The Moneychanger
Weekly Commentary
Friday, 18 July a.d. 2014 Browse the commentary archive
Here's the weekly scorecard:
  11-Jul-14 18-Jul-14 Change % Change
Silver, cents/oz. 2,141.10 2,083.80 -57.30 -2.7
Gold, dollars/oz. 1,337.00 1,309.20 -27.80 -2.1
Gold/silver ratio 62.445 62.828 0.383 0.6
Silver/gold ratio 0.0160 0.0159 -0.0001 -0.6
Dow in Gold Dollars (DIG$) 261.97 270.01 8.03 3.1
Dow in gold ounces 12.67 13.06 0.39 3.1
Dow in Silver ounces 791.36 820.62 29.26 3.7
Dow Industrials 16,943.81 17,100.18 156.37 0.9
S&P500 1,967.57 1,978.22 10.65 0.5
US dollar index 80.22 80.61 0.39 0.5
Platinum 1,512.30 1,489.20 -23.10 -1.5
Palladium 874.75 880.50 5.75 0.7

Nacheral born durned fools like me always want to know WHY. It's fatal curiosity, nowadays, cause don't nothing make no sense no way. Yesterday stocks fell like the Rooshians wuz on Main Street, and today they rose & danced like they Cooter Brown drinking bustskull whiskey. "Why" remains a mystery of the universe as yet unrevealed, but it will be, one o' these days. And I wouldn't be a durned bit surprised to find the WHY didn't have a bunch of Nice Government Men behind it. Don't none of this have nothing to do with value.

Before I get in to that, Look at the week. It held a whipping for silver, gold, & platinum, but fat meat for stocks and the US dollar (go figure THAT).

After yesterday's 161 point nosedive, the Dow turned today and rose 123.37 (0.73%) to 17,100.18. S&P500 out did that, up 10.03% (20.1) to a 1,978.22 close.

For the nonce, today's rise cancels the chance of a Key Reversal downward in stocks. For the time being stocks float, but yet loometh nearby a fall. Watch out.

Today's stock reversal upward and metals fall sent the Dow in metals zig-zagging. Dow in Gold jumped 1.29% to 13.04 oz (G$269.56 gold dollars), and back above the 50 DMA. Dow in Silver bucked up as well, 2% to 817.02 oz (S$1,056.35 silver dollars). No conclusions to draw but "Still correcting it's long fall from early June to mid-July." Patience.

US dollar rose 39 basis points or 0.5% this week, an amazing dance for a currency without legs or substance. Ended today up 3 basis points to 80.61. It has broken out of an even-sided triangle headed at the least for 81.20. If the last 4 months' trading prove to be the upside head and shoulders it appears to be, then the dollar index could touch 82.75.

The euro bell through $1.3600 this week, gapped down, and reached down lower today. Today's low was $1.3491. A close below $1.3500 opens the currency equivalent of a black hold beneath the Franken-currency. Yen bid far yesterday to break out of its long narrow triangle (abuilding since February, yawn!), but fell back today -- all pop, no corn. Closed down 0.18% to 98.67.

Yield on the 10 year treasury note, which I use as a proxy for interest rates, fell this week along with the Malaysian airliner. Such catastrophes send people fleeing into US dollar government bonds, and when bonds rise, interest rates fall. More than that, though, the 10 year note yield is dancing with the top boundary of a trading channel from 2012 & 2013. 'Twas out of that channel's top the yield broke free June a year ago, so it remains weighty support. Should it fall through 2.475% the yield could fall quite a ways, leaving Janet Yellum smugger than a hound sucking duck eggs.

Today silver dropped 24.8 cents (1.2%) to 2083.8 at Comex close. Gold misplaced $7.50 (0.6%) to $1,309.20.

Gold bounced off its ruling downtrend line form the October 2012 top downward. Silver simply retraced all the gain it made yesterday. Assuming that's the B-leg of the correction completed, next week we ought to see lower lows than we saw this week, but not too low, I think. I can't see silver dropping further than 2000c, if it falls that far. Gold could drop to $1,290 and stop, or spike to $1,280 and scare every gold bug to death. Gold has established an uptrend line from $1,240.20 on June 1 to this week's lows. 'Twill be fascinating to see if gold can hold that line, on Monday about $1,300.

