The Moneychanger
Weekly Commentary
Friday, 22 August a.d. 2014 Browse the commentary archive
Here's the weekly scorecard:
  15-Aug-14 22-Aug-14 Change % Change
Silver, cents/oz. 1,949.00 1,936.10 -12.90 -0.7
Gold, dollars/oz. 1,304.50 1,278.60 -25.90 -2.0
Gold/silver ratio 66.932 66.040 -0.892 -1.3
Silver/gold ratio 0.0149 0.0151 0.0002 1.4
Dow in Gold Dollars (DIG$) 264.05 274.87 10.82 4.1
Dow in gold ounces 12.77 13.30 0.52 4.1
Dow in Silver ounces 854.95 878.12 23.17 2.7
Dow Industrials 16,662.91 17,001.22 338.31 2.0
S&P500 1,955.06 1,988.40 33.34 1.7
US dollar index 81.46 82.39 0.93 1.1
Platinum 1,458.20 1,420.50 -37.70 -2.6
Palladium 895.00 888.00 -7.00 -0.8

Sorry week for silver & gold, strong week for stocks & the US dollar. White metals suffered this week, too.

Mother Yellum at Jackson Hole practiced talking evenly out of both sides of her mouth, but most are convinced the Fed is firmly on a track to raise interest rates by mid-2015, so are climbing on the train before it leaves the station. On the Atlantic's other shore, Ridiculous Chief Criminal of the European Central Bank Mario Draghi hinted more broadly that the bank might do something like Quantitative Easing, & he whine3d that euro governments need to engage in more deficit spending. For this he gets paid the big bucks.

I was looking today at pictures of Yellum & Draghi, and something struck me. Have y'all ever noticed that when the media shows pictures of people they like, they never show them digging in their noses for a big booger or dozing off at the banquet table? Rather, they always publish pictures that make them look sober & reflective & intelligent & self-assured.

By the rumor, sell the news. Stocks which had been breathlessly anticipating the Epic Prononciamento from the Great Bankeress simply exhaled and sagged. Dow lost 38.27 (0.22%) to 17,001.22, hanging on above the morale-busting 17,000 level. S&P500 dipped 3.97 (0.2%) to 1,988.40.

A trend in force remains in force until proven otherwise. That says expect stocks to rise more. To avoid that Double Top Aura, however, stocks must build on these advances next week. Otherwise the entire rise begins to look like no more than a garlic-strong corrective B-wave in an A-B-C correction.

Let me de-jargon that for y'all. when upward trending markets correct downwards, they follow a threefold pattern, A-down, B-up, C-down. The B-wave is a trickster that can appear so strong it fools everyone into believing the correction has ended, just in time to reverse and entrap them all for the C-down leg.

Dow in Gold & Dow in Silver hooked down today, but nothing you could notice without a microscope. Dow in Silver ended down 0.08% (2/3 of an ounce) at 876.98 oz. (S$1,133.87 silver dollars). Uptrend in force makes me expect at least a double top with 1 June at 892.99 oz (S$1,154.57). Dow in Gold inched down 0.45% to 13.28 oz (G$274.52 gold dollars). Double top for Dow in Gold comes at 13.53 oz (G$279.69).

Euro took a 0.28% dive after the chief central banking criminals had their say today. Ended at $1.3245, on its way to $1.3100 or maybe $1.2750. Yen dropped a tiny 0.5% but touched at its 95.98 low below the last low at 96.05 (April). If the yen doesn't turn up soon, it jumps over a cliff with no ledge to land on higher than 94.83.

US dollar index's heart was warmed by Mother Yellum so it jumped up 18 basis points (0.23%) to 82.39. Still on track to the targeted 82.75. This sings no love song to gold, but does console us with the thought that it should shortly hit that target & then decline for a while.

Interest rates (looking at the 10 year note yield) look as if they want to move higher, but have not yet the strength for it.

Gold found buyers and rose $4.90 (0.38%) to $1,278.60. Silver went sideways, losing 2.9 cents (0.15% to 1936.10, a low perch it has become accustomed to this week.

I can say little from Gold's performance today. Yes, it rose, but so what? Yesterday it fell $19.70 and traders who were profitably short would have closed out trades today, putting a little buying pressure on the market. Ended beneath the 200 DMA.

More important is that gold turned around at the uptrend from the December low. That offers a little comfort. Gold has traded out into the nose of an even sided triangle since July. The height of the triangle promises a $90 move, but doesn't hint which way it will break.

Only reason to expect higher silver & gold prices next week -- lo, our eyes are sore with watching! -- is that cyclical lows were due today. Next week, however, options expire on Tuesday and that is often the opportunity for the black shirts on the trading floor to run prices down for the day to make sure the call options they've written expire worthless.

Y'all go home and hug your spouse & relax. Next week is a new week.

On 22 August 1485 Henry Tudor defeated Richard III at Bosworth, ending the War of the Roses and establishing the Tudor dynasty in England.

On 22 August 1642 Charles I raised his standard at Nottingham and began a war against parliament -- a war he would lose. Some people are just so pigheaded and self destructive it's hard to feel sorry for them.

On 22 August 1851 gold fields were discovered in Australia.

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
21-Aug-14 Price Change % Change
Gold, $/oz 1,278.60 4.90 0.4
Silver, $/oz 19.36 -0.03 -0.1
Gold/Silver Ratio 66.040 0.254 0.4
Silver/Gold Ratio 0.0151 -0.0000 -0.2
Platinum 1,420.50 1.20 0.1
Palladium 888.00 7.65 0.9
S&P 500 1,988.40 -3.97 -0.2
Dow 17,001.22 -38.27 -0.2
Dow in GOLD $s 274.87 -1.65 -0.6
Dow in GOLD oz 13.30 -0.08 -0.6
Dow in SILVER oz 878.12 -0.66 -0.1
US Dollar Index 82.39 0.18 0.2
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: 1,279.70      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,310.41 1,324.49 1,324.49
1/2 AE 0.50 658.53 675.04 1,350.08
1/4 AE 0.25 329.27 343.92 1,375.68
1/10 AE 0.10 134.26 140.13 1,401.27
Aust. 100 corona 0.98 1,248.09 1,257.09 1,282.48
British sovereign 0.24 303.05 315.05 1,338.36
French 20 franc 0.19 240.71 243.72 1,305.41
Krugerrand 1.00 1,292.50 1,302.50 1,302.50
Maple Leaf 1.00 1,294.70 1,309.70 1,309.70
1/2 Maple Leaf 0.50 735.83 671.84 1,343.69
1/4 Maple Leaf 0.25 326.32 342.32 1,369.28
1/10 Maple Leaf 0.10 135.65 139.49 1,394.87
Mexican 50 peso 1.21 1,535.09 1,546.09 1,282.32
.9999 bar 1.00 1,284.18 1,295.70 1,295.70
SPOT SILVER: 19.40      
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 13,974.68 14,260.68 19.95
US 40% silver 1/2s 0.30 5,529.78 5,679.78 19.25
100 oz .999 bar 100.00 1,929.50 1,989.50 19.90
10 oz .999 bar 10.00 198.95 199.95 20.00
1 oz .999 round 1.00 19.50 20.00 20.00
Am Eagle, 200 oz Min 1.00 21.15 22.40 22.40
SPOT PLATINUM: 1,420.50      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Platinum Platypus 1.00 1,445.50 1,485.50 1,485.50
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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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