The Moneychanger
Daily Commentary
Tuesday, 7 October a.d. 2014 Browse the commentary archive

Okay, we got the signals we needed. We're on the road, pot-holed though it be.

US dollar index, scrofulous parasite on world prosperity, dropped 12 basis points (0.14%) to 85.76. This ain't as much as I'd like, but it is a lower close, & that's all that's needed. The lethargic euro rose 0.13% to $1.2670, & looks none too pert still. 20 DMA floats above at $1.2783. Yen, on the other hand, burst through its 20 DMA (92.20) and added 0.57% for a close at 92.47 cents/Y100. Yen appears to be rallying seriously. Euro appears to be cataleptic or deeply depressed.

Fear sent investors racing out of stocks & into US bonds, driving the price up and the yield down. 10 year treasury note yield fell 3.09% to 2.350%.

Put on black and weep & mourn, stocks! Another triple digit down day for the Dow, its fifth out of eight triple digit days since the 19 September high. Dow dove 272.52 (1.6%) to 16,719.39. S&P500 plunged 29.62 (1.51%) and perched on the low at 1,935.10. For both indices, this is the lowest close, but not the lowest price, for this move. They left their 20 and 50 day moving averages behind so long ago there's no point in mentioning them. All indicators are working for Sir Isaac Newton -- gravity-ward.

Dow in Gold & Dow in Silver are feeding my fire. Dow in gold ended the day at G$285.89 gold dollars (13.83 oz.), below the 20 DMA at 13.96 & down a choking 1.72%! All indicators down, all systems go for "a stock top and gold & silver bottom behind us." Yet humility and the still-remembered bruises of earlier episodes constrain me to await more confirmation.

Dow in silver fell 0.69% to S$1,258.63 silver dollars (973.47 oz), lower than the last low. Also, the MACD turned down today. Rate of change has crashed.

The white metals are also rallying with us. Platinum made a key reversal yesterday and today, and added 1.12% today for a $1,260.70 close. Palladium made a key reversal and rose 2.51% today to $787.30. Both platinum & palladium had collapsed after September 1, and both fell through their 200 DMAs. It strengthens the case for silver & gold to have the white metals rallying, too.

Gold closed Comex higher by $5.00 (0.41%) at $1,211.70. Siler rose 11 cents (0.64%) to a 1719.1c close.

Both metals gave us a key reversal's second half, a higher close today. Gold now must climb through that 20 DMA above at $1,220.89, but in fact needs to close above $1,224, the last high, and $1,237, the high before that. The great barrier in front of gold is $1,300.

Silver today traded up to the downtrend line (from the end-August high) but stopped there. MACD indicator is about to turn up. Silver must keep on progressing, moving through 1775c then 1800c.

So far, so good, but a mere common correction might do all this, especially after as long as metals have been oversold. They need to keep making steady progress.

'Twould be a good idea to buy some here. ALSO, if you are ever going to swap gold for silver, now is the time. Call us.

On 7 October 1571 in the Battle of Lepanto off western Greece the fleet of the Holy League, a coalition of southern European states, destroyed the Ottoman Empire's fleet. The victory help keep the Turks out of western Europe. It was the last great naval battle fought by galleys.

On 7 October 1849 died Edgar Allen Poe, one of America's few first rate literary critics and imaginative poet and author of macabre mystery tales. He virtually invented the detective story. Although born in Boston he was orphaned at age two and raised by the Allens of Richmond, Virginia, where he grew up. In 1835 at age 26 he married his 13 year old cousin, & they remained happily married until she died 11 years later.

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
7-Oct-14 Price Change % Change
Gold, $/oz 1,211.70 5.00 0.41%
Silver, $/oz 17.19 0.11 0.64%
Gold/Silver Ratio 70.485 -0.161 -0.23%
Silver/Gold Ratio 0.0142 0.0000 0.23%
Platinum 1,261.10 12.70 1.02%
Palladium 786.15 20.90 2.73%
S&P 500 1,935.10 29.72 1.56%
Dow 16,719.39 272.52 1.66%
Dow in GOLD $s 285.24 3.49 1.24%
Dow in GOLD oz 13.80 0.17 1.24%
Dow in SILVER oz 972.57 9.69 1.01%
US Dollar Index 85.76 -0.12 -0.14%
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: 1,209.70      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,237.52 1,252.04 1,252.04
1/2 AE 0.50 622.48 638.12 1,276.23
1/4 AE 0.25 311.24 325.11 1,300.43
1/10 AE 0.10 126.91 132.46 1,324.62
Aust. 100 corona 0.98 1,175.08 1,187.08 1,211.06
British sovereign 0.24 286.47 298.47 1,267.94
French 20 franc 0.19 227.54 230.65 1,235.41
Krugerrand 1.00 1,220.59 1,230.59 1,230.59
Maple Leaf 1.00 1,224.70 1,239.70 1,239.70
1/2 Maple Leaf 0.50 695.58 635.09 1,270.19
1/4 Maple Leaf 0.25 308.47 323.59 1,294.38
1/10 Maple Leaf 0.10 128.23 131.86 1,318.57
Mexican 50 peso 1.21 1,446.75 1,470.75 1,219.83
.9999 bar 1.00 1,213.93 1,225.70 1,225.70
SPOT SILVER: 17.21      
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 12,305.15 12,877.15 18.01
US 40% silver 1/2s 0.30 4,885.20 5,035.20 17.07
100 oz .999 bar 100.00 1,711.00 1,771.00 17.71
10 oz .999 bar 10.00 177.10 178.10 17.81
1 oz .999 round 1.00 17.31 17.81 17.81
Am Eagle, 200 oz Min 1.00 18.96 20.21 20.21
SPOT PLATINUM: 1,261.10      
Plat. Platypus 1.00 1,286.10 1,326.10 1,326.10
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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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