The Moneychanger
Weekly Commentary
Friday, 27 June a.d. 2014 Browse the commentary archive
Here's the weekly scorecard:
  20-Jun-14 27-Jun-14 Change % Change
Silver, cents/oz. 2,094.90 2,107.70 12.80 0.6
Gold, dollars/oz. 1,316.20 1,319.00 2.80 0.2
Gold/silver ratio 62.829 62.580 -0.249 -0.4
Silver/gold ratio 0.0159 0.0160 0.0001 0.4
Dow in Gold Dollars (DIG$) 266.17 264.11 -2.06 -0.8
Dow in gold ounces 12.88 12.78 -0.10 -0.8
Dow in Silver ounces 808.97 799.54 -9.43 -1.2
Dow Industrials 16,947.08 16,851.84 -95.24 -0.6
S&P500 1,962.87 1,960.96 -1.91 -0.1
US dollar index 80.41 80.07 -0.34 -0.4
Platinum 1,457.30 1,478.50 21.20 1.5
Palladium 822.95 843.25 20.30 2.5

Stocks suffered a down week, along with the US dollar index, while silver, gold, & the white metals all rose. It 'pears that stocks are rolling over against both paper money and metals.

Hope springs eternal in the human chest, & nowhere more eternally & mistakenly than in the investing human chest. Take stocks, for example. I reckon them as owns 'em expects 'em to rise forever, but the charts don't agree exactly, or show too much of a good thing.

Monthly Dow chart has risen every moth this year except January, & now is plumb bustin' its head against the overhead trend line. Weekly -- and months are made of weeks, remember -- June's four weeks were tied, one up, one down, another up, and this last un down. Daily Dow chart is rapping on support lines below, to see if it can find a trap door to fall through. Yet I'll give it this, it closed today above its 20 DMA at 16,844.61.

Today the Dow gained 5.71 (0.03%) to 16,851.84. Most of that "gain" (I hate exaggerations) came in the last half hour of trading, which don't smell half fishy. S&P500 scratched up 3.74 (0.2%) to 1,960.96. It looks a leetle bit better than the Dow, but not much.

Here are milestones to watch below. The 50 DMA floats at 16,662.13. Close below that would turn mouth corners down all up & down Wall Street. However, the BIG mark to watch is the uptrend line from the March 2009 low, which today stands about 16,500 & climbeth by end-July to 16,700. Any breach of that line will send rats jumping off the leaky Good Ship Wall Street in waves. They'll look like lemmings come migration time.

I am clean convinced that stocks have indeed turned down against metals, which has worried me like a migraine headache since they broke above the long term downtrend lines in 2013. Now both have turned down, but need more confirmation (as I'll point out later).

Dow in gold rose 0.17% today to 12.81 oz (G$236.41 gold dollars). It's momentum is firmly earthward, since it stands below its 20 & 50 DMAs (13.16 & 12.96 oz), and the 200 DMA lieth not far below (12.53 oz). About 12 oz it breaks the year old uptrend line.

Y'all probably wonder why I bother quoting the Dow in gold both in troy ounces & in gold dollars (G$1=0.048375 troy ounce or 1 troy ounce = $20.6718 gold dollars). It's so you folks can perceive how the world really stands. The 1929 high, back when a dollar of gold still equaled a dollar of paper, was 381.17, so for all the chirping and crowing, the Dow today at G$268.81 equals only 69.5% of its peak 1929 value in gold (G$381.17).

If your yardstick is always changing, how can you measure anything?

After sinking for 15 days running, today the Dow in silver finally rose. I warned y'all it was getting overbought. It rose 1.06% to 806.12 oz (S$1,042.26). It's within a gnat's eyebrow of falling through the 200 DMA at 792.31 oz., and will next week unless silver stages a little downward correction.

Dow in Gold and Dow in Silver are warning y'all that it's time to swap stocks for silver and gold.

Something hit the US dollar index today, although it's not clear to me whether it's the Federal Reserve's firm promise to keep inflating the currency or Bernard O'Bama running around the world sticking knitting needles in world leaders' eyes, trying to start a war. Anyway, it lost 21 basis points today (0.26%). That ducks its head below a support line that stretches back to 2012 but has already been broken earlier this year. Below 80 the next major support appears at 79.40, then the last low at 78.93. Truth to tell, the US dollar index looks puking sick. I'd a whole lot ruther hold silver or gold than greenback dollars, which are only guaranteed certificates of confiscation.

Although the Euro jumped 0.26% to $1.3651 it hasn't been able to mount any rally & still lingers below its 200 DMA ($1.3663). Yes, yes, it might rise if the dollar keeps falling. The yen, on the other hand, gained 0.24% to 98.57 & jumped over the 200 DMA (98.50). If it can close above 99.00 cents/Y100, it will rally.

