The Moneychanger
Daily Commentary
Wednesday, 20 May a.d. 2015 Browse the commentary archive

Just for laughs, let's suppose that Franklin, Barry, & Larry formed a conspiracy in the physical gold and silver market to raise the premiums on gold coins. Let's suppose, contrary to known facts, that we do enough business to pull it off. Further, imagine the yankee [in]Justice Department gets wind what we are doing, indicts us, and convicts us. Do you suppose we would get off with a fine? Mercy, no. After publicly scalping us, they would arrange a longterm lease on a condo in Alcatraz.

Yet today, in all reality, five of the worlds largest banks -- JPMorgan Chase, Citigroup, Barclays, Royal Bank of Scotland, and UBS pled guilty to criminal charges of manipulating currency exchange rates and were fined $5.7 billion.

Oddly, these legal fictions -- corporations -- who the law pretends are persons, are fined for this criminal behavior. Yet no natural persons, you see, no traders, managers, uebermanagers, or high-high managers knew anything about it, so none of them were charged criminally, just the corporation. And since a corporation has no soul to damn and no body to kick, well, the yankee government just fines them.

Oh, and it doesn't hurt that these are megabanks. O ye fellow-mushrooms, there are two kinds of law: the law that applies to them, and the law that applies to us, and their law never puts any BODY into jail.

On to the markets, which we all know are never rigged or manipulated and are run by trustworthy people overseen by diligent, capable, & competent government regulators.

Stocks sputtered again today, unable to hold on to or better yesterday's gains. Dow lost 26.99 (0.15%) to 18,285.45 & the S&P500 lost 0.09% or 1.98 to close at 2,125.85.

Yesterday's gold fall combined with barely higher stocks sent the Dow in Gold & Dow in silver up. Dow in gold closed barely above its intertwined 20 & 50 DMAs. Today it hooked down 0.25% to end at G$312.76 gold dollars (15.13 oz). Chart's here,

Because silver has outperformed gold for the past couple of months, the Dow in silver looks quite different. By 18 May the rally in silver had taken it to the 200 DMA --- yes. It has risen from S$1,335.92 (1,033.25 oz) to S$1,382.27 (1,069.1 oz). Only a matter of time before it falls over the cliff. Chart's here,

FOMC released minutes today which the masses interpreted as meaning the Fed won't raise interest rates before September I offer this statement not for the truth of the matter, but as evidence only of what the masses conjecture, having gazed into the entrails of the FOMC minutes. I don't think they can raise interest rates at all, or not much, lest they risk a catastrophe.

Counterintuitively, since higher rates lead to higher currency exchange rates, the US dollar Index ROSE 20 basis points (0.21%) to 95.57. This is a countertrend rally that should stall about 96.50 resistance or at the 50 DMA, now 97.15.

Euro sank 0.48% to $1.1095. Yen fell 0.49% to 82.44. No action either place.

Also counterintuitively US interest rates rose & fell. The 10 year T-note fell 0.49% to 2.251% and the 30 year bond rose 0.49% to 3.053%. Can't make sense out of that, but both remain in rally mode above their 200 DMAs.

Gold rose $2.00 (0.2.%) on Comex and silver lifted 4.2 cents (0.3%) to 1709.2c.

Today's action doesn't tell us much. Silver & gold held on lukewarmly to the support levels where they skidded to a halt yesterday. Silver did actually close the day above its 200 DMA, barely but gold did not.

More good news: both remain above their faster moving averages, the 20 & 50. That's positive, and this reaction might have a positive result by not dropping much lower. And the Gold/Silver ratio remains below its 200 DMA, which is general rally mode.

As always, however the burden of proof lies on any downtrending market to show it has turned up by confirming with successively higher highs and higher lows.

So for right now, we watch patiently, and keep our noses clean by staying out of international conspiracies to manipulate interest rates, gold & silver prices, stock prices, bond prices, and cat food prices. Y'all better be good now, 'cause y'all don't have no corporation to hide behind & they'll put y'all in jail for sure.

In one of the bloodiest incidents in the bloody 30 Years' War on 20 May 1531, forces of the Holy Roman Empire under Johann Tilly seized Magdeburg and massacred most of the inhabitants. The 30 Years' War was so terrible that over 100 years later when Goethe visited some areas they were still depopulated, 90% of their population having been killed. Germany lost 25 to 40% of her population. Almost half the men died.

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
20-May-15 Price Change % Change
Gold, $/oz 1,208.90 2.00 0.17%
Silver, $/oz 17.09 0.04 0.25%
Gold/Silver Ratio 70.729 -0.057 -0.08%
Silver/Gold Ratio 0.0141 0.0000 0.08%
Platinum 1,155.80 6.00 0.52%
Palladium 776.75 1.70 0.22%
S&P 500 2,125.85 -1.98 -0.09%
Dow 18,285.40 -26.99 -0.15%
Dow in GOLD $s 312.67 -0.98 -0.31%
Dow in GOLD oz 15.13 -0.05 -0.31%
Dow in SILVER oz 1,069.82 -4.22 -0.39%
US Dollar Index 95.57 0.20 0.21%
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SPOT GOLD: 1,209.70      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,237.52 1,252.04 1,252.04
1/2 AE 0.50 616.44 638.12 1,276.23
1/4 AE 0.25 311.24 325.11 1,300.43
1/10 AE 0.10 126.91 132.46 1,324.62
Aust. 100 corona 0.98 1,178.63 1,187.63 1,211.62
British sovereign 0.24 286.90 299.90 1,274.00
French 20 franc 0.19 227.54 231.54 1,240.20
Krugerrand 1.00 1,223.01 1,233.01 1,233.01
Maple Leaf 1.00 1,217.70 1,233.70 1,233.70
1/2 Maple Leaf 0.50 695.58 635.09 1,270.19
1/4 Maple Leaf 0.25 308.47 323.59 1,294.38
1/10 Maple Leaf 0.10 128.23 131.86 1,318.57
Mexican 50 peso 1.21 1,448.21 1,459.21 1,210.26
.9999 bar 1.00 1,213.93 1,221.70 1,221.70
SPOT SILVER: 17.09      
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 12,752.03 13,109.53 18.34
US 40% silver 1/2s 0.30 4,848.33 4,998.33 16.94
100 oz .999 bar 100.00 1,698.50 1,748.50 17.49
10 oz .999 bar 10.00 169.85 175.35 17.54
1 oz .999 round 1.00 17.19 17.69 17.69
Am Eagle, 200 oz Min 1.00 18.59 19.44 19.44
SPOT PLATINUM: 1,155.80      
Plat. Platypus 1.00 1,170.80 1,200.80 1,200.80
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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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