The Moneychanger
Daily Commentary
Tuesday, 10 February a.d. 2015 Browse the commentary archive

The Greeks & Germans are butting heads over Greece's bailout (really bailing out banks Greek & European who hold sorry Greek government debt) & the outcome threatens to blow apart the euro.

If you were the Nice Government Men, how would you handle this crisis? Don't bother weaseling with me about them not intervening in markets. Central banks & governments have battalions of experts who war game such situations in theory, readying themselves for practice.

Back in January when left-wing Syriza won the Greek election by promising to re-negotiate the bail out, "realizers" in Greece began withdrawing what money they had left in Greek banks & sending it abroad. How do you counter that?

Also, stock investors jittery about Greece are liable to sell & hide in cash, sending stocks down. Got to jack those up, NGM!

Whew! What about currencies? Can't let them run wild. Need to keep the euro from crashing through the trap door to the cellar and melting toward the earth's core, so NGM need to support euros. Wouldn't do, either, to support the euro but let the dollar shoot moonward, so the NGM need to lean on that US dollar till it bends -- don't break, just bend.

But even if Greek banks were supported and US & European stocks & the euro straightened and the dollar bent, all would be for naught if silver & gold launched into the heavens, wherefore, until the negotiations are successfully concluded, the NGM must busy themselves selling lots & lots of paper gold.

Whoa! Hold on there! I'm not saying this is what the Nice Government Men in fact ARE doing, only that these are a few of the concerns I'd fix if I were a NGM, perish the thought.

My point is that today and yesterday & as long as this Greek mess draggeth on, we can't be sure whether what we see in markets is real, or Memorex.

Until about 10:50 Eastern time this morning, it looked like stocks were about to enjoy a thoroughly rotten day. But aha! Big buyers stepped in to carry the market up until closing. Dow added 139.55 (0.08%) to 17,868.76. S&P500 levitated 21.85 (1.07%) to 2,068.59.

Trading today left both the Dow & S&P500 above & outside their since-December downtrend lines, and above the 20 & 50 day moving averages in which both indices have lately tangled their feet. This could set stocks up for another run higher which will again make them "stupor mundi" for one last, brief moment.

What meaneth that for the Dow in Gold & Dow in Silver? Well, we don't know, because if metals keep on rising while stocks rise, the DiG & DiS would stay flat or keep dropping. Only if silver & gold took a dive from here would they rise. I reckon that unlikely because silver & gold are rallying off last year's lows, which (for now at least) I count as the lows for the 2011-2014 correction.

Today those indicators did no more than fishhook up, but both ended slightly above their 50 DMAs. Dow in gold ended at G$299.74 gold dollars (14.50 troy ounces), up 1.32%, while the Dow in Silver ended up 1.37% at S$1,369.24 silver dollars (1,059.02 troy ounces).

US dollar index today rose only 15 basis points (0.16%) to 94.82. Its fall out of that small even-sided triangle on 3 February. It has established a downtrend, however, and today closed at the top boundary line. Ought to drop more, but with the Greek cards up in the air, there's just no telling.

Euro lost 0.1% to $1.1314. Sure. Yen lost 0.75 to 83.73. Has begun yet another fall.

Meanwhile, the US 10 year treasury note yield gapped up today to its highest level in a month, and rose for the sixth straight day. Am I left to believe that so many investors now expect the Fed, on recent puny, forged economic statistics, to raise interest rates sooner rather than later? And that US government bonds are catching no safe haven bid from Europe's troubles? Seems plumb odd.

Gold backed off $9.20 (0.74%) to $1,231.60. Silver lost 19.7 cents (1.16%) to 1685.7c.

Silver's correction has formed a bullish falling wedge Today it remained above its 20 DMA. I know y'all are going to say I need one of those jackets that buckle in the back, but silver appears to be readying another big leg up. Only a close below 1640c would gainsay that.

Gold remains above that neckline that has become my obsession. Tomorrow gold will meet it about $1,225 (today's low was $1,230.60). Above gold needs to slice through minor resistance about $1,245 and jump above its 200 DMA at $1,253.16. Skittering around here a couple of days won't hurt anything, provided gold doesn't close below that neckline.

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
10-Feb-15 Price Change % Change
Gold, $/oz 1,231.60 -9.20 -0.74%
Silver, $/oz 16.86 -0.20 -1.16%
Gold/Silver Ratio 73.062 0.305 0.42%
Silver/Gold Ratio 0.0137 -0.0001 -0.42%
Platinum 1,209.30 -13.40 -1.10%
Palladium 766.00 -13.95 -1.79%
S&P 500 2,068.59 21.85 1.07%
Dow 17,868.76 139.55 0.79%
Dow in GOLD $s 299.92 4.55 1.54%
Dow in GOLD oz 14.51 0.22 1.54%
Dow in SILVER oz 1,060.02 20.43 1.96%
US Dollar Index 94.82 0.15 0.16%
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: 1,231.80      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,257.67 1,274.91 1,274.91
1/2 AE 0.50 627.71 652.85 1,305.71
1/4 AE 0.25 316.93 331.05 1,324.19
1/10 AE 0.10 129.23 135.50 1,354.98
Aust. 100 corona 0.98 1,198.96 1,207.96 1,232.36
British sovereign 0.24 292.14 297.14 1,262.28
French 20 franc 0.19 231.70 235.70 1,262.46
Krugerrand 1.00 1,247.81 1,257.81 1,257.81
Maple Leaf 1.00 1,246.80 1,261.80 1,261.80
1/2 Maple Leaf 0.50 708.29 646.70 1,293.39
1/4 Maple Leaf 0.25 314.11 329.51 1,318.03
1/10 Maple Leaf 0.10 130.57 134.27 1,342.66
Mexican 50 peso 1.21 1,474.66 1,485.66 1,232.20
.9999 bar 1.00 1,236.11 1,247.80 1,247.80
SPOT SILVER: 16.85      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 23.00 26.00 33.99
VG+ Peace dollar 0.77 19.00 22.00 28.76
90% silver coin bags 0.72 12,727.00 13,084.50 18.30
US 40% silver 1/2s 0.30 4,779.00 4,929.00 16.71
100 oz .999 bar 100.00 1,675.00 1,735.00 17.35
10 oz .999 bar 10.00 173.50 174.50 17.45
1 oz .999 round 1.00 16.95 17.50 17.50
Am Eagle, 200 oz Min 1.00 18.35 19.20 19.20
SPOT PLATINUM: 1,209.30      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,234.30 1,274.30 1,274.30
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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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