The Moneychanger
Daily Commentary
Wednesday, 1 October a.d. 2014 Browse the commentary archive

Whooo-eee! Them stocks took a bad beating with an uglystick today!

Dow dove 238.19 (-1.4%) to land at 16,804.71. S&P500 plunged 26.13 (-1.32%) to 1,946.16.

It's always helpful to take stock (owch!) of these falls. Here's how far indices have fallen since their last highs:

Dow Jones Industrial Average, -3.2%

S&P500 -3.6%

Nasdaq Comp., -4.1%

Nasdaq 100, -3.3%

Wilshire 5000, -4.0%

Russell 2000 small cap, -10.55%.

Now look inside the Dow and S&P500. Both have fallen below their last lows (16,937 & 1,978). Both are below their 20 and now their 50 day moving averages (16,932 & 1,976). Relative strength indicators stand below 50 mark (40.33 and 36.81). MACD and full stochastics point down. Finally, volume is rising as price falls, reinforcing the move and building steam. The more it falls, the more people sell.

Whether we saw the ultimate top in September or that comes later in the year, stocks are now in full-gear correction mode. Durn! I forgot to mention that the Dow has fallen through its uptrend line from March 2009.

Dow in gold flashed its first confirmation of a trend reversal downwards today by closing below the 20 DMA (13.87 oz or G$286.72 gold dollars) at 13.83 oz (G$285.89), down 1.92%. All indicators point down, another reason I believe that the Dow in Gold has pinpointed the top in stocks.

Numbers for the Dow in Silver showing up on Stockcharts today differ from what I saw & reported yesterday, but because it was likely the high, I report it to you at 1,004.59 oz (S$1,298.86 silver dollars).

Today the Dow in Silver fell 2.55% to 979.01 oz (S$1,265.79). DiS still needs to close below its 20 dma (938 oz now or S$1,212.77 to confirm reversal, but that's not in doubt. Oversoldness is rapidly falling (RSI now 68.29), other indicators rolling over earthward.

By the way, a "dollar" of silver is defined by law as 371.25 grains or 0.7734375 troy ounce. That means that S$1,000 contains 773.4375 ounce of silver newly minted, and that $1.2929 = one troy ounce.

US dollar index backed down four basis points to 86, so has not yet evidenced a reversal. Remains historically overbought.

Euro lost 0.1% to end at $1.2640. It giveth no sign of turning up, but has left behind two gaps, which looks like a completed move.

Yen got tired of people calling it "Skinny" and kicking sand in its face and today rared up 0.585 to 91.74. That appears to be a reversal. MACD has turned up, but still needs to rise more to confirm.

Mercy, me, look at that 10 year treasury note yield! That thang pulled the plug today, falling 4.19% to 2.403%. Remember that bond yields move opposite to bond prices. People fleeing stocks are pressing into bonds for "safety." Ain't that a joke, now, anybody fleeing to the sorry debt of the US Government priced in scrofulous sinking dollars! I will admit the US government hasn't defaulted on its debt as often as Argentina, but I count at least three times, not counting the daily default by chronic, intentional inflation. Dollars tomorrow will always be worth less than dollars today.

Finally, finally gold rose! And silver! Gold climbed 0.34% or $4.10 to $1,214.60 while silver skyrocketed 20.4 cents (1.2%) to 1721. Never thought I'd be thankful to see silver at 1721c, but I am.

Yesterday silver's low came at 1685c, today at 1686c, so there's a little double bottom there. On a daily chart the moves looks impulsive, that is, it appears that markets direction is UP.

My gut tells me that today was the turn for metals, but then, my gut also tells me sometimes to eat Thai food, so my gut's not too reliable. Before I will trust my gut or my instinct, I want that silver to PROVE itself by smashing through 1750c, and then through the downtrend line at 1775c, and pushing on toward the 20 DMA at 1824c. Y'all watch it now! When that silver makes its mind up to rise, it'll blind you.

Gold has made a two day bottom about $1,205, but was stopped today by $1,220. That won't do. I want to see gold beat $1,232 (20 DMA). I remind y'all that gold has walked through its downtrend line, so it stands outside the downtrend but has not yet begun to rally seriously.

Yea! MACD turned up for gold today, and it is climbing up out of oversold (RSA at 33.57).

'Tis nothing yet more than a feeling, but with stocks plummeting & the dollar hesitating, things look better for silver & gold.

Yesterday I'll be switched if I didn't have a special offer for y'all, loaded the commentary up to the website, and then forgot to push the button to send it to y'all. I sent it this morning, but some of y'all might not have seen it. Even though gold is higher today by $4.10, I'll still honor the price in that offer ($233.80 for French 20 francs) as long as my supply holds out. Check yesterday's commentary for details.

On 1 October 331 B.C. at Gaugamela Alexander the Great shattered Persian King Darius III's army, making him master of the Persian Empire.

On 1 October 1908 the Ford Model T hit the market and later became the first car for millions of Americans. Eventually Ford sold over 15 million Model Ts, all of them black and every one with air-conditioning -- OPEN air conditioning.

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
1-Oct-14 Price Change % Change
Gold, $/oz 1,210.50 4.10 0.34%
Silver, $/oz 17.21 0.20 1.20%
Gold/Silver Ratio 70.337 -0.603 -0.85%
Silver/Gold Ratio 0.0142 0.0001 0.86%
Platinum 1,287.70 -10.80 -0.83%
Palladium 787.70 8.75 1.12%
S&P 500 1,946.16 -26.13 -1.32%
Dow 16,804.71 -238.19 -1.40%
Dow in GOLD $s 286.98 -5.06 -1.73%
Dow in GOLD oz 13.88 -0.24 -1.73%
Dow in SILVER oz 976.45 -25.72 -2.57%
US Dollar Index 86.00 -0.40 -0.46%
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: 1,212.60      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,242.92 1,255.04 1,255.04
1/2 AE 0.50 623.97 639.65 1,279.29
1/4 AE 0.25 311.99 325.89 1,303.55
1/10 AE 0.10 127.22 132.78 1,327.80
Aust. 100 corona 0.98 1,177.89 1,186.89 1,210.87
British sovereign 0.24 287.16 299.16 1,270.85
French 20 franc 0.19 228.09 231.19 1,238.31
Krugerrand 1.00 1,224.73 1,234.73 1,234.73
Maple Leaf 1.00 1,227.60 1,242.60 1,242.60
1/2 Maple Leaf 0.50 697.25 636.62 1,273.23
1/4 Maple Leaf 0.25 309.21 324.37 1,297.48
1/10 Maple Leaf 0.10 128.54 132.17 1,321.73
Mexican 50 peso 1.21 1,448.75 1,459.75 1,210.71
.9999 bar 1.00 1,216.84 1,228.60 1,228.60
SPOT SILVER: 17.11      
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 12,480.33 12,766.33 17.86
US 40% silver 1/2s 0.30 4,854.23 5,004.23 16.96
100 oz .999 bar 100.00 1,700.50 1,760.50 17.61
10 oz .999 bar 10.00 176.05 177.05 17.71
1 oz .999 round 1.00 17.21 17.71 17.71
Am Eagle, 200 oz Min 1.00 18.86 20.11 20.11
SPOT PLATINUM: 1,287.70      
Plat. Platypus 1.00 1,312.70 1,352.70 1,352.70
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© 2015 Little Mountain Corporation, d.b.a. The Moneychanger. All rights reserved. May not be republished in any form, including electronically, without our express permission.

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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