The Moneychanger
Daily Commentary
Wednesday, 27 August a.d. 2014 Browse the commentary archive

This is getting sort of funny. S&P500 makes a new high by -- 1/10 of a point. Yes, up 1/10 to 2,000.12. Actually traded sideways to lower most of the day, but began rallying after 3:00 to end barely higher.

Dow Jones Industrial Average didn't outshine the S&P500 much. Rose 15.31 (0.09%) to 17,122.01. This looks like wheel spinning at a top as fewer and fewer buyers participate.

CLARITY, that's what we need, clarity of mind and purpose. We are sprayed daily by media firehoses that force our attention this way and that, but really only a few things are necessary, and only a few things forecast all the rest. Somebody told me once that the best commodity traders didn't read much news, but only paid attention to a few important indicators. Most of us don't have that clarity of mind.

Mercy, I fall prey to the fog, too. As long as I've studied money & the monetary system, you'd think I'd have learned how to spell "inevitability." But my attention is diverted by the Fed's QE sideshow or a gold & silver correction or a stock market rise on manufactured money or some gaseous guru.

No excuse for me. I understand that the central banking system is a scam, a fraud, a con game that will inevitably fail. I understand that over 50% of American income comes from federal & state & local spending. I recognize American imperial overstretch & remember how many empires have committed suicide the same way. Then I look at a six year economic crisis that won't let go of the economy and an economy that remains comatose, & I know how this will end. I know all the money is borrowed into existence, so the Fed cannot possibly stop inflating, or the whole system deflates & bankruptcies abound. And I have observed that in the last 30 years the frequency and amplitude of economic crises has grown, now inveigling the whole globe. And I remember that the whole system rests on fragile human confidence alone.

Yea, I let my mind run over all those things, and clarity -- sharp, acute, unrelenting, unforgiving, ruthless -- returns. And I remember why I am holding silver & gold.

In the bogus currency markets today the US dollar index fell back 20 basis points to 82.49. I wasn't paying close attention yesterday or I'd have noticed that yesterday's high print was 82.75, which fulfilled my target. Today the US dollar index posted an 82.75 high again and what looks like a key reversal (yes, yes, I know that it doesn't quite match that because it didn't trade higher) with a starkly lower close after higher trading. What I'm poking at is, the US dollar index might have topped today. Even if it intends to rise higher (& it could) to 83.65 or 84.60, it is scheduled for a correction here anyway.

Both the euro & the yen are severely oversold & due at least for a relief rally. Euro closed up 0.2% at $1.3194 while the Yen rose 0.2% to 96.29 cents/Y100.

Markets are all gearing down before the long US weekend. Labor Day is coming upon which, oddly enough, nobody labors. The quiet settled over gold & silver, too. Gold traded in a $7.30 range to end $1.90 (0.15%) lower at $1,281.90. Silver gained -- ho-hum -- 1.9 cents (0.1%) to 1940.5 cents.

None of this says a durned thing. Gold punched into but couldn't close above its 200 DMA ($1,284.89). No moxie. Silver bounced up but remains glued to the downtrend line from August 2013 and can't pull away higher, not even to cross the 20 DMA at 1975c.

Now oddly enough there are signs -- and no bigger than a cloud the size of a man's hand on the horizon -- of turning up. First, the RSI had reached "plumb over-sold" and has turned up. The Rate of Change has risen from "abysmal" to "lightening up", and the MACD histogram has waxed smaller and smaller while the MACD fast line is trying hard to curve up.

Most likely nothing much will happen the rest of the week, but September is nearly always a supremely strong month for silver & gold.

On 27 August 1883 the volcano Krakatoa, west of Java, exploded with a force of 1,300 megatons of TNT (bomb dropped on Hiroshima was 15 kilotons) killing approximately 40,000 people. In the following year Northern Hemisphere summer temperatures fell by as much as 2.2 degrees Fahrenheit. Weather patterns were chaotic for years and temperatures didn't return to normal until 1888. The eruption darkened the sky around the world for years afterwards. I tell that story to give y'all an idea of how tiny human effects on the atmosphere & weather are compared to natural effects. Conclusion: global warming is a sham and fraud.

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
27-Aug-14 Price Change % Change
Gold, $/oz 1,281.90 -1.90 -0.15%
Silver, $/oz 19.41 0.02 0.10%
Gold/Silver Ratio 66.060 -0.163 -0.25%
Silver/Gold Ratio 0.0151 0.0000 0.25%
Platinum 1,421.90 0.30 0.02%
Palladium 893.90 5.20 0.59%
S&P 500 2,000.12 0.10 0.00%
Dow 12,122.01 15.31 0.13%
Dow in GOLD $s 195.48 0.54 0.27%
Dow in GOLD oz 9.46 0.03 0.27%
Dow in SILVER oz 624.68 0.18 0.03%
US Dollar Index 82.49 -0.20 -0.24%
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: 1,282.20      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,314.26 1,327.08 1,327.08
1/2 AE 0.50 659.82 676.36 1,352.72
1/4 AE 0.25 329.91 344.59 1,378.37
1/10 AE 0.10 134.53 140.40 1,404.01
Aust. 100 corona 0.98 1,248.01 1,257.01 1,282.41
British sovereign 0.24 303.64 315.64 1,340.87
French 20 franc 0.19 241.18 244.19 1,307.91
Krugerrand 1.00 1,293.74 1,303.74 1,303.74
Maple Leaf 1.00 1,297.20 1,312.20 1,312.20
1/2 Maple Leaf 0.50 737.27 673.16 1,346.31
1/4 Maple Leaf 0.25 326.96 342.99 1,371.95
1/10 Maple Leaf 0.10 135.91 139.76 1,397.60
Mexican 50 peso 1.21 1,536.55 1,547.55 1,283.52
.9999 bar 1.00 1,286.69 1,298.20 1,298.20
SPOT SILVER: 19.43      
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 13,960.38 14,246.38 19.93
US 40% silver 1/2s 0.30 5,538.63 5,688.63 19.28
100 oz .999 bar 100.00 1,932.50 1,992.50 19.93
10 oz .999 bar 10.00 199.25 200.25 20.03
1 oz .999 round 1.00 19.53 20.03 20.03
Am Eagle, 200 oz Min 1.00 21.18 22.43 22.43
SPOT PLATINUM: 1,421.90      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,446.90 1,486.90 1,486.90
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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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