The Moneychanger
Weekly Commentary
Friday, 14 November a.d. 2014 Browse the commentary archive
Here's the weekly scorecard:
  7-Nov-14 14-Nov-14 Change % Change
Silver, cents/oz. 1,569.90 1,631.00 61.10 3.9
Gold, dollars/oz. 1,169.70 1,185.00 15.30 1.3
Gold/silver ratio 74.508 72.655 -1.853 -2.5
Silver/gold ratio 0.0134 0.0138 0.0003 2.6
Dow in Gold Dollars (DIG$) 310.58 307.63 -2.95 -0.9
Dow in gold ounces 15.02 14.88 -0.14 -0.9
Dow in Silver ounces 1,119.43 1,081.22 -38.21 -3.4
Dow Industrials 17,573.93 17,634.74 60.81 0.3
S&P500 2,031.92 2,039.82 7.90 0.4
US dollar index 87.63 87.58 -0.05 -0.1
Platinum 1,213.30 1,213.60 0.30 0.0
Palladium 772.20 771.00 -1.20 -0.2

No sooner did I demand it than silver & gold broke out upside, after a frustrating do-nothing week. Stocks spent the week millimetering higher, for the fourth straight up-week. Dollar finally faltered for a correction today. Platinum & palladium seem to have found bottoms.

Dow faltered today, losing 18.05 (0.1%) to 17,634.74. S&P500 technically rose, 0.49 or 0.2% to 2,039.82. Disagreement shows confusion, confusion lack of confidence. May go marginally higher next week, but the time bomb is ticking for a slippery slide. (I'm giving y'all two metaphors for the price of one). Cycles point to a peak soon but also gauges of inward weakness are showing. Add to that knocking on the upper boundary line on declining volume. Not a good cocktail.

Dow in metals plunged. Dow in gold lost 2.11% to end at G$307.39 gold dollars (14.87 oz), falling back below the channel line it had thrown over. Good start.

Dow in silver dove for the bottom, ending at $1,397.60 silver dollars (1,080.96 oz). Now back within the up channel. Too soon to tell us whether this is a permanent turn.

US dollar index made the first half of a key reversal with a new intraday high at 88.36, but a lower close for the day. Ended at 87.58, down 25 basis points or 0.28%. A lower close on Monday will send the dollar index into a weighty correction, swimming like a man in concrete overshoes.

Euro finally made something resembling a turnaround. Reached up for the 20 DMA at $1.2524, up 0.39%. Could run fast toward $1.2900. Yen confirmed nosedive with a gap down today an a 0.41% drop to 85.99.

Gold leapt $23.90 (2.1%) to $1,185.00. Silver outshone, rising 69.3 cents (4.64%) to 1631c. Yesterday I said silver & gold needed to climb through 1600c and $1,185.00, and they promptly did.

Believe it or not, in the midst of all this gloom, gold has actually risen for the past two weeks. Bottom came at $1,130.40 (intraday) last Friday, 7 November. Today gold acted as if it wanted to drop but caught hold and levitated straight up to close Comex at $1,185 and end the day about $1,190.

Why is $1,180 such strong resistance? Because for 16 months it formed the stout floor for gold.

Today gold touched the 20 DMA ($1,192.83). This only begins a rally. Next gold must climb over $1,200, then $1,225 where it began to fall off. Above that comes the test at the last high, $1,255.60.

The chart has formed what might turn out to be an upside-down head and shoulders pattern. That means we can expect a rise toward $1,255.6 where the neckline is, then a drop back for a test of $1,180, the bottom of the left shoulder, for a rally from there up through the neckline.

Silver reached up and nearly touched the 20 DMA at 1640c (the high was 1638c), and it closed near there. Next week it should jump through the 20 DMA and press on toward 1782c, the last high. Silver's chart, too, shows a potential upside-down H&S. Silver needs to throw a leg over 1700c where its waterfall began.

Momentum indicators have all turned up, so they are confirming this breakout as genuine.

I bought silver today.

Gold:Silver ratio dropped to 72.655 today. If you ever want to swap gold for silver near this ratio level, you ought to jump soon.

On 14 November 1501 Arthur Tudor, Prince of Wales and heir to the English throne, married Catherine of Aragon at the age of 15. Catherine was nearly a year older. Although he was in good health, Arthur died six months later, and Catherine firmly testified that the marriage was never consummated. She later married Arthur's younger brother, Henry, who had acceded to the throne in 1509.

And that's where the trouble began. A daughter, Mary (later Bloody Mary) was born in 1516, but no son. Henry tried to get the Pope to annul the marriage on various grounds, & when the pope refused Henry assumed supremacy over religious matters in England. His marriage was shortly declared invalid. Catherine was banished from court and lived until 1536.

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
14-Nov-14 Price Change % Change
Gold, $/oz 1,161.10 23.90 2.1
Silver, $/oz 15.62 0.69 4.6
Gold/Silver Ratio 74.348 1.498 2.1
Silver/Gold Ratio 0.0135 0.0006 4.6
Platinum 1,213.60 14.10 1.2
Palladium 771.00 0.50 0.1
S&P 500 2,039.82 0.49 0.0
Dow 17,634.74 -18.05 -0.1
Dow in GOLD $s 313.96 -6.89 -2.1
Dow in GOLD oz 15.19 -0.33 -2.1
Dow in SILVER oz 1,129.20 -53.64 -4.5
US Dollar Index 87.58 -0.25 -0.3
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SPOT GOLD: 1,189.50      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,221.62 1,231.13 1,231.13
1/2 AE 0.50 612.08 627.46 1,254.92
1/4 AE 0.25 306.04 319.68 1,278.71
1/10 AE 0.10 124.79 130.25 1,302.50
Aust. 100 corona 0.98 1,157.79 1,169.79 1,193.42
British sovereign 0.24 281.69 293.69 1,247.61
French 20 franc 0.19 223.75 226.88 1,215.21
Krugerrand 1.00 1,204.96 1,214.96 1,214.96
Maple Leaf 1.00 1,204.50 1,219.50 1,219.50
1/2 Maple Leaf 0.50 683.96 624.49 1,248.98
1/4 Maple Leaf 0.25 303.32 318.19 1,272.77
1/10 Maple Leaf 0.10 126.09 129.66 1,296.56
Mexican 50 peso 1.21 1,422.59 1,446.59 1,199.79
.9999 bar 1.00 1,193.66 1,205.50 1,205.50
SPOT SILVER: 16.29      
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 12,934.35 13,291.85 18.59
US 40% silver 1/2s 0.30 4,613.80 4,763.80 16.15
100 oz .999 bar 100.00 1,619.00 1,679.00 16.79
10 oz .999 bar 10.00 167.90 168.90 16.89
1 oz .999 round 1.00 16.39 16.94 16.94
Am Eagle, 200 oz Min 1.00 18.04 19.04 19.04
SPOT PLATINUM: 1,213.60      
Platinum Platypus 1.00 1,238.60 1,278.60 1,278.60
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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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