The Moneychanger
Daily Commentary
Monday, 8 December a.d. 2014 Browse the commentary archive

THEY REMEMBER NOTHING & THEY LEARN NOTHING DEPARTMENT. Fannie Mae & Freddie Mac, the government agencies created to subsidize the mortgage & housing industries at taxpayer expense, a major cause contributing to the Housing Bubble & Bust, & presently flat busted, announced today a plan to allow first time homeowners to obtain a mortgage using only a paper-thin 3% down payment.

As I survey America -- never mind any moral survey, let's just limit it to the economy -- I realize that no one can deny that all the adults have left Washington & the teeny-weeny minds who are there should not be given any duty more responsible than tuning a radio.

Stocks have thrice flashed Hindenburg Omens, technical indicators that a crash loometh. Last time that came before the October plunge.

Oil hit a five year low today, & will probably fall further.

Dow skidded 106.21 today, down 6/10%, & stopped at 17,852.48. S&P500 fell a little further, 15.06 or 0.73%, to 2,060.31.

I say nothing of the look of rolling over the Dow gives, but will not resist noting its propinquity to the 20 DMA at 17,762.39. A drop the size of today's would suck the Dow down under that. S&P500 punched into its 20 DMA today (2,056.61), but closed barely above it.

A specter is haunting Wall Street.

Behold, how the Dow in Gold & Dow in Silver enlighten us! Dow in silver punched barely into the 20 DMA above it on Friday, but today bounded downward yet again, down 1.14% to S$1,409.59 silver dollars (1,090.23 oz). Back of the upmove is broken, & the DiS has formed a broadening top or megaphone. Tomorrow that megaphone's bottom boundary is about S$1,358.87 (1,051 oz).

Dow in Gold followed the DIS by closing again below the 20dma (GS309.04 gold dollars or 14.95 oz) today. It lost 1.51% to G$306.56 (14.83 oz). Also in a megaphone. Bottom boundary tomorrow stands at G$300.77 (14.55 oz).

US dollar index has traded up into a really fine rising wedge, which winks, blinks, & nods that the next big move will invoke gravity & not levitation. Fall though 88.17 starts the plunge -- that's the 20 DMA & the lower wedge boundary coinciding.

Euro's wedge is the mirror image of the dollar index, that is, if you held the mirror upside down, because the wedge is pointing downward. Those usually end by breaking out skyward.

Japanese yen rose 0.7% today to 82.88 cents/Y100 (Y120.66=US$1), but will likely not recover in our lifetime.

Gold rose $4.60 to close Comex at $1,194.70; silver rose 2 cents to 1621.6c. Yet in the aftermarket Gold rose as high as $1,209.30 & silver to 1644c. Gold inched up & broke $1,195 about 3:30 p.m., then just shot straight up, cleared resistance at $1,205 & ran to $1,209. That perch was just too slippery, though, and gold fell back. Silver jerked a knee, but showed no such enthusiasm. Both ended Comex above their 20 DMAs.

Tomorrow silver needs to climb through its downtrend line at 1659c. Gold is also nestled right under its downtrend line at $1,210. If they can break those barriers, they can launch a rally.

Tomorrow the US Senate Select Committee on Intelligence will release its report on US torture. Jack Bauer will be disappointed since the report shows that all the barbaric cruelty didn't work. However, I hope somebody in Washington keeps a copy of the report for the day the war crimes trials begin. Whoops! I forgot. In America nobody in charge in government or corporations every has to pay for his crimes. That's only for foreigners & us little people.

On 8 December 568 the Byzantine General Belisarius, having conquered Naples earlier in the year, took Rome from the Ostrogoths. Before that he had re-taken the North African provinces from the Vandals, but they had, well, Vandalized it.

On 8 December 1941 President Franklin Roosevelt delivered his Day of Infamy speech to congress about the bombing of Pearl Harbour. The most surprising thing about the surprise attack is that the US government had broken the Japanese Purple Code months before & knew when & where the attack would come. That's what makes so surprising Roosevelt's or his staff's orders to the US military to position forces for attacks by sabotage, which involves crowding planes together rather than scattering them, and in the event maximized the damage. You can read more in Admiral Theobald's book, The Final Secret of Pearl Harbor.

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
8-Dec-14 Price Change % Change
Gold, $/oz 1,194.70 4.60 0.39%
Silver, $/oz 16.22 0.02 0.12%
Gold/Silver Ratio 73.674 0.193 0.26%
Silver/Gold Ratio 0.0136 -0.0000 -0.26%
Platinum 1,228.40 9.90 0.81%
Palladium 798.80 -4.90 -0.61%
S&P 500 2,075.37 -15.06 -0.72%
Dow 17,852.48 -106.21 -0.59%
Dow in GOLD $s 308.90 -3.04 -0.97%
Dow in GOLD oz 14.94 -0.15 -0.97%
Dow in SILVER oz 1,100.92 -7.92 -0.71%
US Dollar Index 89.16 -0.21 -0.23%
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: 1,203.70      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,236.20 1,245.83 1,245.83
1/2 AE 0.50 619.39 634.95 1,269.90
1/4 AE 0.25 309.70 323.49 1,293.98
1/10 AE 0.10 126.28 131.81 1,318.05
Aust. 100 corona 0.98 1,169.25 1,181.25 1,205.11
British sovereign 0.24 285.05 297.05 1,261.90
French 20 franc 0.19 226.42 229.53 1,229.41
Krugerrand 1.00 1,218.14 1,228.14 1,228.14
Maple Leaf 1.00 1,218.70 1,233.70 1,233.70
1/2 Maple Leaf 0.50 692.13 631.94 1,263.89
1/4 Maple Leaf 0.25 306.94 321.99 1,287.96
1/10 Maple Leaf 0.10 127.59 131.20 1,312.03
Mexican 50 peso 1.21 1,443.92 1,467.92 1,217.49
.9999 bar 1.00 1,207.91 1,219.70 1,219.70
SPOT SILVER: 16.31      
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 12,802.08 13,159.58 18.41
US 40% silver 1/2s 0.30 4,618.23 4,768.23 16.16
100 oz .999 bar 100.00 1,620.50 1,680.50 16.81
10 oz .999 bar 10.00 168.05 169.05 16.91
1 oz .999 round 1.00 16.41 16.96 16.96
Am Eagle, 200 oz Min 1.00 18.06 19.06 19.06
SPOT PLATINUM: 1,228.40      
Plat. Platypus 1.00 1,253.40 1,293.40 1,293.40
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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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