The Moneychanger
Daily Commentary
Tuesday, 24 June a.d. 2014 Browse the commentary archive

This morning I remembered that in Memphis, Tennessee when I was a college freshman in 1965, laundering a dress shirt cost 25 cents each, but the cleaner would wash, starch, & hang five shirts for a dollar.

Today it costs $2.50 or more a shirt.

Cheer up, though. I read an article today in the Jamaica Observer that noted in 1989, J$100 could feed a family of five for a week. Today, a pound of chicken costs J$200.

I reckon that socialism puts a big load on a central bank, not to mention the poor -- but somebody has to pay.

Oh, my -- something's happening in markets, & not too many folks are noticing. The tide is turning.

Stocks fell across the board today. Dow Industrials Dover 119.13 (0.7%) while the S&P500 belly-flopped 12.63 (0.64%) to 1,949.98. The Dow stopped dead on its 200 DMA (16,818.79). Closing below 16,700 punctures the 4 month uptrend line. A close below 16,450 pierces the uptrend line from the March 2009 bottom.

S&P500 is holding up a little better than the Dow. It's 1,949.98 close stopped well short of its 1,940.21 20 DMA. The uptrend from 2009 crosses today about 1,790. Stock momentum turned down today.

Oh, my -- how about the Dow in Metals! "Collapsed" is the word that pops into my mind, but that may be a bit extreme. Dow in Gold today stopped at 12.73 oz (G$263.15 dollars), below both its 20 & 50 day moving averages, and only about 2% above its 200 DMA at 12.50 oz (G$258.40). The real test comes about 12.20 oz (G$252.20) where the DiG will meet its uptrend line reigning since August 2013.

And my, Oh, my, that Dow in Silver! Since the 892.99 oz (S$1,154.57 silver dollars) high on 1 June, it has imitated those Mexican cliff divers at Acapulco. You can see a chart here, http://bit.ly/TgEJSV Right now it's more oversold on the RSI than it has been since August 2013, so you'd expect a correction. Dow in silver has smashed all its shorter term moving averages and is closing in on the 200 DMA at 790.02 oz (S$1,021.44). More, it has fallen down out of the bearish rising wedge in place since last year.

At the risk of repeatedly repeating myself, I remind y'all that the Dow in Gold and Dow in Silver have proven my most reliable indicators. Now they are shouting that the stocks' three year climb against silver & gold has ended.

Time to swap stocks for metals.

Like Wile E. Coyote hurtling over the brink in a cartoon, the US dollar index windmilled its legs at 80.20 and managed to climb back up on the rocks to an 80.39 close today, up 6 basis points. Range for the last 5 days has been 80.50 to 80.15. A close below 80.30 puts the dollar index at peril of a much longer fall. Today's save, however, inspired little. Closed at 80.39 when the 200 DMA is at 80.38. Triflin'.

Euro rose a nothing 0.2% to $1.3606. Yes, it might be curling up for a rally, but not very likely. It's below its 200 DMA and spent all of may losing from $1.3993 to $1.3503. About the best to expect is a dead cat bounce.

Yen is knocking its head on the downtrend line, but only managing to hurt its head. Lost 0.2% to 98.10 cents/Y100 today. It's building an even-sided triangle, so not hinting which way it will move.

Gold closed above $1,318 resistance today at $1,320.90, up $2.90 (0.22%). Silver rose 12.9 cents (0.62%) to close above 2100c for the first time during this move at 21.0389.

On five day charts both silver & gold have passed through resistance and begun what appears to be the next leg up. Gold hit a new high for the move at $1,326.60, but remember that April high at $1,331.40 is the hurdle to beat.

Silver really has no fierce barrier until it reaches the February high at 2218c. Many's the observer who is holding back, watching to see whether silver can leap that hurdle. When she does, all those skeptics will turn into fans.

Stepping back from silver's chart for a longer view, it has made what resembles but technically is not an upside-down head and shoulders, with lows at end-June 2013, end-December 2013, and 30 May, but no fireworks will be lit until silver passes above 2218c. That will likely mark the limit of this move, i.e., the first leg of this rally.

Friends, I have checked a lot of other charts, and all of them indicate a certifiable break-out rally. Gold stocks are manic, Gold vs Bank stocks is thriving. Dollar index and stocks are struggling. It all points to the end of the 2011-2014 precious metals correction and beginning of the next rally. I'm not even going to breath or whisper my upside targets for this phase of the bull market, cause if I did y'all would just call me a nacheral born durned fool from Tennesseeand spit.

Susan and I had a good time at that wedding in Georgia, but on Sunday we stepped off the asphalt just for a second into some thin grass, and that was enough. We are now serving as bloodbanks for thirsty Georgia red bugs, known in Tennessee as "chiggers."

On 24 June 1314 at the Battle of Bannockburn Scots under Robert the Bruce defeated an English army more than twice their number. If the song "Scots wha hae" doesn't move you to tears, even if you're an Italian, your heart's dead.

On 24 June 1861 Tennessee regained its sovereignty and independence when it seceded from the union.

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
24-Jun-14 Price Change % Change
Gold, $/oz 1,320.90 2.90 0.22%
Silver, $/oz 21.04 0.13 0.62%
Gold/Silver Ratio 62.786 -0.249 -0.39%
Silver/Gold Ratio 0.0159 0.0001 0.40%
Platinum 1,473.90 15.30 1.05%
Palladium 831.80 8.20 1.00%
S&P 500 1,962.61 -0.26 -0.01%
Dow 16,937.26 -9.82 -0.06%
Dow in GOLD $s 265.06 -0.74 -0.28%
Dow in GOLD oz 12.82 -0.04 -0.28%
Dow in SILVER oz 805.08 -5.44 -0.67%
US Dollar Index 80.39 0.06 0.07%
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: 1,318.40      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,352.68 1,364.54 1,364.54
1/2 AE 0.50 671.87 695.46 1,390.91
1/4 AE 0.25 350.76 354.32 1,417.28
1/10 AE 0.10 139.64 145.02 1,450.24
Aust. 100 corona 0.98 1,283.25 1,292.25 1,318.35
British sovereign 0.24 312.21 324.21 1,377.29
French 20 franc 0.19 247.99 250.95 1,344.11
Krugerrand 1.00 1,332.90 1,342.90 1,342.90
Maple Leaf 1.00 1,333.40 1,348.40 1,348.40
1/2 Maple Leaf 0.50 758.08 692.16 1,384.32
1/4 Maple Leaf 0.25 336.19 352.67 1,410.69
1/10 Maple Leaf 0.10 139.75 143.71 1,437.06
Mexican 50 peso 1.21 1,581.52 1,592.52 1,320.82
.9999 bar 1.00 1,323.01 1,334.40 1,334.40
SPOT SILVER: 20.94      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 25.00 26.50 34.64
VG+ Peace dollar 0.77 22.00 24.25 31.70
90% silver coin bags 0.72 15,508.35 15,863.35 22.19
US 40% silver 1/2s 0.30 5,985.55 6,135.55 20.80
100 oz .999 bar 100.00 2,084.00 2,144.00 21.44
10 oz .999 bar 10.00 214.40 215.40 21.54
1 oz .999 round 1.00 21.04 21.54 21.54
Am Eagle, 200 oz Min 1.00 22.69 23.94 23.94
SPOT PLATINUM: 1,473.90      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,498.90 1,538.90 1,538.90
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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.

Other Important Information

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