The Moneychanger
Daily Commentary
Thursday, 6 November a.d. 2014 Browse the commentary archive

I think the power of Mario Draghi's tongue is fading. He said about the same thing that's been working for him so long -- "We're gonna do something" -- but it just didn't have much bang today. By the way, y'all look at a picture of him and tell me if somebody hasn't twisted his whole face to the right? Or maybe he caught it in a door? Anyway, he threatened to stimulate if folks & the economy don't straighten up.

Draghi's threat & better than expected US jobless claims are the nearest causes for stocks rising today. Hush! Never mind that the jobless claims will be revised in the opposite direction in a week. They won't publish that.

So stocks rose, the Dow up 69.2 (0.4%) to a new high close at 17,553.73. S&P500 also hit a new all time high at 2,029.73, up 6.16 (0.3%). Dow closed plumb up on that overhead megaphone pattern boundary I mentioned yesterday, and the S&P500 just a mouse-ear below it. I am just watching the magic of fiat money at work, with my mouth open like a fool at a tennis match.

US dollar index passed that 3%-above-breakout test today by closing at 88.21, up 67 basis points or 0.77%). Indicators are overbought and toppy, but that topping process can last a while longer.

Euro finally broke today, down 0.88% to $1.2375, signaling much lower prices to come. No curb before it hits $1.2042, the 2012 low. And the yen crumbled 0.42% to 86.85 cents/Y100. Yen has passed its 2008 low and hasn't been this low since 2007. No safety net before 80.55 cents/Y100, the 2007 low.

On Comex gold lost another $3.10 to close at $1,142.30. Silver flatlined, down 2.6 cents to 1539.2c.

Relative Strength Index for silver & gold has returned to severely oversold level. Versus "oversold" at 30, silver's RSI stands at 19.88, gold's at 21.38. Full stochastics are at lows and are trying to turn up. No sign of a reversal yet, although the speed of the fall has slowed.

I read an article last night by Paul Craig Roberts & Dave Kranzler at bit.ly/1tNjnwe entitled "American Financial Markets Have No Relationship To Reality." They point out that recent falls in gold and silver have been accelerated by massive paper gold sales on the futures market, 47 tonnes' worth within a few minutes, or sales of 25 tonnes on the Comex Globex system at 3:00 a.m. Eastern time, about as thin a market as a manipulator might wish. Another 38 tonnes were sold the same day shortly before Comex opened. Remember these are tonnes of paper gold. Naked shorts.

While I will admit that profit-maximizing sellers don't do such things, practically it doesn't matter whether this is a government/central bank conspiracy or simply trading sharks attracted by blood in the water. The outcome is the same. And ultimately, since all the manipulation in the world couldn't keep silver & gold from rising 2001 - 2011, the present weakness lies with silver & gold. By that I mean that confidence in scabrous fiat currencies & criminal central banks is so high that nobody's interested in gold. After all, isn't quantitative easing working? Ain't stocks rising?

Well, when it stops working, and it will, abruptly, things will turn.

Something near every day a reader writes to inform me how markets are rigged and it's pointless to attempt technical analysis because the gummint & Fed control everything. If that were true, only thing we could do is give up hope & take a job working for the gummint, because it would be god. If I don't accomplish a blessed thing except to remind y'all every day that, in spite of what folks around you may believe, gummint & central banks are not god, do not have godlike powers, & for the most part couldn't pour pea soup out of a boot with instructions written on the heel, well, durn, I'd be as contented as a skinny flea on a fat cat.

Don't y'all understand that they WANT you to believe the myth of their invincibility? The entire monetary and financial system is a CONFIDENCE GAME, & it blows apart into instantaneous smithereens if confidence ever wanes. They're not invincible, they're hyenas & vultures. They do a great job on something weak and for the moment powerless. Against the strong & living they're not so successful, or so brave.

Do central banks & government try to manipulate gold & silver? I don't doubt they do, but manipulations only work for a while, and when markets are weak. Against the rising tide of a primary trend, eventually they fail. This time, too.

On 6 November 1861 Jefferson Davis was elected the first president of the Confederacy.

On 6 November 1917 (October 25 old style) the Bolsheviks staged their October revolution and Vladimir Lenin and Leon Trotsky seized power in Petrograd, the Russian capital. It was the beginning of 70 years' of murder and misery.

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
6-Nov-14 Price Change % Change
Gold, $/oz 1,142.30 -3.10 -0.27%
Silver, $/oz 15.39 -0.03 -0.17%
Gold/Silver Ratio 74.214 -0.076 -0.10%
Silver/Gold Ratio 0.0135 0.0000 0.10%
Platinum 1,198.00 -13.50 -1.11%
Palladium 752.25 -5.25 -0.69%
S&P 500 2,023.57 11.47 0.57%
Dow 17,553.73 69.20 0.40%
Dow in GOLD $s 317.66 2.11 0.67%
Dow in GOLD oz 15.37 0.10 0.67%
Dow in SILVER oz 1,140.45 6.41 0.57%
US Dollar Index 88.21 0.67 0.77%
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: 1,143.50      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,170.94 1,183.52 1,183.52
1/2 AE 0.50 588.39 603.20 1,206.39
1/4 AE 0.25 294.19 307.32 1,229.26
1/10 AE 0.10 119.96 125.21 1,252.13
Aust. 100 corona 0.98 1,113.01 1,125.01 1,147.74
British sovereign 0.24 270.79 282.79 1,201.34
French 20 franc 0.19 215.09 218.29 1,169.21
Krugerrand 1.00 1,157.22 1,167.22 1,167.22
Maple Leaf 1.00 1,158.50 1,173.50 1,173.50
1/2 Maple Leaf 0.50 657.51 600.34 1,200.68
1/4 Maple Leaf 0.25 291.59 305.89 1,223.55
1/10 Maple Leaf 0.10 121.21 124.64 1,246.42
Mexican 50 peso 1.21 1,367.57 1,391.57 1,154.16
.9999 bar 1.00 1,147.50 1,159.50 1,159.50
SPOT SILVER: 15.39      
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 11,933.35 12,219.35 17.09
US 40% silver 1/2s 0.30 4,348.30 4,498.30 15.25
100 oz .999 bar 100.00 1,529.00 1,589.00 15.89
10 oz .999 bar 10.00 158.90 159.90 15.99
1 oz .999 round 1.00 15.49 15.99 15.99
Am Eagle, 200 oz Min 1.00 17.14 18.14 18.14
SPOT PLATINUM: 1,198.00      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,223.00 1,263.00 1,263.00
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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.
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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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