The Moneychanger
Daily Commentary
Wednesday, 13 August a.d. 2014 Browse the commentary archive

Markets are sawing back and forth without any progress It's August. Europeans are off vacationing & nobody else much is watching.

The halfway point (50% correction) of the Dow's dive from the July high to the August low is 16,743. That would be a convenient place to turn down again.

Today the Dow rose 91.26 (0.55%) to 16,651.80. The S&P500 outdid the Dow, rising 12.97 (0.67%) to 1,946.72. 'Twill be interesting to observe how they behave at their 20 day moving averages (19,768 & 1,953). One more downleg is being prepared even now.

Dow in gold jigged up 0.24% today, but remains below its 200 DMA. Ended the day at 12.67 oz (G$261.91 gold dollars), still acting like a market looking for a trap door to fall through.

Dow in silver reflects silver's relative weakness right now. It rose 0.93% to 839.09 oz (S$1,084.88 silver dollars), above its 50 DMA at 825.98 oz (S$1,067.93)

US dollar index closed today at the top of its recent range, 81.68, up eleven basis points. It has remained in this range, oscillating around 81.50 resistance, for two weeks. It needs to close above 81.80 to break out of this range, or fall through 81.30 below. Odds favor higher prices.

Yen fell 0.17%to 97.63, a bad slide. Lower prices in the near future. Euro was flat today, down 0.02% at $1.3364. But that close doesn't reveal its attempt to climb up to the 20 DMA, and failure. Not great.

Silver's relative weakness is beginning to bite. Gold climbed $4.00 (0.3%) to $1,312.80 but silver fell 6 cents to 1981c.

Overnight gold traded flat until midnight, then started to climb. It fended off a seller's raid about 10:00 a.m., then rose to $1,316.40 before it closed at $1,312.80.

This places gold above that downtrend line from October 2012, but after a series of descending highs. Today was the second time in five days at that line that gold closed above the line.

Gold needs to master lateral resistance about $1,325, it seems, before it will advance. Silver is acting as a drag.

Silver tried twice to pierce 2008c, but failed and fell back, lower than yesterday, to 1970c. So far that 1975-ish support is holding, but the longer silver loiters here, the greater the chance it will fall through. First assignment for silver is to throw a leg over the 200 DMA at 2021c & commence running. While gold's indicators all point up, silver's point down.

Gold's course today makes it appear ready to climb higher, while silver's is weak and lazy. These contradictions don't last long.

After a three month siege, on 13 August 1521 Spanish conquistadors under Hernan Cortes captured Tenochtitlan (Mexico City), the capital of the Aztec empire, and the Aztec emperor Cuauhtémoc. Only people who missed the empire were the Aztecs themselves, not the millions of subject peoples whom they had forced to proved human sacrifices for their gods. It was by means of these disgruntled allies that Cortes was able to conquer the Aztecs.

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
13-Aug-14 Price Change % Change
Gold, $/oz 1,313.80 4.00 0.31%
Silver, $/oz 19.81 -0.06 -0.30%
Gold/Silver Ratio 66.320 0.402 0.61%
Silver/Gold Ratio 0.0151 -0.0001 -0.61%
Platinum 1,470.90 -2.30 -0.16%
Palladium 882.10 3.60 0.41%
S&P 500 1,946.72 12.97 0.67%
Dow 16,651.80 91.26 0.55%
Dow in GOLD $s 262.01 0.64 0.24%
Dow in GOLD oz 12.67 0.03 0.24%
Dow in SILVER oz 840.58 7.13 0.86%
US Dollar Index 81.68 0.11 0.13%
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: 1,312.10      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,342.28 1,358.02 1,358.02
1/2 AE 0.50 675.22 692.13 1,384.27
1/4 AE 0.25 337.61 352.63 1,410.51
1/10 AE 0.10 137.67 143.67 1,436.75
Aust. 100 corona 0.98 1,279.69 1,288.69 1,314.72
British sovereign 0.24 310.72 322.72 1,370.95
French 20 franc 0.19 246.81 249.77 1,337.81
Krugerrand 1.00 1,326.53 1,336.53 1,336.53
Maple Leaf 1.00 1,327.10 1,342.10 1,342.10
1/2 Maple Leaf 0.50 754.46 688.85 1,377.71
1/4 Maple Leaf 0.25 334.59 350.99 1,403.95
1/10 Maple Leaf 0.10 139.08 143.02 1,430.19
Mexican 50 peso 1.21 1,573.96 1,584.96 1,314.55
.9999 bar 1.00 1,316.69 1,328.10 1,328.10
SPOT SILVER: 19.84      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 26.00 28.50 37.25
VG+ Peace dollar 0.77 22.00 24.00 31.37
90% silver coin bags 0.72 14,078.35 14,328.35 20.04
US 40% silver 1/2s 0.30 5,661.05 5,811.05 19.70
100 oz .999 bar 100.00 1,974.00 2,034.00 20.34
10 oz .999 bar 10.00 203.40 204.40 20.44
1 oz .999 round 1.00 19.94 20.44 20.44
Am Eagle, 200 oz Min 1.00 21.59 22.84 22.84
SPOT PLATINUM: 1,470.90      
Plat. Platypus 1.00 1,495.90 1,535.90 1,535.90
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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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