The Moneychanger
Daily Commentary
Monday, 18 May a.d. 2015 Browse the commentary archive

Sometimes you bump across an article that is extraordinary insightful and informative. I know not Neil Garfield, but his article "Credit Death Watch" offers an articulate and succinct view of the last 35 years' changes in accounting & finance that have landed us in the Never-Never Land of finance. You'll find it at https://livinglies.wordpress.com/2015/05/15/credit-death-watch/ Superb.

Cut through the storm of hogwash about a new high in the Dow and what do you find? It's 10 points or 0.06% higher than the last high in March, & the Dow Transports & Dow Utilities are nowhere near confirming. This is more of the same inching to new highs that signals exhaustion. Be patient.

Dow rose 26.32 (0.14%) to 18,298.88. S&P500 rose 6.47 (0.3%) to 2,129.20.

But the best lens for the "new high" in stocks is the Dow in Metals. Dow in gold actually DROPPED today, 0.4% to 14.93 oz. Dow in silver tumbled 0.90% to 1,033.25 oz, barely above the 1,030.52 oz. 200 DMA. The Gator Jaws are chomping down.

As I suspected, the US dollar index tried to rally out of that falling wedge today. Rose 109 basis points (1.17%) to 94.27. That doesn't effect a turnaround, but it might foretell one.

Silver & gold kept on rising today. Gold added $2.30 (0.19%) to close Comex at $1,227.80. Silver rose 16.7 cents (0.95%) to 1771.2c.

Note that silver & gold continue manfully marching higher even though stock rose, the US dollar index rose, and interest rates rose.

Silver & gold have both climbed through their 200 day moving averages. Silver is approaching overbought on the RSI. All the last five days' splendor will be spent for naught if silver & gold can't keep moving.

Resistance has been surprisingly strong in the $1,220s, but gold keeps moving forward. Another hurdle awaits at $1,240, but the strategic goal is $1,308. For silver, it's 1860c.

All this rise won't really be for naught. The tenor of this rise differs from what we've usually seen during this correction. Beneath the market lies tremendous support. We'll get a rest along here someplace, but it appears to me that the long correction is over.

Mercy! I sure hope so.

On 18 May 1933 the Tennessee Valley Authority was founded, a major victory for Roosevelt's American fascism. The government owned corporation was given free rein to run people off farms their families had owned for centuries so they could flood the river valleys, build dams, & generate electricity. During the 1930s all the world's dictators were building hydroelectric plants, so TVA was the only way Roosevelt could keep up with the Stalinses. Memory fails me in recalling how long it took to amortize this monstrosity, but 'twarn't nothing to what was promised. Today most of TVA's electric generation is nuclear (34%, yeah, how'd y'all like to have those in your back yard), 32% coal, gas 11%, and hydro? A piddling nine percent. Dam. I reckon somebody thought that was worth destroying a way of life for.

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
18-May-15 Price Change % Change
Gold, $/oz 1,227.80 2.30 0.19%
Silver, $/oz 17.71 0.17 0.95%
Gold/Silver Ratio 69.320 -0.529 -0.76%
Silver/Gold Ratio 0.0144 0.0001 0.76%
Platinum 1,177.40 9.40 0.80%
Palladium 793.00 -1.95 -0.25%
S&P 500 2,129.20 6.47 0.30%
Dow 18,298.88 26.36 0.14%
Dow in GOLD $s 308.09 -0.13 -0.04%
Dow in GOLD oz 14.90 -0.01 -0.04%
Dow in SILVER oz 1,033.13 -8.33 -0.80%
US Dollar Index 94.27 1.09 1.17%
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: 1,225.40      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,253.58 1,268.29 1,268.29
1/2 AE 0.50 624.44 646.40 1,292.80
1/4 AE 0.25 315.28 329.33 1,317.31
1/10 AE 0.10 128.56 134.18 1,341.81
Aust. 100 corona 0.98 1,193.93 1,202.93 1,227.23
British sovereign 0.24 290.62 303.62 1,289.82
French 20 franc 0.19 230.50 234.50 1,256.02
Krugerrand 1.00 1,237.65 1,247.65 1,247.65
Maple Leaf 1.00 1,233.40 1,249.40 1,249.40
1/2 Maple Leaf 0.50 704.61 643.34 1,286.67
1/4 Maple Leaf 0.25 312.48 327.79 1,311.18
1/10 Maple Leaf 0.10 129.89 133.57 1,335.69
Mexican 50 peso 1.21 1,467.00 1,478.00 1,225.84
.9999 bar 1.00 1,229.69 1,237.40 1,237.40
SPOT SILVER: 17.67      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 23.00 26.00 33.99
VG+ Peace dollar 0.77 18.50 21.00 27.45
90% silver coin bags 0.72 13,095.23 13,452.73 18.82
US 40% silver 1/2s 0.30 5,019.43 5,169.43 17.52
100 oz .999 bar 100.00 1,756.50 1,806.50 18.07
10 oz .999 bar 10.00 175.65 181.15 18.12
1 oz .999 round 1.00 17.77 18.27 18.27
Am Eagle, 200 oz Min 1.00 19.17 20.02 20.02
SPOT PLATINUM: 1,177.40      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,192.40 1,222.40 1,222.40
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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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