The Moneychanger
Weekly Commentary
Friday, 19 September a.d. 2014 Browse the commentary archive
Here's the weekly scorecard:
  12-Sep-14 19-Sep-14 Change % Change
Silver, cents/oz. 1,854.60 1,778.10 -76.50 -4.1
Gold, dollars/oz. 1,229.90 1,215.30 -14.60 -1.2
Gold/silver ratio 66.316 68.348 2.032 3.1
Silver/gold ratio 0.0151 0.0146 -0.0004 -3.0
Dow in Gold Dollars (DIG$) 285.52 293.92 8.40 2.9
Dow in gold ounces 13.81 14.22 0.41 2.9
Dow in Silver ounces 915.97 971.81 55.84 6.1
Dow Industrials 16,987.51 17,279.74 292.23 1.7
S&P500 1,985.54 2,010.40 24.86 1.3
US dollar index 84.24 84.86 0.62 0.7
Platinum 1,372.00 1,338.80 -33.20 -2.4
Palladium 836.05 812.35 -23.70 -2.8

This morning a friend sent me a comment from Bill Fleckenstein mentioning that he & a friend were starting to get gold hate-mail, and hate-mailers have an uncanny ability to signal turning points.

I tucked that away in my head as probably quite accurate, then my webmaster, who filters out my email, later mentioned that I had gotten several of the same. It's amazing what low-life, mean, and hurtful things people will say by email, when they known they are beyond the reach of your punching them in the nose. But the chief point is that these chickens usually launch their emails at turning points.

The week was wretched for silver & gold, but kind to stocks and especially the US dollar index. Stocks are stretching the cellophane envelope of reality.

Stocks are flashing all sorts of non-confirmations. Today the Dow rose 13.75 (0.08%) to 17,279.74 (a new high) but the S&P500 fell 0.96 (0.05%) to 2010.40. S&P500 still couldn't close above that internal resistance line I mentioned yesterday,

Whew! Dow in Gold rose 0.84% to 14.20 oz (G$293.54 gold dollars) & grows overboughter every day. Looney overbought.

Dow in silver rose above that upper resistance line 3.87% to 968.38 oz (S$1,252.05 silver dollars). More overbought than the Dow in Silver. If this isn't the peak, then silver's gonna drop a lot more and stocks rise.

US dollar index rose 47 basis points (0.55%) basically rose as much today as it fell yesterday, plus change. Hovering above the long term resistance line but tremendously overbought.

Why do I keep talking about "overbought"? Because it can't last forever. It's a sign that a turn is coming, but it can persist long enough to make you pull your hair out and leave you balder than a pool ball.

Euro lost another 0.,65% to reach a new low at $1.2834. Yen fell again, 0.25%, to 91.79. Here both are severely, grotesquely oversold.

Ten year treasury note yield fell back today to 2.587%. It remains close to breaking out through its downtrend line, about 2.800%.

Gold tumbled $10.40 to end Comex at $1,215.30, down 0.8%. Silver took the gas, losing 67.1 cents (3.6%) to end at 1778.1c, a new low for the downmove since March 2011.

The Gold/Silver ratio gapped up today to 68.348. Either it is pointing to a low in silver & gold, or signaling a huge fall coming in both.

In 2008 and 2009 silver traded out to a triangle. The apex of that triangle is about where silver traded today (a little higher). It is not uncommon for markets to trade back to that apex, so mayhap that's what we are witnessing. Next support below 1750c is 1465c.

Silver has broken to a new low, but not gold. In June 2013 silver hit $1,179.40, then in December $1,181.40. That is the most likely goal for this fall, but given how oversold both silver & gold are, and how overbought the US dollar, gold might also stop here. Also, gold is punching into its long term uptrend line from 2003, so this is serious. Silver remains above the analogous uptrend, which today comes in about 1740c. Good place to stop.

On 19 September 1863 began the two-day Battle of Chickamauga (Georgia) pitting Union General William Rosecrans against the Confederate Army of Tennessee under Braxton Bragg. After fierce casualties, the Confederates won but Bragg failed to follow through and the yankee army escaped. The brave Army of Tennessee never had a commander worthy of it.

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
19-Sep-14 Price Change % Change
Gold, $/oz 1,215.30 -10.40 -0.8
Silver, $/oz 17.78 -0.67 -3.6
Gold/Silver Ratio 68.348 -0.559 -0.8
Silver/Gold Ratio 0.0146 -0.0006 -3.6
Platinum 1,338.80 -12.22 -0.9
Palladium 812.35 -19.05 -2.3
S&P 500 2,010.40 -0.96 -0.0
Dow 17,279.74 13.75 0.1
Dow in GOLD $s 293.92 2.76 0.9
Dow in GOLD oz 14.22 0.13 0.9
Dow in SILVER oz 971.81 36.08 3.9
US Dollar Index 84.39 -0.36 -0.4
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SPOT GOLD: 1,217.40      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,246.62 1,260.01 1,260.01
1/2 AE 0.50 626.45 642.18 1,284.36
1/4 AE 0.25 313.22 327.18 1,308.71
1/10 AE 0.10 127.72 133.31 1,333.05
Aust. 100 corona 0.98 1,182.56 1,191.56 1,215.63
British sovereign 0.24 288.30 300.30 1,275.68
French 20 franc 0.19 228.99 232.09 1,243.11
Krugerrand 1.00 1,230.79 1,240.79 1,240.79
Maple Leaf 1.00 1,232.40 1,247.40 1,247.40
1/2 Maple Leaf 0.50 700.01 639.14 1,278.27
1/4 Maple Leaf 0.25 310.44 325.65 1,302.62
1/10 Maple Leaf 0.10 129.04 132.70 1,326.97
Mexican 50 peso 1.21 1,455.96 1,466.96 1,216.68
.9999 bar 1.00 1,221.66 1,233.40 1,233.40
SPOT SILVER: 17.87      
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 12,705.55 13,134.55 18.37
US 40% silver 1/2s 0.30 5,079.90 5,229.90 17.73
100 oz .999 bar 100.00 1,777.00 1,837.00 18.37
10 oz .999 bar 10.00 183.70 184.70 18.47
1 oz .999 round 1.00 17.97 18.47 18.47
Am Eagle, 200 oz Min 1.00 19.62 20.87 20.87
SPOT PLATINUM: 1,338.80      
Platinum Platypus 1.00 1,363.80 1,403.80 1,403.80
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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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