The Moneychanger
Daily Commentary
Wednesday, 10 August a.d. 2011 Browse the commentary archive

For those who say to me, "Well, why buy gold or silver? The government manipulates those markets." today offered a lesson exactly how much good manipulation does.

I doubt not that the Nice Government Men saw their opportunity after yesterday's FOMC statement to catch a bunch of people short stocks & the Plunge Protection Team dove in. They did, and the Dow ended up 429.92, 3.98%. Wow. And today the Dow lost 519.83 or 4.62% to close at 10,719.94. S&P500 did no better, losing 51.77 (4.4%) to 1,120.76.

'Tis possible to manipulate markets, but only at the margin and only for a short time. Otherwise, markets are simply too big to be forced against their primary trend. The trend will always wreak its vengeance.

Stocks have now reached support that stretches back to January 2010. The area from 9600 to 10,700 might stop the fall, but then again, it might not. This is the last train out for anyone holding stocks. You sell now, or watch them wither gruesomely over the next 5 years.

Stocks: they are the Vitamin D of Investment Vitamins, and the D stands for "deficiency."

US DOLLAR INDEX caught today, rose 3 silly basis points to 74.635. Euro fell 1.36% to 1.4175, while for no apparent cause today a couple of rating agencies declared that France's credit rating was still AAA. Soooo, why did you need to tell us that nothing had changed, unless somebody is suspecting that something has changed? Yen rose today to 130.10c/Y100 (Y76.8/$).

Gold rose 2.4% today, up $41.30 to $1,781.30. In the aftermarket it has risen another $20 to $1,801. Yep, it's in a parabolic rise, and, yep, no telling where it will stop. Nothing in today's chart even hints that gold's about to call a halt. It wants to go higher tomorrow.

SILVER climbed up off yesterday 3700c bottom and never looked back. Should also climb again tomorrow. Lost 149.7c yesterday, gained 144.8c today to close Comex at 3932.5. Maybe, maybe Friday's 3750c and yesterdays 3700c formed a double bottom? To me silver appears to have more downside. Hard above at 3970c lies its 20 day moving average. How will it act there tomorrow? Silver has done nothing to gainsay or negate the downtrend begun five days ago, and must climb above 4229c to do so.

The economy & monetary system has reached a new stage of decay where its condition deteriorates faster and faster. Not world wide panic yet, but daily unthinkable milestones whiz by and are left behind: Greece defaults, US debt ceiling crisis, US debt downgrade, gold passes $1,700 then $1,800, stock market falls 500+ points a day. Oh, this will ease off, but the decay has ratcheted to a higher, faster level.

Y'all ought to remember that for a long time you can see bad things coming on the horizon, but they seem to linger there. Oh, you know they're coming, but you've got plenty of time. Then one day the fellow in the high-top boots & peaked cap comes to arrest YOU.

As I said, only way I know to stay out of bar fights is to leave the bar before the fights start.

On 10 August 1984 was born my daughter Mercy Elizabeth, who is now a nurse in Nashville. She thought we had all forgotten her birthday but my wife Susan & daughter Liberty & daughters-in-law Ellen & Erica drove up there to kidnap her and take her to Chattanooga, where they will dine at our favorite, The Boathouse restaurant, laugh loud enough to make all the rafters ring, and tomorrow go on a shopping spree worthy of women who have just discovered what a credit card if for.

On 10 August a.d. 70 (according to some sources, 29 or 30 July say others) the Romans destroyed the second temple in Jerusalem after the Jews rebelled against Roman rule in a.d. 68.

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
10-Aug-11 Price Change % Change
Gold, $/oz 1,781.30 41.30 2.4
Silver, $/oz 39.33 1.45 3.8
Gold/Silver Ratio 45.300 -0.641 -1.4
Silver/Gold Ratio 0.0221 0.0003 1.4
Platinum 1,766.80 14.30 0.8
Palladium 725.95 -1.80 -0.2
S&P 500 1,120.76 -51.77 -4.4
Dow 10,719.94 -519.83 -4.6
Dow in GOLD $s 124.40 -9.12 -6.8
Dow in GOLD oz 6.02 -0.44 -6.8
Dow in SILVER oz 272.60 -24.15 -8.1
US Dollar Index 74.64 0.03 0.0
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: 1,801.00      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,851.43 1,867.43 1,867.43
1/2 AE 0.50 923.91 945.53 1,891.05
1/4 AE 0.25 464.88 477.27 1,909.06
1/10 AE 0.10 192.71 199.91 1,999.11
Aust. 100 corona 0.98 1,752.98 1,766.98 1,802.68
British sovereign 0.24 421.84 426.84 1,813.24
French 20 franc 0.19 334.57 339.57 1,818.78
Krugerrand 1.00 1,813.61 1,829.61 1,829.61
Maple Leaf 1.00 1,816.00 1,834.00 1,834.00
1/2 Maple Leaf 0.50 943.27 954.53 1,909.06
1/4 Maple Leaf 0.25 472.76 477.27 1,909.06
1/10 Maple Leaf 0.10 183.70 207.12 2,071.15
Mexican 50 peso 1.21 2,153.92 2,170.92 1,800.54
.9999 bar 1.00 1,807.30 1,818.30 1,818.30
SPOT SILVER: 39.29      
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 27,448.85 27,798.85 38.88
US 40% silver 1/2s 0.30 11,118.55 11,343.55 38.45
100 oz .999 bar 100.00 3,904.00 3,949.00 39.49
10 oz .999 bar 10.00 392.90 400.40 40.04
1 oz .999 round 1.00 39.39 40.19 40.19
Am Eagle, 200 oz Min 1.00 41.04 41.94 41.94
SPOT PLATINUM: 1,766.80      
Plat. Am Eagle 1.00 1,766.80 1,866.80 1,866.80
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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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