The Moneychanger
Daily Commentary
Monday, 30 June a.d. 2014 Browse the commentary archive

I promised my wife I'd be on time today & she's going to hit me upside the head with a big stick if I'm late, so I'll make this short.

First, I am baffled by gold today. One of the analytical services I receive sent a special message yesterday about the sudden rise in Commercial Short positions in the Commitments of Traders Reports. Generally Commercials are the "smart money", and when they short, you can prepare your heart (& pocketbook) for a drop. Silver's CoT Commercial Shorts grew even more than gold's.

But in the face of that Gold rose $2.80 to close at $1,321.80, and that Comex close looks like a Potemkin Close because immediately after the close gold shot through $1,326 and remains at $1327.90 in the aftermarket. Painting the tape, Nice Government Men?

Silver gainsaid gold by losing 7 cents to close at 2100.7c. What do I not like about silver? That flag on the chart that looks like it is rising, which is a bearish sign. And it's as overbought as a pretty girl's cake at a county fair bake sale. But if it closes above 2150c, it'll fly.

US dollar index is pushing gold up. It lost 26 basis points to 79.81, down 0.33%. Drop started about 10:30 a.m. and breaks through the old downtrending channel line, and support around 80, and the 50 DMA, and it's just a wretched mess. Will sink further, as witness the rising Euro (up 0.32% to $1.3692 & above its 200 DMA & the Yen at 98.69, above its 200 DMA but up only 0.05%.

Stocks finished down on the day but up for the month. Dow lost 25.25 (0.15%) to 16,826.60 while the S&P500 shaved off 0.73 (0.04%) to 1,960.23. Dow in gold and Dow in silver both fell today. At least that indicator isn't welching on us.

Y'all have mercy, my wife is pulling up! Watch for gold tomorrow. A close above $1,331 carries it aabove those COT worries for a while.

On 30 June 1572 Great Britain passed a Poor Law, supposedly giving assistance to the poor who were unemployed or vagrant, but actually starting a long tradition of treating poverty as a crime and the poor as criminals. Many of the vagrant poor in England at that time had been driven off the land by enclosure, fencing off formerly common lands by the wealthy to raise sheep for the wool trade. Of course, the wrongheaded source of the entire problem is shifting responsiiblity of caring for the poor from the Church & communities to the State. Everybody knows already how gentle the State is, just all warm & fuzzy all the time. Go apply for food stamps and check it out.

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
30-Jun-14 Price Change % Change
Gold, $/oz 1,319.00 2.60 0.20%
Silver, $/oz 21.08 -0.03 -0.15%
Gold/Silver Ratio 62.580 0.215 0.34%
Silver/Gold Ratio 0.0160 -0.0001 -0.34%
Platinum 1,481.00 2.50 0.17%
Palladium 843.55 0.30 0.04%
S&P 500 1,960.23 -0.73 -0.04%
Dow 16,826.60 -25.24 -0.15%
Dow in GOLD $s 263.71 -0.92 -0.35%
Dow in GOLD oz 12.76 -0.04 -0.35%
Dow in SILVER oz 798.34 -0.02 -0.00%
US Dollar Index 79.81 -0.26 -0.32%
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: 1,327.90      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,362.43 1,374.38 1,374.38
1/2 AE 0.50 676.72 700.47 1,400.93
1/4 AE 0.25 353.29 356.87 1,427.49
1/10 AE 0.10 140.65 146.07 1,460.69
Aust. 100 corona 0.98 1,295.10 1,304.10 1,330.44
British sovereign 0.24 314.46 326.46 1,386.84
French 20 franc 0.19 249.78 252.72 1,353.61
Krugerrand 1.00 1,342.51 1,352.51 1,352.51
Maple Leaf 1.00 1,342.90 1,357.90 1,357.90
1/2 Maple Leaf 0.50 763.54 697.15 1,394.30
1/4 Maple Leaf 0.25 338.61 355.21 1,420.85
1/10 Maple Leaf 0.10 140.76 144.74 1,447.41
Mexican 50 peso 1.21 1,592.91 1,603.91 1,330.27
.9999 bar 1.00 1,332.55 1,343.90 1,343.90
SPOT SILVER: 21.04      
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 15,472.60 15,722.60 21.99
US 40% silver 1/2s 0.30 6,015.05 6,165.05 20.90
100 oz .999 bar 100.00 2,094.00 2,154.00 21.54
10 oz .999 bar 10.00 215.40 216.40 21.64
1 oz .999 round 1.00 21.14 21.64 21.64
Am Eagle, 200 oz Min 1.00 22.79 24.04 24.04
SPOT PLATINUM: 1,481.00      
Plat. Platypus 1.00 1,506.00 1,546.00 1,546.00
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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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