The Moneychanger
Daily Commentary
Monday, 14 July a.d. 2014 Browse the commentary archive

Frequently readers castigate me for not reporting on the scheme by governments and central banks to suppress silver & gold prices. Unlike some purveyors of that information, I do not believe that every jot and tittle of price movement in metals can be ascribed to price manipulation. Yes, the evidence as well as US government policy and law confirms that scheme exists, but it does not explain every price move. Moreover, it only works at the margin, not over time, as shown by its "success" suppressing prices from $252 and $4 in 2001 to $1,300 and $21 in 2014. Sounds like a typical government deal to me!

But that said, I don't deny the manipulation exists. Clearly from time to time a gigantic seller wholly numb to self-interest steps up and slaps silver & gold with huge sales. ZeroHedge reports today that huge selling hit the European open, & at the US open $1.37 billion worth of gold was sold on the futures market. See the article at http://www.zerohedge.com/news/2014-07-14/gold-silver-plunge-most-2-months

This changes the price at the margin only and temporarily only. No manipulation can change the relentless primary uptrend, which is powered by relentless central bank money printing and relentless government spending. Attacks like this are not signs of strength, but of desperation.

Long & short today is that stocks jumped up, dollar moved not, & silver & gold fell stoutly.

For purposes of locating ourselves in this wilderness of markets, remember that our most reliable indicators, the Dow in Gold and Dow in Silver, have both been pointing at an upward correction (stocks up, metals down) for some time. Today that correction walked onstage.

Stocks levitated on news that Citibank was going to settle with the yankee government for all its mortgage fraud by paying a fine of "only" $7 billion. That and higher earnings reports set higher a market that plainly wanted to march higher.

Today the Dow added 111.61 (0.66%) to 17,055.42 & the S&P500 rose 9.53 (0.48%) to 1,977.10. By a razor thin margin the Dow made a new intraday high, but not a higher close. S&P didn't do that well.

My conclusion hasn't changed: stocks will make a peak here shortly, then a big fall.

Dow in Gold blasted straight up through its 20 (12.87 oz) and 50 (12.97) moving averages to close up 3.22% at 13.05 oz (G$269.77 gold dollars). That does not alter the existing downtrend, but turns the DiG up for a while anyway.

Dow in Silver erupted 3.46%, blasting up through the 200 DMA (797.33 oz or S$1,030.89 silver dollars), and through its declining 20 DMA (810.42 oz or S$1,047.82) to lodge at 815.50 oz (S$1,054.38). Like the Dow in Gold, this turns all the indicators upwards and promises a correction lasting a couple of weeks at least.

ALWAYS bear in mind behind all my chipper talk looms a domino-like collapse of the banking system. It's broke, but who can predict when it might collapse in a panic? Likewise, the financial system is always waiting to be pushed over a cliff, thanks to central banking, & very little in a chart tells you when a catastrophe like the 2008 panic will precipitate. One reason to buy gold and silver in the first place is for insurance against such a panic. Just remember that financial panic is the buzzard that floats on the breeze, waiting for time and place to roost.

But then, Don't Worry! Be Happy! I'm jes' a nacheral born fool from Tennessee & don't even have a pair of them pointy-toed shoes they wear on Wall Street. Why, how could I know "sic 'em" from "come here"?

Currencies went nowhere today, with the US dollar index going nowhere like a duck with one web nailed to the ground. Closed unchanged at 80.22.

O, Wo! Gold plunged $30.70 (2.35%) to end on Comex at $1,306.30. Silver nosedove 54.7 cents to 2086.4c (down 2.62%).

Now don't y'all send me a bunch of emails telling me what an idiot I am or bellering about the end of the world for gold and silver. I have a delete key and I know how to use it. I told y'all at the top of this commentary what happened: SOMEbody, I don't know whom but I could name several suspects and their names all include Nice Government Men, mounted a raid on gold and silver with massive selling. And it doesn't matter whether it was Nice Government Men or Perfect Private Parties, you hit the gold market with $1.37 billion in sales and it is gonna drop!