But all that bars another airliner shot down, or banks collapsing like dominoes, or any of a hundred things I haven't even imagined yet. Face it, the world ain't too stable, and the least stable element is the currency & financial system.

Don't none of it make no sense.

In the freedom-loving US of A today, taxi companies in Virginia are suing to stop Uber & other ride services from operating in that state, much like another suit filed in Maryland. Yassir, everybody's for a free market until freedom threatens his.

And the freedom loving US government indicted FedEx today for -- ready for this? -- carrying packages for internet pharmacies the government doesn't like! Yassir, land of the free and home of controlled markets. I say, keep those Canadians out of the US Pharmacy market! Why, Amuricun pharmacies are already almost all going broke anyway! Keep those price up!

Speaking of drugs, nearly 50,000 federal drug offenders doing time might be eligible for reduced sentences, since the US sentencing Commission decided to apply retroactively a change decreasing sentencing guidelines.

Here's a place I part company with lots of folks who believe the Cure for All Crime is stiffer sentencing. The War on Drugs is nothing but a gigantic make-work industry, and the prison system is one chief beneficiary since 75% of those sitting in prison got there through drug charges. Why not just legalize all drugs, including penicillin, and let nature take its course? After all, taking dope is Nature's way of telling you that your genes are being withdrawn from the pool. Keeping those folks in prison does not a particle of good for anybody but the prison industry.

Whoa, there! Don't write me any hot emails about how without the drug laws the country would be flooded with addicts. Before the 1906 Pure Food & Drug Act, a 10 year old could buy laudanum, tincture of opium, from any pharmacy in the country. Does anybody seriously believe that the US has fewer addicts today than back when people could buy whatever they wanted? Merely to ask the question answers it.

Aww, lay such durned fool questions aside. I reckon their whole yankee system has to hit the wall before they'll listen to reason even a fool could see. Y'all ever get a song in your mind you couldn't dislodge? The Celtic melody "The Parting Glass" won't stop singing in my mind, and especially this delightful ending:

But since it falls unto my lot

That I should rise and you should not

I'll gently rise and softly call,

Good night, and joy be with you all.

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
18-Jul-14 Price Change % Change
Gold, $/oz 1,309.20 -7.50 -0.6
Silver, $/oz 20.84 0.25 1.2
Gold/Silver Ratio 62.828 -0.367 -0.6
Silver/Gold Ratio 0.0159 0.0002 1.2
Platinum 1,489.20 -13.80 -0.9
Palladium 880.50 -3.60 -0.4
S&P 500 1,978.22 20.10 1.0
Dow 17,100.18 123.37 0.7
Dow in GOLD $s 270.01 3.50 1.3
Dow in GOLD oz 13.06 0.17 1.3
Dow in SILVER oz 820.62 -3.89 -0.5
US Dollar Index 80.58 -0.00 -0.0
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: 1,311.10      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,339.94 1,356.99 1,356.99
1/2 AE 0.50 668.15 691.61 1,383.21
1/4 AE 0.25 348.81 352.36 1,409.43
1/10 AE 0.10 138.87 144.22 1,442.21
Aust. 100 corona 0.98 1,276.14 1,285.14 1,311.10
British sovereign 0.24 310.48 322.48 1,369.94
French 20 franc 0.19 246.62 249.58 1,336.81
Krugerrand 1.00 1,326.83 1,336.83 1,336.83
Maple Leaf 1.00 1,326.10 1,341.10 1,341.10
1/2 Maple Leaf 0.50 753.88 688.33 1,376.66
1/4 Maple Leaf 0.25 334.33 350.72 1,402.88
1/10 Maple Leaf 0.10 138.98 142.91 1,429.10
Mexican 50 peso 1.21 1,571.18 1,582.18 1,312.25
.9999 bar 1.00 1,315.69 1,327.10 1,327.10
SPOT SILVER: 20.87      
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 15,061.48 15,311.48 21.41
US 40% silver 1/2s 0.30 5,963.43 6,113.43 20.72
100 oz .999 bar 100.00 2,076.50 2,136.50 21.37
10 oz .999 bar 10.00 213.65 214.65 21.47
1 oz .999 round 1.00 20.97 21.47 21.47
Am Eagle, 200 oz Min 1.00 22.62 23.87 23.87
SPOT PLATINUM: 1,489.20      
Platinum Platypus 1.00 1,514.20 1,554.20 1,554.20
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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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