The Moneychanger
Weekly Commentary
Friday, 3 October a.d. 2014 Browse the commentary archive
Here's the weekly scorecard:
  26-Sep-14 3-Oct-14 Change % Change
Silver, cents/oz. 1,747.70 1,678.00 -69.70 -4.0
Gold, dollars/oz. 1,214.10 1,192.20 -21.90 -1.8
Gold/silver ratio 69.468 71.049 1.580 2.3
Silver/gold ratio 0.0144 0.0141 -0.0003 -2.2
Dow in Gold Dollars (DIG$) 291.38 294.93 3.56 1.2
Dow in gold ounces 14.10 14.27 0.17 1.2
Dow in Silver ounces 979.18 1,013.69 34.51 3.5
Dow Industrials 17,113.15 17,009.69 -103.46 -0.6
S&P500 1,982.85 1,967.90 -14.95 -0.8
US dollar index 85.75 86.81 1.06 1.2
Platinum 1,303.50 1,226.00 -77.50 -5.9
Palladium 783.55 753.70 -29.85 -3.8

Before I address markets, I need to mention three things.

1. EBOLA. I strongly recommend you get Dr. Thomas Levy's book, Curing the Incurable: Vitamin C, Infectious Diseases, & Toxins. High dose vitamin C by IV or oral has been around a long time, and massive doses have been shown to cure infections. Dr. Levy says that the body absorbs liposomal Vitamin C even better than IV. You can buy liposomal Vitamin C from www.livonlabs.com or from Amazon. Fail not to research it, for your sake and your family's.

2. Reuters reported today that US Jobs data was strong, boosting the dollar & stocks. The official liars at the US Labor Department reported non-farm payrolls rose 248,000 in September & the jobless rate fell to 5.9%, lowest since 2008. This sounds good, until the "corrections" are announced in a couple of weeks. But this is all hogwash anyway, because the Labor Force Participation Rate, sunk at the same time to its lowest rate since 1978, 62.7%. You see how contemptuously they lie to you, mushrooms?

The entire business of analyzing the economy has been boiled down to one item, the unemployment rate. If that falls, it must force the Fed to raise interest rates, so let's buy more dollars. False presupposition here is (1) that anybody at the Fed even knows "Sic 'em" from "Come here", and (2) that if stocks tank the hogs at the Fed won't go right back to waller in the mire of Quantitative Easing. Merciful heavens, Act II of The Great Recession is opening, and investors are still chasing momentum and fads. If they do this in the green tree, what will happen in the dry?

3. Americans have become almost too stupid to breathe in and out, and nowhere does that galloping stupidity show worse than in language. Note to all those under 40: purpose of language is to convey information. On a radio interview today I actually heard a 20-something female singer/songwriter (both stretch my credulity in her case) say, "I mean, like, there's this guy, whatever, whatever." One suspects that people who talk like this really have nothing to say because their brains have been surgically removed, nowhaddamean? Awesome. Whatever. Rad. Sweet. Righteous. Like, gnar-gnar.

Okay, I have coughed that bone up. Now on to markets:

Only market that didn't tank this week was the scrofulous, pestilential, world parasite US dollar.

Volatility (or Nice Government Men) cranked up to raise stocks on Friday to keep their true sickness hidden. Yen & Euro are boring holes in the bottom of the chart to crawl into. Gold & silver waterfalled this week, and platinum and palladium may get cheaper than dirt.

US dollar index gained a rare 107 basis points (1.25%) to close at 86.81 today, shooting up on that goofy jobs report I mentioned above. Highest level in 4 years. These markets have been so crazy I'm about forecast-shy, but looking at the dollar course May thru today, the second upmove (of three) could have been completed today. Even if the dollar turns around, it may be too late for the yen & euro. Remember that the dollar is those currencies' reciprocal: dollar rises, yen & euro fall. Same is true but not as mechanically for gold and silver. If the dollar has completed a rally for a while, then it's correction could last the rest of the year EVEN IF it intends to rise to 92.

Euro lost 1.22% to close $1.2515, a new low for the move. Since May the euro has lost 10.2%, & now stands at its lowest since September 2012. In the bigger picture it's easy to imagine that the dollar's rise was born in an agreement with the Europeans to let the euro fall & support their exports. That's the way Nice Government Men & Central Bank Felons think.

Yen had rallied two days running -- hard to use that word "rally" with the yen -- but collapsed today, not quite to a new low. Lost 1.24% to 91.10 cents/Y100.

I run out of hyperbole trying to describe how overbought the dollar is and how oversold the other two scrofulous fiat currencies are. Suffice it to say a dollar correction/euro & yen rally is coming soon.

Stocks showed that "volatility of the topping" today again. Dow rose 208.64 (1.24%, coincidentally just like the dollar) to 17,009.69 while the S&P500 leapt 21.73 (1.12%) to 1,967.90.

These are not good numbers, & October will likely yet treat stocks unkindly. On my weekly and my monthly charts the Dow has broken down from the uptrend in force since March 2009. Re-read that, it is accurate. Same holds true for the S&P500, but its monthly close today is plumb next to the line -- below, but right at.

