The Moneychanger
Daily Commentary
Tuesday, 29 September a.d. 2015 Browse the commentary archive

Sturgeon's Revelation says that 90% of everything is crap. I'm not sure 90% of the news is crap, but most of it is not worth bothering with, & some great percentage of the media & internet people who massage the news don't repay listening to, but now & then something important turns up. Here are a couple of those pieces.

Zero Hedge published an article yesterday, "UBS Is About To Blow The Cover On A Massive Gold-Rigging Scandal." Read it here,

Y'all have watched as giant banks have paid multi-zillion dollar settlements for rigging every kind of market, from interest rates to kumquats. Now -- surprise, surprise, after Gold Anti-Trust Action Committee (GATA) has been exposing it for more than 15 years -- German and Swiss regulators are closing in on gold market manipulation.

What do all these settlements have in common? The same mega-banks are the perpetrators, they pay piddlin' fines compared to the prodigious pockets they've picked, and no perp ever goes to prison. Whoops, they also show that most markets in the world today are manipulated, either by the market makers or by governments.

Wait, wait, I've got to grab my wastebasket and puke. All this pus oozes out of the same people who plump for "free markets" and pose as Captains of Capitalism when they're simply Captains of Cronyism who know their government buddies will never indict them. There's a proverb in Ecclesiastes, "Because sentence against an evil work is not executed speedily, therefore the heart of the sons of men is fully set in them to do evil." Slow or speedy, a surprise awaits them.

Another article appeared on Zero Hedge yesterday, "Glencore Implodes," at Glencore is an Anglo-Swiss corporation, tenth largest in the world, that trades & supplies commodities: 60% of the zinc market, 50% of copper, 9% of grains, and 3% of the oil market. It grew out of Marc Rich & Company in the 1990s -- y'all remember, the same Marc Rich indicted for tax evasion & illegal oil deals with Iran during the Iran Hostage Crisis. Yep, the same one Prexy Bill Clinton, moved only by his native compassion I'm sure, pardoned just as he was leaving office. Right, he pardoned Rich even before he stood trial. Neat deal, huh?

Rich's key to success was leverage, financing his purchases with bank credit. It appears his successors followed in his footsteps, raking in larger and larger market share, and piling debt higher and higher. The stock has collapsed from $227 in July to 77 today. Here's a chart.

I mention Glencore because this is the kind of bankruptcy that can suck down the whole world into the maelstrom of "systemic collapse." Not saying it will, only that the scale, like Lehman Brothers, is sufficient.

With those cheery thoughts behind us, let's look at today's markets.

Stocks today went through six -- count 'em, six -- reversals. And after all that sound and fury, it signified only a Dow 47.24 (0.3%) higher at 16,049.13. S&P500 wasn't that peppy, either, up 2.32 (0.12%) to 1,884.09. Stocks are on the edge of a wet and slippery cliff, and they ain't Indiana Jones & have no whip handy. More blood and tears will flow, much more.

So stocks are falling, and the dollar is falling, too. Lost 0.14 (0.15%) today to end at 96.04. I see by the yield on 10 year Treasury notes (down yesterday & again today), that bond prices are rising, which makes sense for money fleeing stocks. But what does puzzle me is the dollar continuing to erode. Money running into dollars usually means "running into treasury securities," but the dollar is limp as freshly boiled vermicelli. Euro rose a nothing 0.04% to $1.1252 and the yen rose 0.11% to 83.51, but neither one of those charts shows money pouring into them. Finally, gold isn't rising, either, so where is that fleeing money going? Or maybe the panic hasn't quite begun yet.

Gold & silver are confused. Gold sank $4.90 (0.4%) to $1,127.10 while gold rose 3.1 cents (0.2%) to 1456.9. Confusion's never positive.

Pondering silver's daily chart, I see that both Monday & today silver made lows at 1450c -- a double bottom? It did move up sluggishly off the low. Silver today touched the bottom boundary of that even-sided triangle, but did absolutely nothing to distinguish itself. MACD indicator is close to turning down. RSI stands below 50 at 45.84.

Meanwhile the gold silver ratio gapped up yesterday, which bodes nothing much good for silver & gold rallying. Wouldn't want that to move higher. Chart's right here,

Gold sank to pierce its 20 Day Moving Average, but then closed above it. Neither gold nor silver are telling us a lot, but that may be telling us a lot, too. They're lethargic, weak, and slow with very small daily ranges. No trading. Not good.

I suspect most folks are waiting for the other shoe to drop with stocks, and so are afraid to jump one way or the other. I fear they will be longing for the tedium one day soon.

On 29 September 2008 following bankruptcies of Lehman Brothers & Washington Mutual, the Dow fell 777.68 point, largest single day point loss in history. Y'all remember that number.

On 29 September 1979 gold hit a record $400.20 an ounce in Hong Kong.

On 29 September 1916 John D. Rockefeller became the first billionaire. The second billion came a lot easier.

On 29 September 480 B.C. at the Battle of Salamis the Greek fleet under Themistocles defeated the Persian fleet under Xerxes I. If they hadn't, y'all probably wouldn't be having elections today and you'd be speaking Persian and beginning words with X, like "xpert" or "xcellent".

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
29-Sep-15 Price Change % Change
Gold, $/oz 1,127.10 -4.90 -0.43%
Silver, $/oz 14.57 0.03 0.21%
Gold/Silver Ratio 77.363 -0.502 -0.64%
Silver/Gold Ratio 0.0129 0.0001 0.65%
Platinum 917.10 -9.00 -0.97%
Palladium 657.40 6.15 0.94%
S&P 500 1,884.09 2.32 0.12%
Dow 16,049.13 47.24 0.30%
Dow in GOLD $s 294.35 2.14 0.73%
Dow in GOLD oz 14.24 0.10 0.73%
Dow in SILVER oz 1,101.59 0.90 0.08%
US Dollar Index 96.04 -0.14 -0.15%
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: 1,126.80      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,157.22 1,166.24 1,166.24
1/2 AE 0.50 574.16 594.39 1,188.77
1/4 AE 0.25 289.89 302.83 1,211.31
1/10 AE 0.10 118.21 123.38 1,233.85
Aust. 100 corona 0.98 1,098.97 1,107.97 1,130.35
British sovereign 0.24 267.24 280.24 1,190.48
French 20 franc 0.19 211.95 215.95 1,156.68
Krugerrand 1.00 1,144.83 1,154.83 1,154.83
Maple Leaf 1.00 1,136.80 1,150.80 1,150.80
1/2 Maple Leaf 0.50 647.91 591.57 1,183.14
1/4 Maple Leaf 0.25 287.33 301.42 1,205.68
1/10 Maple Leaf 0.10 119.44 122.82 1,228.21
Mexican 50 peso 1.21 1,348.96 1,359.96 1,127.94
.9999 bar 1.00 1,130.74 1,138.80 1,138.80
SPOT SILVER: 14.61      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 25.00 27.00 35.29
VG+ Peace dollar 0.77 20.00 22.00 28.76
90% silver coin bags 0.72 13,302.58 13,660.08 19.11
US 40% silver 1/2s 0.30 4,116.73 4,366.73 14.80
100 oz .999 bar 100.00 1,485.50 1,510.50 15.11
10 oz .999 bar 10.00 147.55 152.55 15.26
1 oz .999 round 1.00 14.71 15.17 15.17
Am Eagle, 200 oz Min 1.00 16.11 17.61 17.61
SPOT PLATINUM: 917.10      
Plat. Platypus 1.00 932.10 962.10 962.10
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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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