The Moneychanger
Daily Commentary
Tuesday, 26 July a.d. 2011 Browse the commentary archive

Sorry I missed y'all yesterday. I was finishing my monthly Moneychanger newsletter. Paid subscribers can log in at for the electronic version.

Ever seen someone who will stand and argue with a road sign? I know somebody like that, & standing in the way of gold & silver right now is precisely standing and arguing with a road sign. More of that further down.

Since the US dollar index broke thru its uptrend line, it surprises no one that it fell 53.7 basis points today to 73.527. This trashed support at 74 & sets the buck on the skids for 72.70 before it begins rallying. Today took it below the 20 DMA (74.89) and back to the last low. More downside coming.

Euro today gapped up from below 1.4400 to 1.4511, up 0.95%. That might be a breakout over the downtrend line and lead to 1.4700 to 1.4950. What? It makes no economic sense! Why, who are you to talk about economic sense in a system set up by Salvador Dali?

Yen also continues to climb. Today it's at 128.35c/Y100 (Y77.91/$), almost back to the 128.79 earthquake peak in March.

You know, hard as it is to fathom, it may be that the world actually believes that something will happen if the debt ceiling isn't lifted. Mercy -- they can't be that gullible, can they? Surely they know that debt ceiling will be lifted -- don't they?

STOCKS are tumbling against gold, & not doing too killing well against the dollar. Dow today closed at 12,501.30, down 91.5 and the S&P at 1,331.94, down 5.49.

Dow today fell below its 20 dma (12,521) first warning of a downturn. I keep reading technicians I respect talking about another leg up in stocks, but it's not materializing.

Hold on to your stocks. They're your anchor to poverty.

Gold keeps on ratcheting up day by day. Now $1,620 is the barrier (high today was $1,620.10), & $1,607 has become support.

Gold will probably hit $1,650 before this stops. Already it is overbought, but can grow more so. Comex gold gained $4.60 to $1,616.80.

SILVER keeps advancing, too. Comex closing found silver up 33.7c at 4069.1c. 4100c is now the Great Blockade. Silver's high today came at 4095c. It is tugging at the leash. It will break through 4100c & run farther still.

Silver has the bit in its teeth and will keep on running. Don't get caught short silver here.

Liberty & self-government lost a great friend & man of spotless integrity today. Georgia state representative Bobby Franklin was found dead, apparently of a heart attack. He was an exceptionally fine and brave man, standing on principle regardless who attacked him. R.I.P.

On 22 July 1941 the US government placed an embargo on oil exports to Japan, not quite an act of war, but close. Roosevelt was working hard to push them into war.

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
26-Jul-11 Price Change % Change
Gold, $/oz 1,616.80 4.60 0.3
Silver, $/oz 40.69 0.34 0.8
Gold/Silver Ratio 39.730 -0.218 -0.5
Silver/Gold Ratio 0.0252 0.0001 0.5
Platinum 1,804.90 14.30 0.8
Palladium 838.65 31.70 3.9
S&P 500 1,331.94 -5.49 -0.4
Dow 12,501.30 -91.50 -0.7
Dow in GOLD $s 159.84 -1.61 -1.0
Dow in GOLD oz 7.73 -0.08 -1.0
Dow in SILVER oz 307.23 -4.83 -1.5
US Dollar Index 73.53 -0.54 -0.7
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: 1,619.60      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,662.52 1,676.52 1,676.52
1/2 AE 0.50 830.85 850.29 1,700.58
1/4 AE 0.25 418.06 429.19 1,716.78
1/10 AE 0.10 173.30 179.78 1,797.76
Aust. 100 corona 0.98 1,574.04 1,587.04 1,619.10
British sovereign 0.24 381.25 386.25 1,640.84
French 20 franc 0.19 302.38 307.38 1,646.38
Krugerrand 1.00 1,628.51 1,642.51 1,642.51
Maple Leaf 1.00 1,634.60 1,652.60 1,652.60
1/2 Maple Leaf 0.50 848.27 858.39 1,716.78
1/4 Maple Leaf 0.25 425.15 429.19 1,716.78
1/10 Maple Leaf 0.10 165.20 186.25 1,862.54
Mexican 50 peso 1.21 1,939.90 1,954.90 1,621.38
.9999 bar 1.00 1,625.27 1,636.27 1,636.27
SPOT SILVER: 40.91      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 31,000.00 33,000.00 43.14
VG+ Peace dollar 0.77 30,000.00 32,000.00 41.83
90% silver coin bags 0.72 28,392.65 28,717.65 40.16
US 40% silver 1/2s 0.30 11,596.45 11,821.45 40.07
100 oz .999 bar 100.00 4,066.00 4,111.00 41.11
10 oz .999 bar 10.00 409.10 416.60 41.66
1 oz .999 round 1.00 41.01 41.81 41.81
Am Eagle, 200 oz Min 1.00 42.66 43.56 43.56
SPOT PLATINUM: 1,804.90      
Plat. Am Eagle 1.00 1,804.90 1,904.90 1,904.90
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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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