The Moneychanger
Daily Commentary
Wednesday, 5 November a.d. 2014 Browse the commentary archive

I reckon y'all who believe the Republicans are going to save the country are preening your feathers today. Personally I couldn't slip a cigarette paper into a slot the size of the difference between Democrats & Republicans, but I wish y'all well.

The US Mint is temporarily sold out of silver American Eagles following "tremendous" demand in the past several weeks. The mint will continue striking 2014 dated coins. This announcement indicates strong physical demand.

However, silver American Eagles are the WORST buy in silver with the highest cost per ounce of all bullion products. Worse yet, premium always disappears over time, so you won't recapture that premium when you sell.

Speaking of silver, today I did one of the best gold to silver swaps I've every done. Person had bought gold one day off the silver top in April 2011 when the ratio was 31.082. He swapped it today for silver at 71.51:1 and took out 130% more silver than if he had bought silver in the first place. More than that, when silver & gold eventually begin rising again, he will have 2.3 times the silver ounces to enjoy that ride.

Apparently stock buyers and dollar investors are Republicans, or just any news will stimulate their buying gland. Either way, both the dollar and stocks rose.

Dow rose 100.69 (0.58% to a new all time high at 17,484.53. And the S&P500 was running right along its side, up 11.47 (0.57%) to 2,023.57, also a new high. And if you live in Oregon, Alaska, or DC voters approved a new high for you last night, legalizing small amounts of dope.

I hate to bust up the party, but it's a plain fact that both major stock indices are nearing the upper boundary of trading the last year. Now maybe they can punch through that and run higher, but it ain't likely. That line stands about 17,500 for the Dow and 2040 for the S&P500.

Listen, durn it! I ain't nothin' but a nat'ral born durned fool from Tennessee, but if I know anything, I know can't nobody PRINT their way into prosperity. Dumb as I look, I have read the history of every inflation on the face of the globe, and hadn't a one of 'em succeeded. Oh, yeah, for a while everybody was wearing silver slippers and clicking their heels, until the balloon burst.

Now on every side the poor public-miseducated folk think the Wise Central Bankers can print up some prosperity for us. I jes' have a single question: If printing money makes everybody rich, why don't we jes' print up a bunch of it & see? Fact is, that's what they're doing now, & the end will be weeping and wailing and gnashing of teeth, and maybe even decorating lampposts with central bankers.

Hack, hack, that bone's out of my throat, so on to the US dollar Index. It rose 38 basis points today (0.43%) to 87.54 & a new high for the move. Lo, it's true I am sour, but there's an old technical rule called the 3% rule, namely, that a market has to rise at least 3% to PROVE a breakout. Breakout for the Dollar index was about 85.5, so it really needs to reach 88.07 to achieve escape velocity. Maybe it can, I don't know. Don't nothin' make sense to me no more.

Yen is seeking the bottom of the scabrous, scurvy fiat currency heap. Fell another 0.97% 5today to 87.23 cents/Y100. No hope of a turnaround when the Bank of Japan has already poisoned the well. Euro doesn't look much better. It dropped 0.48% today to $1.2486, bumping along where the previous bottom was $1.2501. Nothing hopeful appears in the chart.

Republicans whacked silver & gold over the head. On Comex silver plunged 50.9 cents (3.2%) to close at 1541.8c. Gold dove $22 or 1.9% to $1,145.40.

Merciful heavens! I'm reading people crowing about gold going to $700 & I guess if it does they'll be charging you to haul away silver by the truckload. I just can't get it into my head that the Fed is that good, but maybe they're not. Maybe the whole world is just that unhinged and fluid. Anyway silver & gold just free-fell today, and nothing is turning up. When gigantic amounts of paper silver can be sold versus the available physical supply, and when leveraged players all hop on a market, y'all can throw statistics out the window. It's gonna fall till it stops.

Gold needs to close above $1,170 even to hint of a reversal. Silver needs 1625c. They were simply slammed with selling that began about midnight Eastern time. Too much weight on the selling side.

Remember, Remember, the fifth of November/Gunpowder, treason & plot! On 5 November 1605 the Gunpowder Plot was discovered. Guy Fawkes and other conspirators tried to blow up King James I while he opened Parliament, but the large stash of gunpowder was discovered. Fawkes was caught and tortured in Guantanamo, and he and seven others were later executed. Since then the English have celebrated Guy Fawkes Day by bonfires onto which they throw stuffed manikins called "guys." Oh, yes, some of them drink beer, too, and some drink whiskey.

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
5-Nov-14 Price Change % Change
Gold, $/oz 1,145.40 -22.00 -1.88%
Silver, $/oz 15.42 -0.51 -3.20%
Gold/Silver Ratio 74.290 0.993 1.35%
Silver/Gold Ratio 0.0135 -0.0002 -1.34%
Platinum 1,207.80 -14.10 -1.15%
Palladium 758.65 -32.80 -4.14%
S&P 500 2,023.57 11.47 0.57%
Dow 17,484.53 100.69 0.58%
Dow in GOLD $s 315.56 7.73 2.51%
Dow in GOLD oz 15.26 0.37 2.51%
Dow in SILVER oz 1,134.03 42.56 3.90%
US Dollar Index 87.54 0.43 0.49%
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: 1,143.40      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,174.27 1,183.42 1,183.42
1/2 AE 0.50 588.34 603.14 1,206.29
1/4 AE 0.25 294.17 307.29 1,229.16
1/10 AE 0.10 119.95 125.20 1,252.02
Aust. 100 corona 0.98 1,112.92 1,124.92 1,147.64
British sovereign 0.24 270.77 282.77 1,201.24
French 20 franc 0.19 215.07 218.27 1,169.11
Krugerrand 1.00 1,157.12 1,167.12 1,167.12
Maple Leaf 1.00 1,158.40 1,173.40 1,173.40
1/2 Maple Leaf 0.50 657.46 600.29 1,200.57
1/4 Maple Leaf 0.25 291.57 305.86 1,223.44
1/10 Maple Leaf 0.10 121.20 124.63 1,246.31
Mexican 50 peso 1.21 1,367.46 1,391.46 1,154.06
.9999 bar 1.00 1,147.40 1,159.40 1,159.40
SPOT SILVER: 15.33      
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 11,890.45 12,176.45 17.03
US 40% silver 1/2s 0.30 4,330.60 4,480.60 15.19
100 oz .999 bar 100.00 1,523.00 1,583.00 15.83
10 oz .999 bar 10.00 158.30 159.30 15.93
1 oz .999 round 1.00 15.43 15.93 15.93
Am Eagle, 200 oz Min 1.00 17.08 18.08 18.08
SPOT PLATINUM: 1,207.80      
Plat. Platypus 1.00 1,232.80 1,272.80 1,272.80
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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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