The Moneychanger
Daily Commentary
Thursday, 31 July a.d. 2014 Browse the commentary archive

What a mess! I'm away two days & the devil busts out in Georgia -- and markets.

Most meaningful and pointed event came in the Dow. Not only did it fall 317.06 (1.9%) to 16,563.30, it also broke through -- for the first time -- the uptrend line from the March 2009 low (about 16,730 today). Y'all read that again. Let it sink in.

Today the Dow stands 574.90 or 3.4% below the 16 July 17,138.20 closing high. A 10% correction would take it to 15,424.

Opening from a few points below the 50 DMA (16,877), the Dow began the day dropping & never let up, closing at the low. Next support lies at the last (May) low, 16,341, but the 200 DMA is also nearby at 16,315.

Today's close in the Dow wiped out all but 24 points of ALL the Dow's 2014 gains.

S&P500 dropped more than the Dow, 2% or 39.4, to land at 1,930.67. That sliced clean through the 1,953 50 day moving average like one of them fancy Japanese chopper knives they sell on late-night TV. The uptrend from March 2009 stands today about 1,840. Next support stands at the June low, 1,926.

Since gold & silver also fell today the decline in the Dow In Gold and Dow In Silver were not as dramatic as you might expect. Dow in Gold lost 0.92% to close at 12.91 oz (G$266.18 gold dollars), and fell from near its 50 DMA (13.05) through its 20 DMA (12.97). If the question is, "Has the DiG's upward correction ended?" the answer is "Yes."

Dow in Silver lost 0.75% (6.12 oz) to end at 811.13 oz (S$1,048.73 silver dollars). That is virtually on top of the 811.94 ($1,049.78) 20 DMA. Just below at 805.27 oz (S$1,041.16) stands the 200 DMA. When the DiS breaks that, gravity will get ugly.

Yea, let us keep score, let us chalk up on this, July's last day, gains for the year. Dow +0.1%; Dow Transports +10.1%; Dow Utilities +9.9%; S&P500 +4.7%; Nasdaq Comp +4.6%; Nasdaq 100 +8.4%; Russell 2000 -3.7%; Wilshire 5000 +3.6%; various gold stock indices, up over 18%; gold + 6.6%; silver + 5.3%; platinum +6.9%; palladium + 21.9%; US dollar index +1.8%.

Also in the last two days the 10 year treasury yield has shot up through resistance & the downtrend line from the 31 Dec 2013 high. Ended at 2.556%. Reason assigned by the media is that investors believe the FOMC's latest hot air and a lying government jobs report today showing more employed & rising labor costs mean the Fed will have to raise interest rates sooner than June 2014. Interest rates need to rise over 2.75% before they'll make Mother Janet Yellum start fanning her face with her apron.

Yesterday the Japanese yen dove head first. It had broken the lower boundary of the long narrow triangle slightly, and simply dropped like your wife's cubic zirconium wedding ring straight down the drain. Flat today at 97.27.

Euro did not lose its cool, but dropped only 0.05% to $1.3389. Its nosedive will come another day, maybe soon.

Meanwhile the US dollar index made good on its threat to rally & proved it yesterday with an 81.51 close Rose only 3 basis points today to 81.54. This promises a rally to at least 82.75, maybe higher, but first may back off a couple of days.

Today gold peeled off $13.60 (1.06%) to $1,281.30. Silver lost 18.5 cents (0.61%) to 20.373c.

Around 9:30 a.m. Eastern time when the devil starts to get busy in New York, sellers broke gold about $1,294 and it fell clean below $1,290. Stairstepped down the rest of the day.

Silver did not look anything like that. Before New York opened it climbed to 2075c, then about 9:30 sellers drove it from 2065c to 2055c, and the rest of the day was a losing battle.

Maybe I'm seeing things, but gold's chart may have an upside-down head and shoulders that began with a left shoulder in May, bottom of the head in June, & a right shoulder forming now. If that's true, it means the present decline should not go much further than $1,265 before it reverses.

Silver has now tumbled again to its 200 DMA (now 2031c). It can catch hold and turn around anywhere between 2000c and 1975c. That ought to come soon.

Silver & Gold are fixing to hand y'all a bargain basement opportunity. Don't miss it.

Friends, if you are like me I get up every morning thinking, "Today will be like yesterday, only more so." 'Tain't so. Some days, things change. Today things changed in stocks. Serious adults will begin to sell stock positions & put the proceeds into silver & gold.

Thanks most kindly for all your emails affirming y'all are praying for my sick friend, Daniel Freemon. Susan & I spent a long time in the hospital with him. Doctor is not sure whether he has encephalitis or a tick borne disease (Rocky Mountain Spotted Fever or ehrlichia). Daniel's wife died last November after a two day illness, and he has a 7 year old daughter. Please pray that God would graciously heal him.

Argentum et aurum comparanda sunt —
Silver and gold must be bought.

— Franklin Sanders, The Moneychanger

Your source for gold and silver. Read our latest reviews and testimonials.
Market Snapshot See more charts and market data
31-Jul-14 Price Change % Change
Gold, $/oz 1,271.30 -13.60 -1.06%
Silver, $/oz 30.37 -0.19 -0.61%
Gold/Silver Ratio 41.856 -0.192 -0.46%
Silver/Gold Ratio 0.0239 0.0001 0.46%
Platinum 1,465.70 -17.70 -1.19%
Palladium 874.65 -6.45 -0.73%
S&P 500 1,930.67 -39.40 -2.00%
Dow 16,563.30 -317.06 -1.88%
Dow in GOLD $s 269.33 -2.25 -0.83%
Dow in GOLD oz 13.03 -0.11 -0.83%
Dow in SILVER oz 545.33 -7.07 -1.28%
US Dollar Index 81.54 0.03 0.04%
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: 1,281.30      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,310.77 1,326.15 1,326.15
1/2 AE 0.50 652.95 675.89 1,351.77
1/4 AE 0.25 340.88 344.35 1,377.40
1/10 AE 0.10 135.71 140.94 1,409.43
Aust. 100 corona 0.98 1,249.65 1,258.65 1,284.08
British sovereign 0.24 303.43 315.43 1,339.96
French 20 franc 0.19 241.01 244.02 1,307.01
Krugerrand 1.00 1,292.83 1,302.83 1,302.83
Maple Leaf 1.00 1,296.30 1,311.30 1,311.30
1/2 Maple Leaf 0.50 736.75 672.68 1,345.37
1/4 Maple Leaf 0.25 326.73 342.75 1,370.99
1/10 Maple Leaf 0.10 135.82 139.66 1,396.62
Mexican 50 peso 1.21 1,530.83 1,541.83 1,278.79
.9999 bar 1.00 1,285.78 1,297.30 1,297.30
SPOT SILVER: 20.37      
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 14,638.20 14,888.20 20.82
US 40% silver 1/2s 0.30 5,818.29 5,968.29 20.23
100 oz .999 bar 100.00 2,027.30 2,087.30 20.87
10 oz .999 bar 10.00 208.73 209.73 20.97
1 oz .999 round 1.00 20.47 20.97 20.97
Am Eagle, 200 oz Min 1.00 22.12 23.37 23.37
SPOT PLATINUM: 1,465.70      
Plat. Platypus 1.00 1,490.70 1,530.70 1,530.70
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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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