And it was adept timing, since both (in my ignorant opinion) were finishing the last leg of a rise. But where does that leave us?

Let us assume the rally was complete from $1,240.20 on June 1. A 50% correction from the intraday high ($1,346.80) takes us $53.50 off the high or $1,293.50. Around there are nested the 200 DMA ($1,287.49) & the 50 DMA ($1,292.53), and lateral support/resistance around $1,295. A 61.8% correction would carry gold to $1,281, just about where lateral support awaits at $1,277. I don't expect lower.

Since June 1 silver has climbed from 1861.5c to 2163c, or 301.5c. A 50% correction carries silver to 2012c, below the 200 DMA at 2037c, the first likely target of a correction, and lateral support exists around 2035 - 2055c. A 61.8% correction would land silver at 1977 cents, about where the big breakout started. & Loads of fans stand waiting to buy around 2000c.

Silver & gold may spend a couple of weeks correcting. Get ready for the sale prices.

On 14 February 1789 a French mob stormed the Bastille, an old fortress being used as a prison, another victory of Revolutionary propaganda over truth. Alleged to be a terrible dungeon for enemies of the "tyrannical" king. it held only 7 prisoners. In fact it was stormed to get the gunpowder stored within. But propaganda has passed into "fact," and Bastille Day became the French national day. I respect the French greatly, but this is something like claiming the Boston Tea Party really was run by Indians.

On 14 July 1798 the US congress passed the Sedition Act, making it a federal crime to publish false, scandalous, or malicious writing about the US government, in other words, squelching free speech. Today we no longer have such embarrassing monstrosities. Today the government simply charges its enemies with tax crimes or terrorism. No explanation is needed or expected, nor any Bastille.

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
14-Jul-14 Price Change % Change
Gold, $/oz 1,306.30 -30.70 -2.30%
Silver, $/oz 20.86 -0.55 -2.55%
Gold/Silver Ratio 62.610 0.166 0.27%
Silver/Gold Ratio 0.0160 -0.0000 -0.26%
Platinum 1,492.30 -20.00 -1.32%
Palladium 871.45 -3.30 -0.38%
S&P 500 1,977.10 9.53 0.48%
Dow 17,055.42 111.61 0.66%
Dow in GOLD $s 269.90 7.92 3.02%
Dow in GOLD oz 13.06 0.38 3.02%
Dow in SILVER oz 817.46 26.10 3.30%
US Dollar Index 80.22 0.00 0.00%
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: 1,306.60      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,339.27 1,352.33 1,352.33
1/2 AE 0.50 665.86 689.23 1,378.46
1/4 AE 0.25 347.62 351.15 1,404.60
1/10 AE 0.10 138.39 143.73 1,437.26
Aust. 100 corona 0.98 1,270.48 1,279.48 1,305.33
British sovereign 0.24 309.42 321.42 1,365.42
French 20 franc 0.19 245.77 248.74 1,332.31
Krugerrand 1.00 1,320.97 1,330.97 1,330.97
Maple Leaf 1.00 1,321.60 1,336.60 1,336.60
1/2 Maple Leaf 0.50 751.30 685.97 1,371.93
1/4 Maple Leaf 0.25 333.18 349.52 1,398.06
1/10 Maple Leaf 0.10 138.50 142.42 1,424.19
Mexican 50 peso 1.21 1,565.79 1,576.79 1,307.78
.9999 bar 1.00 1,311.17 1,322.60 1,322.60
SPOT SILVER: 20.89      
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 15,147.28 15,397.28 21.53
US 40% silver 1/2s 0.30 5,969.33 6,119.33 20.74
100 oz .999 bar 100.00 2,078.50 2,138.50 21.39
10 oz .999 bar 10.00 213.85 214.85 21.49
1 oz .999 round 1.00 20.99 21.49 21.49
Am Eagle, 200 oz Min 1.00 22.64 23.89 23.89
SPOT PLATINUM: 1,492.30      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,517.30 1,557.30 1,557.30
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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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