The Moneychanger
Daily Commentary
Monday, 12 January a.d. 2015 Browse the commentary archive

Well -- or, "Way-yull," as we say in the South -- I don't really want to talk about anything but silver & gold this evening, but I reckon I'll hit a lick at the others, too, just to look like I'm working.

Stocks daily add evidence to my inference that they peaked in December & are rolling over for the Big Drubbing -- thousands of points down. Dow today fell as low as down 165.79, but "rallied" up to close down ONLY 96.53 (0.54%) at 17,640.84. That's below the 50 & 20 DMAs again, so momentum points down & other indicators agree. Even looking over my shoulder at the possibility stocks might fool me yet and make one last high, I still expect to see them lower tomorrow & next week.

Forgot the S&P500 -- it fell 16.55 (0.81%, more'n the Dow, to 2,028.26). Also had the ladder kicked out from under it, stands below the moving averages, and can only be caught by the last low at 1,992.44. If that misses, then a large trap door opens up.

Dow in Gold and Dow in Silver both kept on tumbling today. Dow in Gold fell 1.3% to G$295.81 gold dollars (14.31 oz). Break of the last low at G$292.30 (14.14 oz) will accelerate the plunge.

Dow in Silver fell only 0.81%, thanks to silver's laziness. Ended at S$1,377.76 (1,065.01 oz).

US dollar index moved sideways but a little higher, up 6 basis points to 92.22. Euro lost only 0.08% to $1.2834 while the Yen gained 0.15% to 84.48.

West Texas Intermediate Crude fell another 4.44% to $46.07 and another new low.

Gold is building steam but silver's not paying attention. Gold jumped $16.70 (1.4%) to close Comex at $1,232.70. Only one resistance level left to crash through. Silver gained on 14.9 cents (0.9%) to 1653.5c.

Go look at this chart of the upside-down head and shoulders in gold, http://scharts.co/1tvDPnr Gold closed today nearly on the neckline, about $1,234. Resistance remains at the December (last) high at $1,239. Rule of thumb for measuring H&S breakouts is that when they break the neckline they will rise the height of the head. This head measures $1,130 to $1,250 or $120. Neckline is now about $1,235, so $1,235 + $120 = $1,355. Not coincidently tough resistance resides there. 'Twould surprise no one if gold took a couple of days to crack this line, but once it does, 'twill run.

Silver doesn't look bad, it just can't build any momentum. Needs to pass break out of that diamond reversal pattern (it's right on the line now) & clear 1675c resistance. More to the point, silver needs to beat October's 1782c high then push through old support/resistance at 1860c. You'll find a picture at http://scharts.co/1Benapx

Gold has set itself up in the best position I have seen for many months, and will drag silver along for the ride. Start buying on any gold close above $1,240, both silver & gold.

On 12 January 1970 the Igbo nation of Biafra lost its war for independence from Nigeria. Nobody in the west would aid them, and stood by while the Nigerian government carried out a genocide against them. One suspects oil was involved somewhere.

On 12 January 1879 Great Britain invaded Zululand, expecting a quick & easy victory. Didn't turn out that way. The Zulus wiped out a British force of 1,350 at Isandlwana ten days later. Never despise your enemy.

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
12-Jan-15 Price Change % Change
Gold, $/oz 1,232.70 16.70 1.37%
Silver, $/oz 16.54 0.15 0.91%
Gold/Silver Ratio 74.551 0.341 0.46%
Silver/Gold Ratio 0.0134 -0.0001 -0.46%
Platinum 1,240.40 11.30 0.92%
Palladium 814.10 13.95 1.74%
S&P 500 2,044.81 -17.33 -0.84%
Dow 17,640.84 -96.55 -0.54%
Dow in GOLD $s 295.83 -5.70 -1.89%
Dow in GOLD oz 14.31 -0.28 -1.89%
Dow in SILVER oz 1,066.88 -15.59 -1.44%
US Dollar Index 92.22 0.06 0.07%
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: 1,233.30      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,264.13 1,276.47 1,276.47
1/2 AE 0.50 634.63 650.57 1,301.13
1/4 AE 0.25 317.32 331.45 1,325.80
1/10 AE 0.10 129.39 135.05 1,350.46
Aust. 100 corona 0.98 1,198.00 1,210.00 1,234.44
British sovereign 0.24 292.50 297.50 1,263.79
French 20 franc 0.19 231.98 235.98 1,263.97
Krugerrand 1.00 1,246.87 1,256.87 1,256.87
Maple Leaf 1.00 1,248.30 1,263.30 1,263.30
1/2 Maple Leaf 0.50 709.15 647.48 1,294.97
1/4 Maple Leaf 0.25 314.49 329.91 1,319.63
1/10 Maple Leaf 0.10 130.73 134.43 1,344.30
Mexican 50 peso 1.21 1,479.43 1,503.43 1,246.94
.9999 bar 1.00 1,237.62 1,249.30 1,249.30
SPOT SILVER: 16.58      
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 21.00 27.45
90% silver coin bags 0.72 12,855.70 13,213.20 18.48
US 40% silver 1/2s 0.30 4,699.35 4,849.35 16.44
100 oz .999 bar 100.00 1,648.00 1,708.00 17.08
10 oz .999 bar 10.00 170.80 171.80 17.18
1 oz .999 round 1.00 16.68 17.23 17.23
Am Eagle, 200 oz Min 1.00 18.33 18.98 18.98
SPOT PLATINUM: 1,240.40      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,265.40 1,305.40 1,305.40
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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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