The Moneychanger
Daily Commentary
Tuesday, 17 June a.d. 2014 Browse the commentary archive

On the Burning Platform there's an especially good article, "Fourth Turn Accelerating." It's a little long, but the overview of our present condition economically, socially, and politically is quite thorough and insightful. It will make connections in your mind. Look at http://bit.ly/1qpqKJ3

Looks like the War Party (Republican/Democrat) is beginning to beat the drums for another war in Iraq, charging that somehow Iraqi rebels pose a threat to the US. With the lumbering US economy in trouble, war offers an easy political out. And it increases demand, for stuff that blows up and therefore has to be re-ordered over and over. Good for GDP, bad for people & other living things.

Although it gained 17 basis points (0.2%) today & closed at 80.71, the US dollar index has only been dancing sideways for the last three days. Until it closes above 81, the dollar's intentions remain suspect. If it can clear 81, it will run at least to 81.50, maybe higher.

Euro changed its mind again today and fell 0.2% to $1.3546. It ought to stage at least a little snap-back rally here, but if it falls through $1.3500 first, it's cooked -- clean through.

Yen lost 0.32% to 97.88. Remains in the same rangebound track between 99 and 96, and until it beats one of those numbers will keep on snoozing.

Ten year Treasury yield today hit and closed at its downtrend line from the year's opening. Closed at 2.655%. Any higher close tomorrow confirms a breakout, and a close above the 200 day moving average at 2.714% turns the yield -- and with it other interest rates -- up. Remember this comparison: Higher Interest Rates are to Janet Yellen as crucifixes are to Count Dracula.

Today's little gains in stocks proved nothing. S&P500 & Dow are both hovering above their 20 DMAs. Dow rose 27.48 (0.16%) to 16,808.49 while the S&P500 augmented by 4.21 (0.22%) to 1,941.99.

Dow in Gold rose a negligible 0.16% to 13.22 oz (G$273.28 gold dollars), with the 20 DMA at 13.23 oz (G$273.49). Excitement reigned in the Dow in Silver however, where a lethargic 0.29% drop to 851.06 oz (S$1,100.36 silver dollars) took the DiS down below the 50 DA (853.11 or S$1,103.01) It has already broken down through the 20 DMA, which on the advance from March had served as the safety net under it. Much more downside & I'll be forced to declare the Dow in Silver knocked out.

Silver gained a silly 1.9 cents today to 1972.1. Gold lost $3.20 to close Comex at $1,271.70.

Both the gold and silver daily charts are a bit ambiguous. Both might have finished a correction, but more likely is one more leg down.

Looking past the Comex to trading the whole day, gold closed unchanged although during the day it dipped below its 20 Dma ($1,265.21). Low came at $1,258, high at $1,275.50, so it closed nearer the high. Gold still must batter down the gate at $1,280 resistance, but more importantly, the 200 DMA at $1,290.60. These are the first baby steps. Beyond that gold must pull on those seven league boots and step out over $1,305, then $1,315 (May's High) and most important, $1,331.40 (April's high). All momentum indicators are positive with plenty of room to climb.

Silver touched back to its 50 DMA (1942c) today, then closed near the 1977c high. Low came at 1943c. I'm nothing but a nacheral born durned fool, but this looks like a strong rally to me. Determined. I'll feel chipper as can be as long as silver stays above 1950c. Over 2050c, it will begin to run. Not coincidentally, the 200 DMA stands at 2052c.

On 17 June 1876 1,500 Sioux and Cheyenne under Crazy Horse defeated General George Crook's US Cavalry along the Rosebud River in Montana. The Indians called it Battle Where the Girl Saved Her Brother because when Buffalo Calf Woman saw her brother, Comes In sight, running on foot after his horse had been shot, she rode to his rescue. He jumped onto her horse and both escaped.

On 17 June 1913 US Marines set sail from San Diego to protect "American interests" (read "oil company interests") in Mexico.

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
17-Jun-14 Price Change % Change
Gold, $/oz 1,271.70 -3.20 -0.25%
Silver, $/oz 19.72 0.02 0.10%
Gold/Silver Ratio 64.485 -0.225 -0.35%
Silver/Gold Ratio 0.0155 0.0001 0.35%
Platinum 1,445.10 4.00 0.28%
Palladium 817.45 7.35 0.91%
S&P 500 1,941.99 4.21 0.22%
Dow 16,808.49 27.48 0.16%
Dow in GOLD $s 273.23 1.13 0.42%
Dow in GOLD oz 13.22 0.05 0.42%
Dow in SILVER oz 852.31 0.57 0.07%
US Dollar Index 80.71 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: 1,270.50      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,303.53 1,314.97 1,314.97
1/2 AE 0.50 647.45 669.24 1,338.47
1/4 AE 0.25 323.72 340.97 1,363.88
1/10 AE 0.10 133.30 139.12 1,391.20
Aust. 100 corona 0.98 1,236.63 1,245.63 1,270.79
British sovereign 0.24 301.32 306.07 1,300.21
French 20 franc 0.19 238.98 242.05 1,296.48
Krugerrand 1.00 1,283.21 1,293.21 1,293.21
Maple Leaf 1.00 1,285.50 1,300.50 1,300.50
1/2 Maple Leaf 0.50 730.54 667.01 1,334.03
1/4 Maple Leaf 0.25 323.98 339.86 1,359.44
1/10 Maple Leaf 0.10 134.67 138.48 1,384.85
Mexican 50 peso 1.21 1,524.06 1,535.06 1,273.17
.9999 bar 1.00 1,274.95 1,289.50 1,289.50
SPOT SILVER: 19.71      
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 14,911.33 15,161.33 21.20
US 40% silver 1/2s 0.30 5,621.23 5,771.23 19.56
100 oz .999 bar 100.00 1,975.50 2,025.50 20.26
10 oz .999 bar 10.00 197.55 202.55 20.26
1 oz .999 round 1.00 19.81 20.31 20.31
Am Eagle, 200 oz Min 1.00 21.56 21.96 21.96
SPOT PLATINUM: 1,445.10      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,460.10 1,477.10 1,477.10
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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.

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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