The Moneychanger
Daily Commentary
Thursday, 12 March a.d. 2015 Browse the commentary archive

David Stockman's Contra Corner has an article worth reading about why the dollar is rising. See http://bit.ly/1MvRtdx His comments about the bogus Chinese economic miracle reminds me of something that happened maybe ten years ago. Friend of mine who built turnkey plants in China -- all finished and ready to start, just turn the key -- told me about plants built in the middle of nowhere. That was years ago, but now the stories are surfacing about huge empty high rises, roads to nowhere, etc. in China. But who is surprised? We are asked to believe that central planning communists can engineer an economic miracle. That's a story I've never been able to swallow.

Only our American Socialists in Federal Reserve can do that, Comrade!

Dollar slid 49 basis points to 99.26 today & the Nice Government Men took that as their opportunity to buy S&P500 futures and jack up the stock market. Dow rose 259.83 (1.47%) to 17,895.22. S&P 500 rose to 2,065.95, up 25.71. Note: The Dow is way outside its uptrend line from 2009. S&P barely above today.

Whoops! I shouldn't have said that. NGM are probably listening. Sorry. See y'all in the concentration camp!

Euro took the opportunity to rise 0.81% for a change, reaching the lofty level of $1.0626. Don't look like much on a chart, & surely no turnaround yet. Yen rose 0.19% to 82.44. Same range.

Silver rose 14.8 cents (0.97%) to 1549.3c. Gold closed Comex at 1,152.10, up $1.40 (0.12%).

Friends, you can not build an empire on $1.40 a day.

Five day chart shows a bottom about $1,147.50 yesterday & today. could that be a double bottom? Doesn't act like it yet.

Silver's five day chart looks stronger, with a V-bottom yesterday & a rise back toward 1570c -- but look where it closed, at 1549.3c.

I just can't see any sign either one has turned up yet, and am not convinced the raging dollar has stopped raging. Till it does, I'm sitting tight.

On 12 March 1850 the first US $20 gold piece (DOUBLE eagle) was minted. The Coinage Act of 1792 specified the eagle (about half an ounce) as the largest gold coin. The minting of $20s and $1 gold pieces indicates the glut of gold on the market at the time, thanks to gold discoveries in the US & Australia. Later the Comstock Lode (yes) brought on more, and then South Africa, so the price of gold in terms of silver slipped for decades.

There's a great short article by Antal Fekete, "Silver & Opium," at http://bit.ly/1GKyXzB He very briefly describes the flows of wealth from west to east that moved the British (and Americans) to force opium on China. You ought to think about it because these tides of wealth toward the east & then toward the west are very long term trends. Today it appears the tide is again flowing east.

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
11-Mar-15 Price Change % Change
Gold, $/oz 1,152.10 1.40 0.12%
Silver, $/oz 15.49 0.15 0.96%
Gold/Silver Ratio 74.363 -0.626 -0.83%
Silver/Gold Ratio 0.0134 0.0001 0.84%
Platinum 1,115.90 -0.50 -0.04%
Palladium 786.60 -2.45 -0.31%
S&P 500 2,065.95 25.71 1.26%
Dow 17,895.22 259.83 1.47%
Dow in GOLD $s 321.09 4.28 1.35%
Dow in GOLD oz 15.53 0.21 1.35%
Dow in SILVER oz 1,155.05 5.79 0.50%
US Dollar Index 99.49 -0.49 -0.49%
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: 1,152.80      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,182.77 1,193.15 1,193.15
1/2 AE 0.50 593.18 608.10 1,216.20
1/4 AE 0.25 296.59 309.82 1,239.26
1/10 AE 0.10 120.94 126.23 1,262.32
Aust. 100 corona 0.98 1,120.93 1,129.93 1,152.76
British sovereign 0.24 273.40 278.40 1,182.69
French 20 franc 0.19 216.84 220.84 1,182.87
Krugerrand 1.00 1,166.63 1,176.63 1,176.63
Maple Leaf 1.00 1,160.80 1,177.80 1,177.80
1/2 Maple Leaf 0.50 662.86 605.22 1,210.44
1/4 Maple Leaf 0.25 293.96 308.37 1,233.50
1/10 Maple Leaf 0.10 122.20 125.66 1,256.55
Mexican 50 peso 1.21 1,380.09 1,391.09 1,153.76
.9999 bar 1.00 1,156.83 1,168.80 1,168.80
SPOT SILVER: 15.55      
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 11,865.43 12,222.93 17.10
US 40% silver 1/2s 0.30 4,394.03 4,544.03 15.40
100 oz .999 bar 100.00 1,544.50 1,604.50 16.05
10 oz .999 bar 10.00 160.45 161.45 16.15
1 oz .999 round 1.00 15.65 16.15 16.15
Am Eagle, 200 oz Min 1.00 17.05 17.85 17.85
SPOT PLATINUM: 1,115.90      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,130.90 1,160.90 1,160.90
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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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