The Moneychanger
Daily Commentary
Thursday, 24 July a.d. 2014 Browse the commentary archive

In this Best of All Possible Worlds, the sick Portuguese Espirito Santo Financial Group that owns 20% of sick Banco Espirito Santo is trying to dodge behind the bankruptcy curtain in Luxemburg. That's the third company in a week linked to the Espirito Santo family.

But in this Best of All Possible World's bankruptcy is no stigma, makes no one nervous, and roils no stock indices. I reckon they all look at it as the Best of All Possible Bankruptcies.

In the US all indices but the S&P500 wavered slightly, but a bit nervously. S&P500 added 0.97 (0.05%) to rise to a new high above yesterday's at 1,987.98. No, that was not an epochal accomplishment, and only nudges the S&P500 up a little closer to its upper trading channel line. It is rising on rising volume. In this Best of All Possible Worlds, everything is possible.

The Dow dropped for the second day running, down 2.83 (0.02%) to 17,083.80. Trading out into the nose cone of a bearish rising wedge, it can rise higher, even to 17,300, maybe even overthrow the upper boundary of that wedge. Yet a certain doominess hovers over all, for an end to this looms ahead shortly.

But in this Best of All Possible Worlds, anything is possible.

Steady-ish stocks and falling metals pushed the Dow in gold & Dow in silver higher today. Dow in silver jumped to its 50 DMA (837.31 oz or S$1,082.58) and closed 2.63% higher at 836.83 oz (S$1,081.96). Dow in gold burst through its downtrend line and rose 1.06% to 13.24 oz (G$273.69 gold dollars). Y'all don't act like I didn't tell y'all this was coming. And it has further to rise still.

The Best of All Possible Scrofulous Fiat Currencies, the US Dollar, managed by the Best of All Possible Central Banks, rose six basis points (0.07%) today to end at 80.94. It appears to be rallying, and threatens a roughly two hundred basis point rally, i.e., to 82.75.

In this BOAPW even the euro rose today, up 0.03% to $1.3464, but still sick as a poisoned dog. Lower prices seem inevitable, but remember that all scrofulous, rotten fiat currencies are manipulated, subject to the secret cosmic motions and goofy policies that take hold of central bankers' minds.

The Yen has fallen all the way to the bottom side of its narrow triangle below its 20 DMA (98.46) and on top of its 50 DMA (98.23). If it makes one baby step lower, it falls out of the triangle for a long tumble.

Oh, owch! Welcome back, volatility! Gold broke that $1,305 support hard and avalanched $13.90 (1.07%) to close Comex at $1,290.60. Silver sledded 2.75% or 57.6 cents to 2037.6, right on the 200 DMA.

I note between gritted teeth that both metals punched through their 300 day moving averages today, as well as the uptrend lines which had been supporting them.

Silver landed on its 200 DMA (2035c) as did gold ($1,287) in this twin fall, but gold rose up off its 200. Gold has some internal lateral support that runs back to 2013 right at $1,387, too.

Last gold breakout occurred around $1,280, so everybody expects this correction will fall that far and stop, which means it probably won't. Another target is a roughly 75% correction of the preceding rise from $1,240.20 to $1,346.80, or about $1,265. Of course, it could stop at that $1,280, IF it breaks the 200 DMA ($1,287). Does this sound as if I am vacillating? Ought to, because I am.

Silver enjoys strong support at 2000c and at 1975c. 50 DMA also stands ready to catch it at 2015c. I'll buy a little tomorrow one way or the other, just so I don't miss out.

Gold/Silver ratio rose 1.7% to 63.339 from yesterday's 62.258. That catches my eye because it matches the high a couple of weeks ago. Ratio looks overstretched to the upside, which hints that the silver and gold's fall will be short-lived.

On 24 July 1567 Mary Queen of Scots was forced to abdicate. Her one year old son became King James VI of Scots, and later James I of England. He was a thoroughly nasty person, fitting founder of the Stewart dynasty in England.

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
24-Jul-14 Price Change % Change
Gold, $/oz 1,290.60 -13.90 -1.07%
Silver, $/oz 20.38 -0.58 -2.75%
Gold/Silver Ratio 63.339 1.078 1.73%
Silver/Gold Ratio 0.0158 -0.0003 -1.70%
Platinum 1,472.70 -12.30 -0.83%
Palladium 869.96 -3.35 -0.38%
S&P 500 1,987.98 0.97 0.05%
Dow 17,083.80 -2.83 -0.02%
Dow in GOLD $s 273.63 2.87 1.06%
Dow in GOLD oz 13.24 0.14 1.06%
Dow in SILVER oz 838.43 22.91 2.81%
US Dollar Index 80.94 0.06 0.07%
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: 1,290.50      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,317.60 1,335.67 1,335.67
1/2 AE 0.50 657.65 680.74 1,361.48
1/4 AE 0.25 343.33 346.82 1,387.29
1/10 AE 0.10 136.69 141.96 1,419.55
Aust. 100 corona 0.98 1,256.09 1,265.09 1,290.65
British sovereign 0.24 305.61 317.61 1,349.22
French 20 franc 0.19 242.74 245.74 1,316.21
Krugerrand 1.00 1,300.82 1,310.82 1,310.82
Maple Leaf 1.00 1,305.50 1,320.50 1,320.50
1/2 Maple Leaf 0.50 742.04 677.51 1,355.03
1/4 Maple Leaf 0.25 329.08 345.21 1,380.84
1/10 Maple Leaf 0.10 136.79 140.66 1,406.65
Mexican 50 peso 1.21 1,546.49 1,557.49 1,291.77
.9999 bar 1.00 1,295.02 1,306.50 1,306.50
SPOT SILVER: 20.35      
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 14,693.25 14,943.25 20.90
US 40% silver 1/2s 0.30 5,811.50 5,961.50 20.21
100 oz .999 bar 100.00 2,025.00 2,085.00 20.85
10 oz .999 bar 10.00 208.50 209.50 20.95
1 oz .999 round 1.00 20.45 20.95 20.95
Am Eagle, 200 oz Min 1.00 22.10 23.35 23.35
SPOT PLATINUM: 1,472.70      
Plat. Platypus 1.00 1,497.70 1,537.70 1,537.70
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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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