The Moneychanger
Daily Commentary
Tuesday, 25 November a.d. 2014 Browse the commentary archive

On November 30 the Swiss vote on a referendum that would force the Swiss National Bank (their central bank) to halt all Swiss gold sales, repatriate all Swiss gold held in foreign vaults, and again back the Swiss Franc with 20% gold (from 7.7% today). Until 2000 Swiss law required a 40% gold backing for the franc. If the referendum passes, the SNB would have to buy about 300 tonnes (9.7 million oz.) a year for five years (as I remember).

Of course the SNB and the politicians have shifted their propaganda campaign against the referendum into high gear, but who knows how the Swiss might vote. The media will turn a no vote into a "no confidence" vote in gold, and that could slap gold around. A surprise Yes vote would help the gold price briefly, but in the long term even an increase of 300 tonnes against world gold production of 2,700 would amount to only 11%, and the Swiss wouldn't go out and buy it all at once. More than the increased gold demand, the change in public opinion expressed by a Yes vote would be a longer term boost for gold. That gives you an idea how frantic the central bankers are to see the gold referendum defeated. Maybe the fiercely independent Swiss will do us all a favor & kick the central bankers in the teeth.

Nobody wants markets to go loony during a Thanksgiving holiday week, so they probably won't.

Stocks backed off slightly today. Dow lost 2.96 (0.2% to end at 17,814.94, still at nosebleed altitude. S&P500 lost 2.38 or 0.12% to 2,067.03. Folks, this simply ain't normal, inching to new highs day after day. And "not normal" means that every day it continues, it becomes less and less normal & less likely to continue.

But what do I know? I wear overhauls and a straw hat and go barefoot so I can run from ridge to ridge easier. Can't hold ne'er a candle to them New York & Washington smarties.

The Dow in gold is offering some balm to my ragged patience. It dropped a small 0.25% to G$305.77 gold dollars (14.84 troy ounces). This was enough to dip its head beneath the 20 DMA (now G$308.22 or 14.91 oz). Chart is here, http://scharts.co/1vKWQ5L

Dow in Silver keeps falling, down another 1.25% today to S$1,383.40 silver dollars (1,069.97 oz). Good move, but only a start Chart's at http://scharts.co/1y9UknD

Silver & gold will keep on being tortured until these two indicators prove a downturn. By "prove a downturn" I mean below G$271.83 (13.15 oz) for the DIG and below S$1,133.50 (876.69 oz), the 200 day moving averages.

US dollar index is bouncing back and forth in what might be a continuation formation, and has not yet broken its 20 DMA (87.58). Lost 21 basis points today (0.23%) to end at 87.96. More dollar strength (a breakout from this level) would hit silver & gold like a second-story dropped anvil hits a duck on the sidewalk below.

The timid euro has reached up to touch its 20 DMA today, but couldn't work up nerve to cross it. Rose 0.28% to $1.2475. Resistance at $1.2600 needs to be taken out to give the euro credibility. Yen rose 0.3% but from a level so low it doesn't make a bit of difference. Ended at 84.78.

Thanksgiving week or no, gold & silver are squandering momentum. Gold rose $1.40 (nothing percent) to $1,197.10. Silver rose 17.7 cents (0.1%) to 1655.3c, its highest close since it began rising on 6 November.

Gold must throw a leg over resistance at $1,205 and its 50 DMA at $1,206.04. Every day it stalls here it gets weaker and weaker. Silver's no better -- it's taken all this time merely to float above 1650c, not even as high as where it broke down (1700c). Okay, I'll give you this is a slow week, but if they hold up tomorrow (US commodity market is closed Friday), they're going to have to put the pedal to the metal next week, right in the aftermath of that Swiss referendum on Sunday.

Here's one last hopeful item. The gold/silver ratio dropped below an channel boundary today and touched its 50 DMA. That ratio needs to drop to confirm a gold/silver turnaround.

I have to take a trip with two of my sons tomorrow to look at a South Poll. That breed is heat tolerant, gentle, fattens on grass & not grain. Anyhow, I'll be thinking about a different kind of stock tomorrow so won't be here to send y'all a commentary.

May God bless you Thanksgiving & always always with a thankful heart for all his tender mercies!

On 25 November 2014 British forces captured from the French Fort Duquesne, which y'all know as Pittsburgh.

On 25 November 1783 the British army evacuated New York City, its last military position in the United States. A year before it had looked like the British were winning the war. Remember that.

On 25 November 1873 the inflationist US Greenback Party was founded, mostly by farmers suffering in the wake of the Panic of 1873. They wanted the federal government to print more of the fiat paper money issued during the War for Southern Independence, the Greenback. Now, I'm not trying to be mean (although clearly I share not their monetary opinions) but I want ya'll go to Wikipedia and look up Greenback Party and gaze on the picture of Peter Cooper of New York, their 1876 presidential candidate. I'm telling y'all, it's hard to take a man seriously who has a fluffy beard like that & no moustache. Right hard.

On 25 November 164 eleven nations had to pony up $3 billion to rescue the British pound sterling. The more things change, the more they stay the same.

Friend of mine today asked a question I couldn't answer, maybe y'all can help. Why is it looters never steal work boots?

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
25-Nov-14 Price Change % Change
Gold, $/oz 1,197.10 1.40 0.12%
Silver, $/oz 16.55 0.18 1.08%
Gold/Silver Ratio 72.319 -0.696 -0.95%
Silver/Gold Ratio 0.0138 0.0001 0.96%
Platinum 1,223.60 15.60 1.29%
Palladium 795.60 5.50 0.70%
S&P 500 2,067.03 -2.38 -0.12%
Dow 17,814.94 -2.96 -0.02%
Dow in GOLD $s 307.63 -0.41 -0.13%
Dow in GOLD oz 14.88 -0.02 -0.13%
Dow in SILVER oz 1,076.24 -11.81 -1.09%
US Dollar Index 87.96 -0.21 -0.24%
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SPOT GOLD: 1,199.90      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,231.10 1,241.90 1,241.90
1/2 AE 0.50 617.43 632.95 1,265.89
1/4 AE 0.25 308.72 322.47 1,289.89
1/10 AE 0.10 125.88 131.39 1,313.89
Aust. 100 corona 0.98 1,170.26 1,182.26 1,206.14
British sovereign 0.24 284.15 296.15 1,258.08
French 20 franc 0.19 225.70 228.82 1,225.61
Krugerrand 1.00 1,215.50 1,225.50 1,225.50
Maple Leaf 1.00 1,214.90 1,229.90 1,229.90
1/2 Maple Leaf 0.50 689.94 629.95 1,259.90
1/4 Maple Leaf 0.25 305.97 320.97 1,283.89
1/10 Maple Leaf 0.10 127.19 130.79 1,307.89
Mexican 50 peso 1.21 1,439.37 1,463.37 1,213.71
.9999 bar 1.00 1,204.10 1,215.90 1,215.90
SPOT SILVER: 16.64      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 22.75 26.50 34.64
VG+ Peace dollar 0.77 18.50 22.00 28.76
90% silver coin bags 0.72 13,220.35 13,577.85 18.99
US 40% silver 1/2s 0.30 4,717.05 4,867.05 16.50
100 oz .999 bar 100.00 1,654.00 1,714.00 17.14
10 oz .999 bar 10.00 171.40 172.40 17.24
1 oz .999 round 1.00 16.74 17.29 17.29
Am Eagle, 200 oz Min 1.00 18.39 19.39 19.39
SPOT PLATINUM: 1,223.60      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,248.60 1,288.60 1,288.60
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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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