The Moneychanger
Daily Commentary
Monday, 21 July a.d. 2014 Browse the commentary archive

There's a proverb that nothing stinks worse than perfume gone bad, & there's nothing more shameful, ridiculous, or illogical than science gone political. You simply can't serve truth if you're aiming for a political result.

And of all the politically-driven scientific hogwash, "climate change" or "global warming" stands at the list's head. Not even as believable as the Tooth Fairy -- less evidence for its existence.

But one particular burr under the saddle of these political scientists has been cows. Because they are ruminants -- basically a grass fermentation barrel on legs -- cows produce gas out of both ends. Not as much as termites, I am told, which leaves you wondering who would devote a lifetime to studying termites' gas-passing customs.

But let all that go, & don't miss this: the premise of man-created global warming and the evils of carbon dioxide is simply hogwash. All the same, that doesn't slow down the Cow Persecutors.

Latest attack comes from an article in the Proceedings of the National Academy of Sciences (government science at its best) in a study that says beef causes 10 times the environmental impact of pork, poultry, dairy, & eggs. I will pass over in science the erring premise that compares raising beef the American industrial way (in feedlots) on grain rather than grass feeding on pasture. More, the study ignores that much land devoted to raising cattle is so marginal that it cannot be used for anything else. Finally, these "scientists," who may never have actually seen or touched a cow, do not notice that grazing grass actually IMPROVES the soil and, if properly managed, can restore as much as an inch of topsoil every ten years.

So for a truly healthy environment, go eat a steak tonight. Naww, make it TWO steaks, and grass-fed at that.

That Malaysian airliner shoot-down came back to haunt stocks today. Dow fell back 48.45 (0.28%) to 17,051.73. S&P500 lost 4.59 (0.23%) to 1,973.63. Inability to hold on to gains looks weak to me, but I am notoriously NOT stocks' best friend. Still expecting a large fall soon.

Dow in metals jiggled today, but remain tight-lipped. Both the Dow in Gold and Dow in Silver remain about their 20 day moving averages, i.e., their momentum is upward. Dow in silver lost 0.67% to 811.52 oz (S$1,049.24 silver dollars), hovering above the 20 DMA. Dow in gold fell 0.47% to 12.98 oz (G$268.32 gold dollars). Most indicators appear to point higher, not the way I prefer it to go.

Air traffic over the Ukraine must be running investors into US bonds for safety (just think about that a minute, to get a flavor of what a lunatic world we live in). Of course, that drives the yield down. 10 year treasury note yield ended today a little lower at 2.474%. It is walking a line along a cliff where there's not enough room to swing a cat. Once misstep & it falls much further.

In trading this morning before New York opened the dollar index stumbled and fell to 80.42, but quickly rose back above 80.50 & flattened out the rest of the day around 80.60. Ended unchanged at 80.61. All that is right low volatility, but trend is up. Euro went nowhere, up 0.01% to $1.3524. Hanging over an abyss by a cotton thread. Yen barely jiggled today -- Hey, shake that thing by the shoulder and see if it's still alive! Down 0.03% to 98.64.

Today gold rose $4.50 (0.34%) on Comex, ending at $1,313.70 Silver bumped up 12.8 cents (0.62%) to 2096.6c.

I know y'all probably don't pay no mind to the 300 day moving average, but starved for excitement as my life is, I watch it. I have been watching it for a coon's age, because closing above the 300 DMA and staying above the 300 DMA witnesses that the correction is over. So I want y'all to understand that when I say, "Silver remained above its 300 DMA today," that is a statement pregnant with meaning.

But the object is to close above the 300, then pull away above it. Hasn't done that yet.

Today silver couldn't close above its 20 DMA (2108c), but also did not close below the rising trend line from the June bottom, today about 2080c. I expect silver will manage one more scary spike through that line, maybe as far as the 200 DMA at 2036c. There I would back up the truck and load 'er up.

Gold is trapped in an even-sided triangle, nor could it climb over its 20 DMA. Uptrend line here comes in about $1,300. Spike to $1,380 is still possible.

Once again I caution that safe haven gains such as those occasioned by events in the Ukraine don't usually stick. But clearly for the present it is preventing further falls.

Patience should pay off here.

On 21 July 1861 Confederate forces under Brig. Gen. PGT Beauregard defeated Union forces invading Virginia under B. Gen. Irvin McDowell. The tide of battle was running against the Southerners until Gen. Joe Johnston arrived with reinforcement by railroad. During the battle the unknown brigadier who had been teaching at the Virginia Military Institute stood fast with his Virginia brigade and earned the nickname, Stonewall Jackson. When South Carolina General Bee's troops were confused, he urged them to re-form by shouting, "There stands Jackson like a stone wall. Rally behind the Virginians!" Bee was mortally wounded shortly and died. Later in the battle, Jackson sent his men to the attack, saying, "When you charge, yell like furies!" Thus began the Rebel Yell. Unfortunately, Beauregard did not follow up his victory by chasing the routed US Army and taking Washington.

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
21-Jul-14 Price Change % Change
Gold, $/oz 1,313.70 4.50 0.34%
Silver, $/oz 20.97 0.13 0.62%
Gold/Silver Ratio 62.659 -0.172 -0.27%
Silver/Gold Ratio 0.0160 0.0000 0.27%
Platinum 1,492.70 3.50 0.24%
Palladium 876.15 -4.35 -0.49%
S&P 500 1,973.63 -4.59 -0.23%
Dow 17,051.73 -48.45 -0.28%
Dow in GOLD $s 268.32 -1.69 -0.62%
Dow in GOLD oz 12.98 -0.08 -0.62%
Dow in SILVER oz 813.30 -7.36 -0.90%
US Dollar Index 80.61 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: 1,312.90      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,341.78 1,358.85 1,358.85
1/2 AE 0.50 669.07 692.55 1,385.11
1/4 AE 0.25 349.29 352.84 1,411.37
1/10 AE 0.10 139.06 144.42 1,444.19
Aust. 100 corona 0.98 1,279.18 1,288.18 1,314.20
British sovereign 0.24 310.91 322.91 1,371.75
French 20 franc 0.19 246.96 249.92 1,338.61
Krugerrand 1.00 1,328.65 1,338.65 1,338.65
Maple Leaf 1.00 1,327.90 1,342.90 1,342.90
1/2 Maple Leaf 0.50 754.92 689.27 1,378.55
1/4 Maple Leaf 0.25 334.79 351.20 1,404.80
1/10 Maple Leaf 0.10 139.17 143.11 1,431.06
Mexican 50 peso 1.21 1,573.34 1,584.34 1,314.04
.9999 bar 1.00 1,317.50 1,328.90 1,328.90
SPOT SILVER: 20.95      
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 15,154.43 15,404.43 21.54
US 40% silver 1/2s 0.30 5,987.03 6,137.03 20.80
100 oz .999 bar 100.00 2,084.50 2,144.50 21.45
10 oz .999 bar 10.00 214.45 215.45 21.55
1 oz .999 round 1.00 21.05 21.55 21.55
Am Eagle, 200 oz Min 1.00 22.70 23.95 23.95
SPOT PLATINUM: 1,492.70      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,517.70 1,557.70 1,557.70
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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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