The Moneychanger
Daily Commentary
Thursday, 8 January a.d. 2015 Browse the commentary archive

Yes, yes, yesterday's commentary prices below contained an error. I mistyped the gold spot price then current as $1,613.20, roughly $400 higher than the $1,210.60 Comex close. That was an error. Please forgive me. I operate in haste at day's end, and, unlikely as it sounds, I occasionally err.

The heart of contrarian investing is to watch what the crowd does, & do the opposite. Right now, you couldn't find a radioactive dollar bear with a Geiger counter, because there ain't no dollar bears, period. Everybody's convinced the dollar is going higher, which means they've already placed their bets that way. Trouble is, who's left to buy it, if everybody already has?

Their case is built on expecting the Fed will raise interest rates, but how can the Fed do that in the face of a struggling economy? Worse yet, a rising dollar wreaks havoc on American industries' ability to compete overseas. Whoops, it also has some debt default implications for all those borrowers outside the US, some of them sovereign nations, who have to pay back now more expensive bucks.

Long & the short is, the Fed will shortly find its fingers in the wringer & begin exercising their jawbones to talk the dollar down. Either that, or they've lost their feeble minds & in fact want & intend to destroy the American economy.

That's certainly one explanation.

Stocks kept on jubilatin' today, the Dow rising 323.35 (1.84) to 17,907.87. S&P500 rose 36.24 (1.79%) to 2,062.14. That puts both indices above their 20 & 50 day moving averages. Give 'em another day or two to see what they have in mind, but I am still inclined to favor gravity.

Dow in gold and Dow in Silver tangled their feet in the 20 & 50 day moving averages, coming up from beneath. DiG closed at G$306.15 (14.81 troy ounce). Funny how nobody at all thinks of the Dow in Gold DOLLARS, but it still has clustered around that G$300 gold mark. (G$20.6718 = 1 troy ounce)

Dow in silver climbed 2.8% to S$1,413.96 silver dollars (1,093.61). (S$1.2929 = 1 troy ounce).

Both remain in the Gator Jaws pattern, ready to fall out of that broadening top.

US dollar index is just a-climbin' & a-climbin', with no end in sight, except the one I discussed above. Dollar index is hugely overbought on the RSI. Today it added 36 basis points (0.4%) to close at 92.57.

Euro fell more, to a new low at $1.1793, down 0.38% while the Yen also fell 0.38% to 83.56c/Y100.

WTIC rose again today, 0.08% to US$48.79/barrel.

Steve Saville mentioned in a report today that gold has broken out to the upside against the Euro & Yen, and, I would argue, the British pound sterling, too.

Euro Gold is the most dramatic, breaking above 15 month resistance about 990 - 1000 to close at 1,025 today. Chart's here,

Yen gold is pretty clear too, but still needs to climb above Y14,827, but it has completed a 17 month pattern. Closed today at 14,460. Chart's at

Pound gold has broken out of a 12-month even-sided triangle and closed today at 801, but needs to prove itself by climbing over 837.20.

This gold strength against other scrofulous, scurvy fiat currencies is exactly what we want to see. Once the dollar breaks, gold will soar.

But its wings were clipped today. Gold dropped $2.20 (0.18%) to $1,208.40. Silver dropped 0.96% or 15.9 cents to 1635.1 cents.

Yes, yes, gold dropped below $1,210, but it is correcting, now isn't it? Remains above 20 & 50 DMAs ($1,198.59 & 1191.59 & 1616c & 1619c). That 20 DMA might make a good target for 'em.

Gold/Silver ratio went the wrong way today, rising to 73.904, above the 50 dma but below the 20. It is possible that silver might trade as low as 1575 cents & gold as low at $1,200 - $1,190 just to scare the life out of us, but they won't fall off the face of the earth. This is just a little correction.

. . . he said, biting his nails.

On 10 January a.d. 794 Vikings attacked and sacked the monastery at Lindisfarne Island, off the coast of Northumberland.

On 8 January 1815 Tennessee Volunteers (and some from Kentucky) led by Tennessean Andrew Jackson saved y'all's yankee bacon at the Battle of New Orleans. If he hadn't done that y'all would all be singing God Save the Queen instead of the Star Spangled Banner, & be forced to drink tea -- HOT tea -- three times a day.

On 8 January 1835 for the first and only time US government debt reached zero, in the presidency of Andrew Jackson, who, y'all may not know, came from Tennessee.

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-Jan-15 Price Change % Change
Gold, $/oz 1,208.40 -2.20 -0.18%
Silver, $/oz 16.35 -0.16 -0.96%
Gold/Silver Ratio 73.904 0.578 0.79%
Silver/Gold Ratio 0.0135 -0.0001 -0.78%
Platinum 1,221.70 1.00 0.08%
Palladium 793.10 0.65 0.08%
S&P 500 2,062.14 36.24 1.79%
Dow 17,907.87 323.35 1.84%
Dow in GOLD $s 306.35 6.08 2.02%
Dow in GOLD oz 14.82 0.29 2.02%
Dow in SILVER oz 1,095.22 30.13 2.83%
US Dollar Index 92.57 0.36 0.39%
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: 1,208.80      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,240.23 1,251.11 1,251.11
1/2 AE 0.50 622.02 637.64 1,275.28
1/4 AE 0.25 311.01 324.87 1,299.46
1/10 AE 0.10 126.82 132.36 1,323.64
Aust. 100 corona 0.98 1,174.20 1,186.20 1,210.16
British sovereign 0.24 286.26 298.26 1,267.03
French 20 franc 0.19 227.38 230.48 1,234.51
Krugerrand 1.00 1,223.31 1,233.31 1,233.31
Maple Leaf 1.00 1,223.80 1,238.80 1,238.80
1/2 Maple Leaf 0.50 695.06 634.62 1,269.24
1/4 Maple Leaf 0.25 308.24 323.35 1,293.42
1/10 Maple Leaf 0.10 128.13 131.76 1,317.59
Mexican 50 peso 1.21 1,450.04 1,474.04 1,222.56
.9999 bar 1.00 1,213.03 1,224.80 1,224.80
SPOT SILVER: 16.33      
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 12,712.70 13,070.20 18.28
US 40% silver 1/2s 0.30 4,625.60 4,775.60 16.19
100 oz .999 bar 100.00 1,623.00 1,683.00 16.83
10 oz .999 bar 10.00 168.30 169.30 16.93
1 oz .999 round 1.00 16.43 16.98 16.98
Am Eagle, 200 oz Min 1.00 18.08 18.73 18.73
SPOT PLATINUM: 1,221.70      
Plat. Platypus 1.00 1,246.70 1,286.70 1,286.70
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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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