The Moneychanger
Daily Commentary
Thursday, 11 August a.d. 2011 Browse the commentary archive

Picture this: markets plunging & rising 4 to 5% a day. Friends, take it from me, the people who make the market simply cannot trade under those circumstances. That turmoil eats you alive.

More evidence a panic is on: I heard today that Swiss 20 francs in Europe are bringing E20 (US$28) over melt per coin and Rooster French 20 francs are bringing E25 (US$35). That's 8.5% and 10.7% respectively. Report says the French are pulling money out of banks on suspicion that after Greece, Portugal, Ireland, Spain, & Italy comes France, & soon. Those are huge premiums considering at wholesale in the US they've been about US$5.

STOCKS today found a friend. My o my. Dow rose 423.37 points (3.95%) to 11,143.31 & S&P500 followed with a 4.63% (51.88 point) rise to 1,172.64

Put that into perspective: Dow in Gold Dollars remains at G$131.72 (7.33 oz). No hope for stocks against silver or gold.

Stocks -- the empty bucket at a raging fire.

US DOLLAR INDEX flatlined today, closed 74.614, down 2.2 basis points. Euro rose 0.46% to 1.4238, meaningless on the chart. Nipponese NGM not yet successful in bringing down the Yen. Their tricks are like using plastic bullets Godzilla.

GOLD passed an inscrutable day. High at $1,794.90, low at $1,732. Appeared to break today around $1,760, dropped to $1,750, then briefly to $1,740 and climbed straight back up. Shook the whole incident off and now is trading at $1,764.10. Comex lost $32.50 to close at $1,748.80, but increasingly the real world and Comex have little in common. After Comex closed gold climbed over $1,760. Is Comex really relevant, or just useful to those who paint the tape?

Yes, today MIGHT have been the break in gold at a top, but then again, maybe not -- certainly not if driven by panic in Europe. Key will be tomorrow's close, which must not be lower than today's.

UNDER NO CIRCUMSTANCES should you sell gold or be short gold.

SILVER lost 66.9c at the Comex close of 3865.6c. Range was 3939c to 3868c. Wide swings are killing me -- silver will be okay & not crash if it can remain above 3700c. Bounced off its 20 DMA today, coming up from beneath. Indicators calling for lower silver.

Now if I were a CLEVER Nice Government Man (no, not a complete oxymoron, since they can print enough money to hire real talent) instead of spending so much trying to crash gold, I would just suppress silver to pull the heart out of gold investors.

Hang on to your silver. Nothing is clear here, & it is for times that lack clarity that we own silver & gold. This much is clear: central banks have not stopped inflating, & must now speed up inflating, so our silver & gold will keep on climbing relentlessly.

On 11 August 1860 the first successful silver mill in American began operating, in Virginia City, Nevada. The Comstock Lode there was discovered in 1859, & as memory serves me it produced over a billion oz. of silver. What most people don't know is that the value of gold produced over the whole life of the mines was about equal to the value of the silver from the Comstock. Adjusted for inflation, production at peak in 1877 alone was about $270 million in gold and $400 million in silver. It wasn't new silver supply that drove the price of silver down after 1873, it was politics and the Crime of '73, demonetizing silver.

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
11-Aug-11 Price Change % Change
Gold, $/oz 1,748.80 -32.50 -1.8
Silver, $/oz 38.66 -0.67 -1.7
Gold/Silver Ratio 45.240 -0.057 -0.1
Silver/Gold Ratio 0.0221 0.0000 0.1
Platinum 1,787.60 20.80 1.2
Palladium 741.45 15.50 2.1
S&P 500 1,172.64 51.88 4.6
Dow 11,143.31 423.37 3.9
Dow in GOLD $s 131.72 7.33 5.9
Dow in GOLD oz 6.37 0.35 5.9
Dow in SILVER oz 288.27 15.67 5.7
US Dollar Index 74.61 -0.00 -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: 1,764.10      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,818.79 1,834.79 1,834.79
1/2 AE 0.50 904.98 926.15 1,852.31
1/4 AE 0.25 455.36 467.49 1,869.95
1/10 AE 0.10 188.76 195.82 1,958.15
Aust. 100 corona 0.98 1,717.07 1,731.07 1,766.03
British sovereign 0.24 413.19 418.19 1,776.52
French 20 franc 0.19 327.71 332.71 1,782.06
Krugerrand 1.00 1,783.51 1,799.51 1,799.51
Maple Leaf 1.00 1,779.10 1,797.10 1,797.10
1/2 Maple Leaf 0.50 923.95 934.97 1,869.95
1/4 Maple Leaf 0.25 463.08 467.49 1,869.95
1/10 Maple Leaf 0.10 179.94 202.87 2,028.72
Mexican 50 peso 1.21 2,109.78 2,126.78 1,763.94
.9999 bar 1.00 1,770.27 1,781.27 1,781.27
SPOT SILVER: 38.70      
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 27,027.00 27,377.00 38.29
US 40% silver 1/2s 0.30 10,944.50 11,169.50 37.86
100 oz .999 bar 100.00 3,845.00 3,890.00 38.90
10 oz .999 bar 10.00 387.00 394.50 39.45
1 oz .999 round 1.00 38.80 39.60 39.60
Am Eagle, 200 oz Min 1.00 40.45 41.35 41.35
SPOT PLATINUM: 1,787.60      
Plat. Am Eagle 1.00 1,787.60 1,887.60 1,887.60
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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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