. It's risen from $1,240.20 to $1,274.90, $33.7 or 2.7%. All the same, gold has levitated through its 20 DMA ($1,266.43) and today reached for its 50 DMA ($1,286.02). Big resistance for silver lurks at $1,280, but bigger still at $1,291.29 where the 200 DMA awaits. If gold can clear that, and then o'erleap the May $1,319.80 high, a rally is confirmed.

But looking elsewhere, gold is screaming that a rally lies ahead. Gold stock indices -- HUI, GDX, XAU -- have rallied since June opened and are now bumping against their 200 DMA. GDXJ, an ETF of junior mining stocks that usually leads GDX, has burst through the 200 DMA on rising volume. Mining stocks are also rising faster than gold, a positive sign. Gold has also turned up (since 9 June) sharply against the BKX bank stock index. All these argue that while most people plod ignorantly ahead, listening to the mainstream & disgusted with long moribund silver & gold, metals are preparing a surprise rally.

Finally, since 9 June the gold/silver ratio has tanked, falling from nearly 66:1 to 64.709 today, a very large move. It fell out of a long-lived (since December) rising wedge, and is trading below its 20 & 50 DMAs. Ratio's eye seems to be fixed on the 200 DMA, now 62.97. The horn is blowing for your LAST chance to swap gold for silver for a ride down to 30:1. Remember that the ratio normally FALLS during precious metals' rallies, so the ratio is signaling higher gold and silver prices.

As I said, after a two week rally, metals might correct briefly, might even spike down to higher lows than this move has seen, but that danger will pass as June expires.

Investing is a tug of war between fear of making a mistake or of missing opportunities. If you take an action, you risk being wrong. If you take no action, you risk missing an opportunity. Move or stand still, you're at risk.

Writing about investing, especially when you run a company that sells the investment, is a worse tug of war. You don't want to mislead anyone, but no forecast in the world approaches a certainty. Every day the sun rises brings the possibility you are wrong.

Sometimes it helps to weigh that downside risk. If gold might possibly sink to $1,200 from here, what's that risk? About six percent. If silver dropped to 1750c, that's an 11% + risk; if to 1800c, 8-2/3%. There's more: after three years' correction, the market has pretty well run out of sellers.

Personally, I've been buying every time silver & gold drop. And if they drop again, I'll buy again, till I run out of money. Then I'll sit tight and wait.

But then, I ain't no more'n a nacheral born fool from Tennessee.

On 16 June 455 Rome was sacked by the Vandals. Today, they didn't bother sacking Washington, DC, they just set up the Fed & began sacking the whole country.

On 16 June 1897 the US government signed a treaty of annexation with Hawaii. This is a little like saying the Scots in 1707 signed a treaty of annexation under the Act of Union. It may be technically correct, but it significantly understates the positions of both sides. Hawaii's hereditary sovereign had been been overthrown by an 1893 coup d'├ętat arranged and financed by Americans.

Y'all enjoy your weekend!

Argentum et aurum comparanda sunt —
Silver and gold must be bought.

— Franklin Sanders, The Moneychanger

Your source for gold and silver. Read our latest reviews and testimonials.
Market Snapshot See more charts and market data
16-Jun-14 Price Change % Change
Gold, $/oz 1,274.90 1.20 0.1
Silver, $/oz 19.70 0.07 0.3
Gold/Silver Ratio 64.709 0.059 0.1
Silver/Gold Ratio 0.0155 0.0001 0.3
Platinum 1,441.10 4.10 0.3
Palladium 810.10 -3.25 -0.4
S&P 500 1,937.38 1.62 0.1
Dow 16,781.01 5.27 0.0
Dow in GOLD $s 272.09 -0.14 -0.1
Dow in GOLD oz 13.16 -0.01 -0.1
Dow in SILVER oz 851.74 -2.55 -0.3
US Dollar Index 80.54 -0.08 -0.1
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: 1,271.70      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,304.76 1,316.21 1,316.21
1/2 AE 0.50 648.06 669.87 1,339.74
1/4 AE 0.25 324.03 341.29 1,365.17
1/10 AE 0.10 133.42 139.25 1,392.51
Aust. 100 corona 0.98 1,239.04 1,248.04 1,273.25
British sovereign 0.24 301.60 306.35 1,301.42
French 20 franc 0.19 239.21 242.28 1,297.68
Krugerrand 1.00 1,284.42 1,294.42 1,294.42
Maple Leaf 1.00 1,286.70 1,301.70 1,301.70
1/2 Maple Leaf 0.50 731.23 667.64 1,335.29
1/4 Maple Leaf 0.25 324.28 340.18 1,360.72
1/10 Maple Leaf 0.10 134.80 138.62 1,386.15
Mexican 50 peso 1.21 1,525.50 1,536.50 1,274.36
.9999 bar 1.00 1,276.15 1,290.70 1,290.70
SPOT SILVER: 19.61      
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 14,839.83 15,089.83 21.10
US 40% silver 1/2s 0.30 5,591.73 5,741.73 19.46
100 oz .999 bar 100.00 1,965.50 2,015.50 20.16
10 oz .999 bar 10.00 196.55 201.55 20.16
1 oz .999 round 1.00 19.71 20.21 20.21
Am Eagle, 200 oz Min 1.00 21.46 21.86 21.86
SPOT PLATINUM: 1,441.10      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Platinum Platypus 1.00 1,456.10 1,473.10 1,473.10
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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.

Other Important Information

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