The Moneychanger
Daily Commentary
Wednesday, 15 July a.d. 2015 Browse the commentary archive

This morning as we were getting ready I said to my wife Susan, "The problem with Greece is government -- everybody has tried to make a nest for himself on the government teat. They're all like pigs feeding on a sow: if nobody feeds the sow, nursing starves her to death."

"That's just like the U.S.!" sweet Susan shot back.

"Precisely. Between Greece & the US only quantity differs, not quality."

Since Bismarck every Western nation has installed the "social[ist] state," which claims to be able to support everyone in infancy, infirmity, & old age & to run the economy. But with a growing number of pigs sucking on the teats year by year, eventually feeding 'em pulls down the sow till she dies. Central banks try to feed the sow paper, but a sow can't thrive on paper. Eventually, nursing all those pigs pulls the sow down so that she starves to death. THIS is the crisis facing Greece & the West, & unless they get those pigs off that sow, she'll die. Until the government teat is taken away from all the parasites and the economy freed from government & central bank control, nothing will improve & the Western economies, including the US, will keep lurching toward destruction.

A WARNING FROM GREECE FOR THOSE WHO STILL TRUST BANK SAFETY DEPOSIT BOXES. On 5 July Reuters reported that the Greek Deputy Financial Minister said that part of the measure closing the banks was that "people would also not be allowed to withdraw cash from safe deposit boxes." Why not? You figure it out. Reuters report here, http://reut.rs/1fJOuFn Interpretation from EFT Daily News at http://bit.ly/1I33lr1 Only way to stay out of a bar fight is to stay out of the bar.

Y'all remember how to tell when a central bank official is lying, right? Sure, her lips are moving. So, Janet Yellen spoke to congress today, but it was the same old hogwash, every day in every way the economy is getting better and better. Y'all believe that, doncha? Sure, sure.

Stocks ran out of gas today, but remain above the 50 DMA. Dow fell 3.41 (0.02%) to 18,050.17 while the S&P500 shaved off 1.55 (0.7%) to 2,107.40.

On a metals' plunge the Dow in Gold rose 0.58% to 15.73 ounces. Dow in silver bumped up 1.95% to 1,199.51 oz. I'm cliffhanging.

US dollar index rose 50 basis points (0.51%) to 97.29. That almost dispels all doubt. Tomorrow it ought to close above the last high (97.45) to confirm its rally. Really doesn't need any confirmation, though.

Gold tumbled $6.10 (0.53%) while silver skidded 26.7% (1.75%) on Comex. Closes were $1,147.20 and 1502.8c.

Gold remains in the falling wedge I spoke of yesterday, but stabbed into that support line rising gently from the November low. Low came at 1$1,141.90, close to that $1,130 low. If you're ever going to see that, will probably be tomorrow.

Silver fell down out of that little even sided triangle I mentioned yesterday, and hit a low of 1496c. Every reason to expect it will drop back at least briefly to or near the 7 July low at 1462c. Should happen tomorrow.

Gold/Silver ratio is at 76.338, not as high as 7 July's 77.084. Oh, it gapped up today, but if silver & gold were bottoming here, the ratio would reinforce that with a lower high. Just speculating.

Once again, my operating theory is that silver & gold are fulfilling cyclical & seasonal lows in this time window, and that will mark the end of the long bear phase from 2011. Alternative interpretation is that I am plumb wrong & silver & gold will drop a lot more. I tell you that to make the risk plain, & don't kid yourself. No matter how emphatically anybody argues one interpretation or the other, nobody has a crystal ball.

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
15-Jul-15 Price Change % Change
Gold, $/oz 1,147.20 -6.10 -0.53%
Silver, $/oz 15.03 -0.27 -1.75%
Gold/Silver Ratio 76.338 0.934 1.24%
Silver/Gold Ratio 0.0131 -0.0002 -1.22%
Platinum 1,021.60 -6.30 -0.61%
Palladium 641.90 -14.20 -2.16%
S&P 500 2,107.40 -1.55 -0.07%
Dow 18,050.17 -3.41 -0.02%
Dow in GOLD $s 325.25 1.66 0.51%
Dow in GOLD oz 15.73 0.08 0.51%
Dow in SILVER oz 1,201.10 20.74 1.76%
US Dollar Index 97.29 0.50 0.52%
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: 1,149.90      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,185.55 1,190.15 1,190.15
1/2 AE 0.50 585.94 606.57 1,213.14
1/4 AE 0.25 295.84 309.04 1,236.14
1/10 AE 0.10 120.63 125.91 1,259.14
Aust. 100 corona 0.98 1,119.24 1,128.24 1,151.03
British sovereign 0.24 272.72 285.72 1,213.75
French 20 franc 0.19 216.30 220.30 1,179.95
Krugerrand 1.00 1,170.60 1,180.60 1,180.60
Maple Leaf 1.00 1,157.90 1,173.90 1,173.90
1/2 Maple Leaf 0.50 661.19 603.70 1,207.40
1/4 Maple Leaf 0.25 293.22 307.60 1,230.39
1/10 Maple Leaf 0.10 121.89 125.34 1,253.39
Mexican 50 peso 1.21 1,379.39 1,390.39 1,153.18
.9999 bar 1.00 1,153.92 1,161.90 1,161.90
SPOT SILVER: 15.14      
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 12,827.10 13,184.60 18.44
US 40% silver 1/2s 0.30 4,274.55 4,424.55 15.00
100 oz .999 bar 100.00 1,504.00 1,554.00 15.54
10 oz .999 bar 10.00 150.40 155.90 15.59
1 oz .999 round 1.00 15.24 15.74 15.74
Am Eagle, 200 oz Min 1.00 16.64 17.49 17.49
SPOT PLATINUM: 1,021.60      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,036.60 1,066.60 1,066.60
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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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