Whether September 19 market the ultimate high in a 300 year cycle remains to be seen. The speed and extent of this fall will tell us whether it is a correction or the end of the stock bull market.

Dow in gold today made a new high for the move, 14.28 oz (G$295.19 gold dollars), which may (but does not yet certainly) blow my theory that stocks have turned over against gold.

Dow in silver made a new high for the move, too, at 1009.78 oz (S$1,305.57 silver dollars).

Gold went over the cliff $22.00 (1.81%) to end Comex at $1,192.20. Silver lost 22.1 cents (1.3%) and closed Comex at 1678c.

Let's go for the big picture. Gold's weekly chart has oscillated over and under the downtrend line all year, and for the last three weeks has been under. Not enough steam yet to throw a leg over that line and leave it behind. On gold's monthly chart it has closed right at the uptrend line from 2001. If it was ever fish or cut bait time, it's now.

Depending on how you draw the downtrend line, silver is over or under. I have drawn it to the first two tops from the March 2011 peak, and in the last year silver has been ABOVE that line. This week it merely traded down to it, but closed above.

On silver's monthly log scale chart since 2001, it has traded all the way down to the uptrend line. Once again, folks, silver must fish or cut bait. Hard to overstate how important it is to hold this line.

Gold's five day chart shows a collapse today beginning just before 10:00 a.m. Once it broke through $1,205, it had to fall until it found support at $1,190. I probably don't need to point out to y'all that this is ten bucks above the June 2013 & December 2013 lows.

Although silver has sunk through its lows made last year, gold has not. And it is not unusual for silver in a correction to show itself weaker than gold. Ordinary, in face. But also gold approaching the $1,180 support also carries the caution that the more times support is challenged, the more likely it is to give.

Silver fell off about the same time gold did, breaking 1700 and plunging to a 1664c low.

There's really not much else to say here. Either silver & gold hold here or drop much further. The world looks very odd this week, however, with both stocks & gold & silver & platinum and palladium sinking while the US dollar rises. I won't say it's as amazing as seeing an axe head float, but it's in the same county. I'm not at all joyful to see stocks cracking, because they will take the economy down with them. I wasn't kidding about Act II of the Great Recession opening. It did. This week.

On 3 October 1990 East & West Germany were re-unified as the hateful Berlin Wall came down.

On 3 October 1283 Dafydd ap Gruffydd, prince of Gwynedd in Wales, became the first person executed by being hanged, drawn, and Quartered. The same Edward I of England who murdered the Scottish patriot William Wallace that way began the practice on Dafydd ap Gruffydd for the impertinence of trying to keep Wales free.

Thinking about being hanged, drawn, and quartered sort of makes your troubles seem small, doesn't 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
3-Oct-14 Price Change % Change
Gold, $/oz 1,192.20 -22.00 -1.8
Silver, $/oz 16.78 -0.22 -1.3
Gold/Silver Ratio 71.049 -1.302 -1.8
Silver/Gold Ratio 0.0141 -0.0002 -1.3
Platinum 1,226.00 -43.10 -3.4
Palladium 753.70 -14.10 -1.8
S&P 500 1,967.90 21.73 1.1
Dow 17,009.69 208.64 1.2
Dow in GOLD $s 294.93 8.93 3.1
Dow in GOLD oz 14.27 0.43 3.1
Dow in SILVER oz 1,013.69 25.45 2.6
US Dollar Index 86.81 1.07 1.2
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: 1,190.30      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,217.68 1,231.96 1,231.96
1/2 AE 0.50 612.49 627.88 1,255.77
1/4 AE 0.25 306.24 319.89 1,279.57
1/10 AE 0.10 124.88 130.34 1,303.38
Aust. 100 corona 0.98 1,156.23 1,165.23 1,188.77
British sovereign 0.24 281.88 293.88 1,248.42
French 20 franc 0.19 223.90 227.03 1,216.01
Krugerrand 1.00 1,201.01 1,211.01 1,211.01
Maple Leaf 1.00 1,205.30 1,220.30 1,220.30
1/2 Maple Leaf 0.50 684.42 624.91 1,249.82
1/4 Maple Leaf 0.25 303.53 318.41 1,273.62
1/10 Maple Leaf 0.10 126.17 129.74 1,297.43
Mexican 50 peso 1.21 1,423.55 1,434.55 1,189.80
.9999 bar 1.00 1,194.47 1,206.30 1,206.30
SPOT SILVER: 16.78      
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 12,208.63 12,494.63 17.48
US 40% silver 1/2s 0.30 4,756.88 4,906.88 16.63
100 oz .999 bar 100.00 1,667.50 1,727.50 17.28
10 oz .999 bar 10.00 172.75 173.75 17.38
1 oz .999 round 1.00 16.88 17.38 17.38
Am Eagle, 200 oz Min 1.00 18.53 19.78 19.78
SPOT PLATINUM: 1,226.00      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Platinum Platypus 1.00 1,251.00 1,291.00 1,291.00
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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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