The Moneychanger
Daily Commentary
Wednesday, 24 September a.d. 2014 Browse the commentary archive

I keep wondering what tyrannical government action will finally make y'all stiffen up your backs and say, "NO!" Better think about it, cause here's what you have to face next: the Garbage Police.

Mercy, I wish I had an imagination so overamped I could invent stuff like this, but only the Left Coast could spawn this idea. In Washington State (where all the drivers drive in the left lane) the City of Seattle will soon begin to fine you if you throw banana peels or old tomatoes in your garbage. No, no, no, you troglodytic environmental spoiler! You must sort your compostable garbage so Seattle can meet its self-imposed goal of recycling 60% of all waste. This passed the city council by a 9-0 vote, which makes one (like me) wonder why they haven't yet recycled the city council.

There are so many things wrong about this, I don't know where to begin unraveling it. I could begin by denouncing the socialism of city government owning the garbage collection service, but then I'd have to get into the rest of the evils municipal socialism, & that could take hours.

God deliver us from do-gooders! They will conform you to their own righteous image even if they have to cut off your hands and feet & kill you to do it. (I still have left a few copies of my expose about the environmental movement, The Greening. You can find it at http://store.the-moneychanger.com/products/the-greening)

By the way, don't y'all write me any self-righteous emails about recycling, either. I don't need to compost, I have a PIG. He eats it all, and eventually I recycle him into lard, ham, bacon, and pork chops. Not one shred of edible compost escapes my pig bucket, after every meal. But then, nobody MAKES me do it.

Now today's markets:

US dollar index advanced 36 basis points (0.42%) through the 2013 high at 80.96 to perch at 85.15. This makes a further dollar rally look inevitable, but the present overboughtness begs for a correction soon.

Head Criminal at the ECB, Mario Draghi ("Mr. Eye-bags") promised again to keep monetary policy loose for as long as it takes. To do what, I don't know. Euro obediently sagged to a new low at $1.2781, down 52%.

Yen can't muster enough strength to get up off the floor. Lost 0.16% & ended at 91.71 cents/Y100

After 3 days falling away from the 200 day moving average, the 10 year Treasury note yield gained 1.34% today to 2.569%. Acts as if it wants to climb.

Stocks meanwhile, buoyed (I reckon) by the myth that a strong currency goes with a strong stock market, rose sharply. Dow added 154.19 (0.9%) to 17,210.06. S&P500 rose 15.53 (0.8%) to 1,998.30. This fierce volatility, way up one day and way down the next, characterizes topping markets. S&P500 closed right at its 20 DMA (1,997.95).

Dow in gold zagged back up after zigging down several days. DiG rose 1.42% to 14.14 oz (G$292.30 gold dollars), lower than Friday's high. Dow in silver (Mercy!) made another new high today at 974.25 oz (S$1,259.64 silver dollars). Gravity ought to be pulling down hard on the DiS, as it is monstrously overbought plus has thrown over the upper resistance line.

Gold stumbled and fell $2.40 (0.4%) to $1,218.60 on Comex. Silver lost 7 cents to 1764.3c.

Gold put in a high about $1,227 today about 4:30 a.m. Eastern time, then spent the rest of the day giving it back. Despite that reach upward yesterday to $1,237, gold's five day chart shows no excitement. Today was basically a flat day between $1,227 and $1,216. It closed barely below its ruling downtrend line (from 1 September). Holding its breath.

Silver remains overboughter than woolen drawers at an old ladies' convention. Today did little for silver except close it above the 1750c line. There was a bit of movement in silver, with a 3:30 a.m. high at 1787c and a low at 1751c about 11:15. In the aftermarket silver has returned to 1771c, about seven cents above its Comex close.

Despite the excitement silver & gold generated yesterday, they fell back into the glumps today. No sign yet they are turning up.

Sometimes I was sort of downcast, thinking about all the world's central banks crowding into markets & manipulating them, or, if not manipulating, overwhelming them with money. As Chris Powell of GATA says, there aren't any markets any more.

Then I get a good view of the sky, or remember how huge the earth is looking down from an airplane, and I am reminded how small men are, how arrogant their plans, and how quickly overthrown. Patience doesn't panic.

That doesn't change the closes, but it does brighten my mood some.

On 24 September 1862 Abraham Lincoln suspended the writ of habeas corpus. That's an ancient writ that harkens back to Magna Carta and requires the government either to charge you or turn you loose. It means they can't imprison you indefinitely just because you are their political critic. Therefore Abraham Lincoln had to suspend the writ, and by the war's end had imprisoned more than 50,000 Northerners. Whoops! That story doesn't get into the history books too often, now does it?

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
23-Sep-14 Price Change % Change
Gold, $/oz 1,221.00 -2.40 -0.20%
Silver, $/oz 17.64 -0.07 -0.40%
Gold/Silver Ratio 69.206 0.138 0.20%
Silver/Gold Ratio 0.0144 -0.0000 -0.20%
Platinum 1,320.90 -13.30 -1.00%
Palladium 819.50 4.25 0.52%
S&P 500 1,998.30 15.53 0.78%
Dow 17,210.06 154.19 0.90%
Dow in GOLD $s 291.37 3.18 1.10%
Dow in GOLD oz 14.10 0.15 1.10%
Dow in SILVER oz 975.46 12.56 1.30%
US Dollar Index 85.15 0.36 0.42%
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SPOT GOLD: 1,217.30      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,246.52 1,259.91 1,259.91
1/2 AE 0.50 626.39 642.13 1,284.25
1/4 AE 0.25 313.20 327.15 1,308.60
1/10 AE 0.10 127.71 133.29 1,332.94
Aust. 100 corona 0.98 1,182.46 1,191.46 1,215.53
British sovereign 0.24 288.27 300.27 1,275.58
French 20 franc 0.19 228.97 232.07 1,243.01
Krugerrand 1.00 1,230.69 1,240.69 1,240.69
Maple Leaf 1.00 1,232.30 1,247.30 1,247.30
1/2 Maple Leaf 0.50 699.95 639.08 1,278.17
1/4 Maple Leaf 0.25 310.41 325.63 1,302.51
1/10 Maple Leaf 0.10 129.03 132.69 1,326.86
Mexican 50 peso 1.21 1,455.84 1,466.84 1,216.58
.9999 bar 1.00 1,221.56 1,233.30 1,233.30
SPOT SILVER: 17.71      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 24.00 27.00 35.29
VG+ Peace dollar 0.77 19.00 22.50 29.41
90% silver coin bags 0.72 12,591.15 13,020.15 18.21
US 40% silver 1/2s 0.30 5,032.70 5,182.70 17.57
100 oz .999 bar 100.00 1,761.00 1,821.00 18.21
10 oz .999 bar 10.00 182.10 183.10 18.31
1 oz .999 round 1.00 17.81 18.31 18.31
Am Eagle, 200 oz Min 1.00 19.46 20.71 20.71
SPOT PLATINUM: 1,320.90      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,345.90 1,385.90 1,385.90
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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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