The Moneychanger
Daily Commentary
Monday, 5 January a.d. 2015 Browse the commentary archive

On the wall where I can see it frequently hangs a saying:

"In a bear market, money returns to its rightful owner."

Any know-nothing knothead can make money in a bull market, you just have to buy & wait, but in a bear market all those proud Know-nothings who had puffed themselves up over their investing genius are relieved of their easy money.

"In a bear market, money returns to its rightful owner." Count on it.

Today zillions of dollars went to money heaven, or, out of the pockets of some into the pockets of the not so credulous. Stock indices flowed red across the board, & deep red it was. Dow Industrials skidded down 331.34 (1.86%) to 17,501.65. S&P500 dove 37.62 (1.83%) to land at 2,020.58.

Where does that leave them? Both are below their 20 & 50 day moving averages. 200 DMAs look at 16,953.82 & 1,959.4. Last lows were at 17,067.59 (watch that number) & 1,972.56. Volume is rising, all indicators point down.

Tomorrow, stocks will be cheaper than they were today. If not tomorrow, Wednesday.

Dow measured in metals nose-dove, both falling below THEIR 20 & 50 DMAs. Remember, remember, both have been sketching out Gator Jaws patterns, megaphones or broadening tops that are a fatal reversal pattern, but slow to unfold.

Dow in gold fell over G$10 today, barely holding on above G$300 with a close at G$300.15 (14.52 troy ounces). Bottom Jaw stands tomorrow about G$293.54 or 14.2 troy ounces. All indicators have pulled the plug.

Dow in silver lost S$63.00 silver dollars (48.73 oz) to end the day 4.31% lower at S$1,397.68 (1,081.02). Bottom jaw tomorrow bites about S$1,318.79 (1,020 oz).

By now y'all have caught on that what's happening in oil is not the product of natural market forces, right? It's widely mooted that the Saudis have decided to spike the US oil shale industry by continuing to pump their cheaper oil, but that doesn't explain it all. I bet if you look at some of those sell tickets in the futures market you'll find Nice Government Men fingerprints. No doubt the present administration is numb enough to reality that they really are picking a war with Russia, whose government derives 50% of its revenue from oil. Never pays to back a bear into a cave. You go in there to get him, he might come out instead of you, and Bernard O'Bama ain't no Davy Crocket, "b'ar ciller".

WTIC closed down 5.42% at $49.95/barrel.

Having punched through the top of that wedge on Friday the US dollar index predictably rose today, up 0.24% or 22 basis points to 91.65, and punching into nosebleed Oversold atmosphere. If the causality-challenged Masters of the Universe at the Fed are causing this, they are about to get a lesson in their own stupidity. They will crush US exporting firms, and cause big problems for all importers, too.

Euro sank beneath $1.2000 today, at one point as low as $1.1893, but ending down "only" 0.57% at $1.1934. I reckon the central banker criminals are making it "scary" enough to sell more inflation (QE) to the suckers in the public. Tis a dangerous game.

Yen actually rose 0.72% to 83.6c/Y100, not quite above its 20 DMA. A rally may be in store.

All right! I've had a gutful of this up and down in silver & gold. Today gold rose $17.90 or 1.51% to $1,203.90 while silver dashed by it, up 2.83% (44.5 cents) to 1617.9.

Here's my gutful: it don't say what you think it says. It don't speak weakness, it speaks strength, 'cause they keep on bouncing right back.

First there was gold's plunge on 2 January, only to end the day HIGHER. First half of a key reversal. Today came the second half, a sharply higher close, and above the 50 ($1,192.59) and 20 9$1,198.08) day moving averages.

Whoa, whoa, don't get in such a hurry you forget this? That low on 2 January sank down & reversed exactly where, where I say? Right at the shoulder line of my putative upside-down head & shoulders, 'zackly what it should have done if it really is an UDH&S. If so, next step will be to run for the neckline above around $1,230/$1,240. Go look at the chart,

Same holds true for silver, & a key reversal. Since the 1 December bear raid that turned out to be a b'ar-killer, silver has found plenteous, gleeful buyers around 1550c. Sure enough, came last Friday when the bears played their game again, silver stopped at 1551c. Today it jumped up 44.5% off that trampoline, and closed right on the 20 DMA (1618c). MACD has turned up, along with Rate of Change and RSI.

Headed higher, both of 'em.

Need confirmation, though, silver above 1650c and gold above $1,210.

Dad-durn! It's good to be alive today. Well, every day, but today especially.

On 5 January 1836 Davy Crockett arrived in Texas, just in time for the fun.

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
5-Jan-15 Price Change % Change
Gold, $/oz 1,203.90 17.90 1.51%
Silver, $/oz 16.18 0.45 2.83%
Gold/Silver Ratio 74.411 -0.967 -1.28%
Silver/Gold Ratio 0.0134 0.0002 1.30%
Platinum 1,210.10 7.10 0.59%
Palladium 793.20 -1.65 -0.21%
S&P 500 2,020.58 -37.62 -1.83%
Dow 17,501.65 -331.34 -1.86%
Dow in GOLD $s 300.52 -10.31 -3.32%
Dow in GOLD oz 14.54 -0.50 -3.32%
Dow in SILVER oz 1,081.75 -51.65 -4.56%
US Dollar Index 91.65 0.22 0.24%
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SPOT GOLD: 1,205.00      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,236.33 1,247.18 1,247.18
1/2 AE 0.50 620.06 635.64 1,271.28
1/4 AE 0.25 310.03 323.84 1,295.38
1/10 AE 0.10 126.42 131.95 1,319.48
Aust. 100 corona 0.98 1,170.51 1,182.51 1,206.40
British sovereign 0.24 285.36 297.36 1,263.21
French 20 franc 0.19 226.66 229.77 1,230.71
Krugerrand 1.00 1,219.46 1,229.46 1,229.46
Maple Leaf 1.00 1,220.00 1,235.00 1,235.00
1/2 Maple Leaf 0.50 692.88 632.63 1,265.25
1/4 Maple Leaf 0.25 307.28 322.34 1,289.35
1/10 Maple Leaf 0.10 127.73 131.35 1,313.45
Mexican 50 peso 1.21 1,445.48 1,469.48 1,218.78
.9999 bar 1.00 1,209.22 1,221.00 1,221.00
SPOT SILVER: 16.16      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 19.50 22.50 29.41
VG+ Peace dollar 0.77 16.50 18.50 24.18
90% silver coin bags 0.72 12,444.58 12,802.08 17.91
US 40% silver 1/2s 0.30 4,573.98 4,723.98 16.01
100 oz .999 bar 100.00 1,605.50 1,665.50 16.66
10 oz .999 bar 10.00 166.55 167.55 16.76
1 oz .999 round 1.00 16.26 16.81 16.81
Am Eagle, 200 oz Min 1.00 17.91 18.56 18.56
SPOT PLATINUM: 1,210.10      
Plat. Platypus 1.00 1,235.10 1,275.10 1,275.10
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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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