The Moneychanger
Daily Commentary
Thursday, 18 September a.d. 2014 Browse the commentary archive

Continuing our lesson in not panicking today, the markets beat us with a small stick. Stocks rose, still drunk on the FOMC's non-statement, while the dollar index backed off and silver & gold fell.

I'm gonna tell y'all one thing: the wonder workers & magicians at the Fed have NOT repealed the law of gravity,. This will end badly for the US dollar and for stocks. The US dollar has been a completely unbacked fiat currency since August 1971; gold & silver have been money since memory runneth not to the contrary. Those who bet against history or gravity lose.

Stocks made new highs today. Dow's last closing high was 17,138 on 16 July. Today it gained 109.14 (0.64%) to 17,265.99. S&P500 also made a new high at 2,011.36, up 9.79 (0.49%). One thing catches my eye. Back in June the S&P500 began trading in a channel, fell out of the channel in July, then traded back up and barely into the channel as September opened, bell down again, and today has traded right up snug against that line, but not above it. Look at it here http://scharts.co/1s9mAXO

Dow in gold rose 0.49% to 14.08 oz (G$291.06 gold dollars) a new high for the move that began just 3 years ago in August 2011, and higher than the December 2013 high at 13.80 oz (G$285.27). Chart's at http://scharts.co/1ATCRPl

Dow in silver crashed into the overhead resistance line and rose 0.77% to close at 932.29 oz (S$1,205.38). There 'tis -- must turn around from here or rise much higher. Chart's at http://scharts.co/1s9naVF

US dollar index gave back 36 of the 53 basis points it had gained yesterday, closing at 84.39. That changes nothing, initiates no corrections. Must fall below 84.20 to talk about such things. Remains painfully overbought.

Euro rose 0.43% to $1.2919. Yen fell another 0.33% after gapping down. That looks like an exhaustion gap. Closed at 92c/Y100.

10 Year Treasury note yield rose 1.12% to 2.629% and nearly touched its 200 DMA above at 2.648%. Odd. Markets really think that Janet Yellum can simply begin raising rates when the Zero Interest Rate Policy is the linchpin of all wickedness the Fed has worked since 2008? Or, maybe they're just computer jockeys following momentum. I'm too big a hick to know the difference.

Gold closed Comex $8.70 cheaper at $1,225.70. Silver closed Comex 21.1 cents lighter at 1845.2.

Gold's three day chart shows a bottom yesterday about $1,217 and another today about $1,216. Today gold bounced smartly up off that low at 9:30 to its high at noon. Traded above $1,225 rest of the day.

Since human beings are social animals on a par with lemmings, it's monumentally tough to run contrary to the herd. However, it's precisely moments like this when most everybody is dead-dog sure things will continue forever that they turn and go the other way. Wouldn't surprise me if gold did that tomorrow.

Silver's plunge didn't come until today, when it hit a 1830c low. But that low was a clean V-bottom.

Both silver & gold are powerfully oversold, but have to snap back hard before anybody but me will pay attention. Silver needs to climb above 1875c and gold over $1,250. Otherwise the erosion will continue.

Call me crazy, but I'll still take gold & silver with 6,000 years to the fiat US dollar's four decades.

Here's a coincidence: On 18 September 1873, just 141 years ago to the day, Government bond agent Jay Cooke & Co. collapsed, launching a panic on Wall Street and beginning a long (20 year) depression. But we've got central banks to prevent that now.

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
18-Sep-14 Price Change % Change
Gold, $/oz 1,225.70 -8.70 -0.70%
Silver, $/oz 18.45 -0.21 -1.13%
Gold/Silver Ratio 66.426 0.285 0.43%
Silver/Gold Ratio 0.0151 -0.0001 -0.43%
Platinum 1,351.00 -12.70 -0.93%
Palladium 831.40 -7.40 -0.88%
S&P 500 2,011.36 9.79 0.49%
Dow 17,265.99 109.14 0.64%
Dow in GOLD $s 291.20 3.88 1.35%
Dow in GOLD oz 14.09 0.19 1.35%
Dow in SILVER oz 935.72 16.43 1.79%
US Dollar Index 84.39 -0.36 -0.42%
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: 1,225.50      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,254.91 1,268.39 1,268.39
1/2 AE 0.50 630.62 646.45 1,292.90
1/4 AE 0.25 315.31 329.35 1,317.41
1/10 AE 0.10 128.57 134.19 1,341.92
Aust. 100 corona 0.98 1,190.42 1,199.42 1,223.65
British sovereign 0.24 290.21 302.21 1,283.83
French 20 franc 0.19 230.52 233.60 1,251.21
Krugerrand 1.00 1,238.98 1,248.98 1,248.98
Maple Leaf 1.00 1,240.50 1,255.50 1,255.50
1/2 Maple Leaf 0.50 704.66 643.39 1,286.78
1/4 Maple Leaf 0.25 312.50 327.82 1,311.29
1/10 Maple Leaf 0.10 129.90 133.58 1,335.80
Mexican 50 peso 1.21 1,465.64 1,476.64 1,224.72
.9999 bar 1.00 1,229.79 1,241.50 1,241.50
SPOT SILVER: 18.56      
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 13,198.90 13,627.90 19.06
US 40% silver 1/2s 0.30 5,283.45 5,433.45 18.42
100 oz .999 bar 100.00 1,846.00 1,906.00 19.06
10 oz .999 bar 10.00 190.60 191.60 19.16
1 oz .999 round 1.00 18.66 19.16 19.16
Am Eagle, 200 oz Min 1.00 20.31 21.56 21.56
SPOT PLATINUM: 1,351.00      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,376.00 1,416.00 1,416.00
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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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