The Moneychanger
Daily Commentary
Tuesday, 11 November a.d. 2014 Browse the commentary archive

When a market tops it will often reach back toward that top several times, only to be slapped back again. That leaves behind a series of lower highs & higher lows.

So appeareth now the US dollar index, which today lost 29 basis points or 0.32% to end at 87.61. Oh, three days don't make a trend, but the indicators look tired. Next big move should be down.

Euro rose today 0.42% to $1.2474, no big shakes but better that the low three days ago at $1.2359. Trying to turn up, but without energy or conviction. I reckon you ought to expect that when the people who manage the yen announce they are printing quadrillions more, it ought to establish a downtrend, & it has. Lost another 0.77% today to 86.42, a new low and new low close for the move.

I note in passing that US & British regulators are preparing to settle with giant banks suspected of manipulating currency markets. The US CFTC is expected to fin Barclays, JPMORGAN Chase, Citigroup, UBS, Royal bank of Scotland, UBS, & HSBC some $300 million each. The Briitsh regulators are talkking a settlement, but no figures have been mentioned. Other inquiries are going forward agianst Bank of America.

Res ipsa loquitur. Would you pay a $300 million fine if you hadn't done anything wrong? I wouldn't pay a $20 fine if I hadn't done anything wrong, but I'm from Tennessee. Makes you wonder just how "free" markets under government "oversight" really are.

Stocks have dazzled with a five day run of new highs on lower & lower volume, which witnesses they are running out of gas. Dow today rose 1.16 or 0.1% to 17,614.90. SUP rose a little more 07% (1.42) to 2,039.68. Both are bumping hard against overhead resistance. Warning flags are piling up, but that's only the view of a natural born fool from Tennessee.

Just to bring y'all up to date, the Dow in Gold hit a high 6 November at 15.381 oz or G$317.95 gold dollars and today dropped 1% to end at 15.15 oz or G$313.18. It's left a kind of vibrating zig-zag since then & begun stepping back from an extremely overbought state. This is the key indicator for the entire market party. Until it turns down, decisively down, silver & gold will suffer like a blood bank facing withdrawals from Dracula -- stocks will pull into themselves all the money in the world.

Dow in silver saw its high on 5 November at 1,143.15 ounces or S$1,478.01 silver dollars. Since it has zigzagged down, and today lost 0.55% to 1,123.54 oz S$1,452.66. Both the DIG & DIS are rattling on uptrend lines which so far have held as support. Breaking those promises to send them plummeting as fast as they soared in October.

Silver lost 7/10 of a cent today to shutter the Comex at 1566.4 cents. Gold added $3.20 to close at $1,162.80o

Both metals have flashed reliable buy signals by closing above & inside their Bollinger Bands. This shouts that some kind of rally will follow, but doesn't offer many details.

Five day charts for silver and gold both show upward reversals.

As recently as mid-September you could have bought US 90% coin at a wholesale premium of 30 cents an ounce over its melt value. Last Friday it cost $1.75 an ounce over spot, and that jumped yesterday to $2.25. These are stark gains that point to demand outstripping supply of physical silver, pushing up the price.

The US Mint announced in the last week that it was temporarily suspending sales of 2014 silver American Eagles because it was out of stock. Silver Maple Leaves are delayed three weeks. Premiums on silver rounds are have crept up 5 cents.

A "premium" over the melt value implies that people are willing to pay ABOVE THE PAPER MARKET PRICE to secure the silver in hand. In the panic of 2008 we saw premiums on silver items climb above 50%. The paper price became a joke, because you couldn't buy silver anywhere at that price, and if you could convince anybody to sell you silver, you had to wait eight weeks.

Clearly, we aren't there now, but that leaping premium on US 90% says there is plenty of physical demand under the silver market.

I want more confirmation, especially a gold close above $1,180, but it's beginning to look like silver & gold have found their feet. Silver must hold today's low at 1544c and gold must hold $1,145.

If all this holds, then tomorrow ought to see silver & gold at higher prices.

On 11 November 1647 Massachusetts passed the first compulsory school attendance law in North America, anticipating Karl Marx by nearly 200 years. If you have never read John Taylor Gatto's Underground History of American Education you ought to buy a copy. Reads like a thriller, and will give you another view of public education.

On 11 November 1880 Austrailian bushranger/outlaw Ned Kelley was hanged in Melbourne, Australia. Depending on your outlook, he was either a Robin Hood or a murderous villain.

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
11-Nov-14 Price Change % Change
Gold, $/oz 1,162.80 3.20 0.28%
Silver, $/oz 15.66 -0.01 -0.04%
Gold/Silver Ratio 74.234 0.237 0.32%
Silver/Gold Ratio 0.0135 -0.0000 -0.32%
Platinum 1,207.20 -0.20 -0.02%
Palladium 772.35 6.45 0.84%
S&P 500 2,039.68 1.42 0.07%
Dow 17,614.90 1.16 0.01%
Dow in GOLD $s 313.15 -0.84 -0.27%
Dow in GOLD oz 15.15 -0.04 -0.27%
Dow in SILVER oz 1,124.55 0.58 0.05%
US Dollar Index 87.61 -0.29 -0.33%
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: 1,163.70      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,192.79 1,204.43 1,204.43
1/2 AE 0.50 598.79 613.85 1,227.70
1/4 AE 0.25 299.40 312.74 1,250.98
1/10 AE 0.10 122.08 127.43 1,274.25
Aust. 100 corona 0.98 1,132.67 1,144.67 1,167.80
British sovereign 0.24 275.58 287.58 1,221.66
French 20 franc 0.19 218.89 222.06 1,189.41
Krugerrand 1.00 1,178.83 1,188.83 1,188.83
Maple Leaf 1.00 1,178.70 1,193.70 1,193.70
1/2 Maple Leaf 0.50 669.13 610.94 1,221.89
1/4 Maple Leaf 0.25 296.74 311.29 1,245.16
1/10 Maple Leaf 0.10 123.35 126.84 1,268.43
Mexican 50 peso 1.21 1,391.73 1,415.73 1,174.20
.9999 bar 1.00 1,167.77 1,179.70 1,179.70
SPOT SILVER: 15.70      
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 12,476.75 12,834.25 17.95
US 40% silver 1/2s 0.30 4,439.75 4,589.75 15.56
100 oz .999 bar 100.00 1,560.00 1,620.00 16.20
10 oz .999 bar 10.00 162.00 163.00 16.30
1 oz .999 round 1.00 15.80 16.35 16.35
Am Eagle, 200 oz Min 1.00 17.45 18.45 18.45
SPOT PLATINUM: 1,207.20      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,232.20 1,272.20 1,272.20
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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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