Today silver backed off 3.1 cents to 2107.7 but gold gainsaid, adding $2.60 to $1,319.00

Over the last year availability of small gold coins has been drying up. I used to be able to pick up the phone and order any number of Mexican 10 or 5 or 2-1/2 or 2 pesos, British sovereigns, Swiss or French 20 Francs, German 20 marks, Dutch 10 guilders, and so on, but not any more. I have to scratch to find any. I know a lot have been shipped overseas to Europe, which says something about what THEY think about the euro's future. These coin's disappearance points to strong demand for gold.

Gold's weekly chart rose ever week in June, and now stands above the 18 week & 50 week moving averages, as well as the downtrend line from the 2011 high. All it needs to do now is to close above that March $1,392.60 high. Gold's monthly chart resembles first half of a key reversal, closing at a new low for the move in May but rising this month.

In the near term, gold blasted up on 19 June, but stalled at $1,326.50. Would not surprise me if it corrected next week to $1,300 to $1,295. I would buy it there, or buy it if it closes over $1,331.40, for that latter price would signal another leg of the rally.

Silver has traced out a bearish up-pointing flag, and a correction next week might drag it down to 2050c, where I would buy it like the Russians were on Main Street. A close above 2150c would signal a buy, too, and start another rally leg.

Yes, silver & gold are all cattywampus to their seasonal chart, rallying when they usually bottom in June, but don't argue with a market. It'll just roll right over you.

As a perfect example of what meddlers, ideologues, and do-gooders can destroy, I offer to you the assassination of the Austrian Archduke Franz Ferdinand & his wife on 28 June 1914. A few stupid Serb radicals carried out the assassination, the Serb government and the Austrians, Germans, and Russians let the incident escalate into war, the war to destroy world order and Western Christendom. Before it was over, both sides lost 29 million killed, wounded, or missing in action (blown to bits so small none could be found). What it costs in civilian casualties, I don't know, but some areas of France still can't be farmed for danger a plough will catch and explode an artillery shell. World War I destroyed the European political order, and brought to an end the Austrian, German, Russian, and Ottoman empires, bled all the countries dry, & installed Communism in Russia. Nice work, fellows.

On 27 June 1893 the New York stock market crashed. By the end of the year 600 banks and 74 railroads had folded. The more things change, the more they stay the same.

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
27-Jun-14 Price Change % Change
Gold, $/oz 1,319.00 2.60 0.2
Silver, $/oz 21.08 -0.03 -0.1
Gold/Silver Ratio 62.580 0.124 0.2
Silver/Gold Ratio 0.0160 -0.0000 -0.1
Platinum 1,478.50 8.40 0.6
Palladium 843.25 7.05 0.8
S&P 500 1,960.96 3.74 0.2
Dow 16,851.84 5.71 0.0
Dow in GOLD $s 264.11 -0.40 -0.2
Dow in GOLD oz 12.78 -0.02 -0.2
Dow in SILVER oz 799.54 1.44 0.2
US Dollar Index 80.07 -0.21 -0.3
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: 1,316.00      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,350.22 1,362.06 1,362.06
1/2 AE 0.50 670.65 694.19 1,388.38
1/4 AE 0.25 350.12 353.68 1,414.70
1/10 AE 0.10 139.39 144.76 1,447.60
Aust. 100 corona 0.98 1,283.49 1,292.49 1,318.60
British sovereign 0.24 311.65 323.65 1,374.87
French 20 franc 0.19 247.54 250.50 1,341.71
Krugerrand 1.00 1,330.48 1,340.48 1,340.48
Maple Leaf 1.00 1,331.00 1,346.00 1,346.00
1/2 Maple Leaf 0.50 756.70 690.90 1,381.80
1/4 Maple Leaf 0.25 335.58 352.03 1,408.12
1/10 Maple Leaf 0.10 139.50 143.44 1,434.44
Mexican 50 peso 1.21 1,578.64 1,589.64 1,318.43
.9999 bar 1.00 1,320.61 1,332.00 1,332.00
SPOT SILVER: 20.96      
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 15,522.65 15,880.15 22.21
US 40% silver 1/2s 0.30 5,991.45 6,141.45 20.82
100 oz .999 bar 100.00 2,086.00 2,146.00 21.46
10 oz .999 bar 10.00 214.60 215.60 21.56
1 oz .999 round 1.00 21.06 21.56 21.56
Am Eagle, 200 oz Min 1.00 22.71 23.96 23.96
SPOT PLATINUM: 1,478.50      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Platinum Platypus 1.00 1,503.50 1,543.50 1,543.50
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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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