The Moneychanger
Daily Commentary
Thursday, 18 August a.d. 2011 Browse the commentary archive

On Monday, 22 August I will be speaking for the Campaign for Liberty in Memphis at Jason's Deli, 3473 Poplar Ave. Suite 102, near Poplar & Highland. Speech should start shortly after 6:30 p.m.

DID SOMEBODY MAKE AN ANNOUNCEMENT TODAY THAT THE WORLD IS CLOSING DOWN? I looked for some news item that might have sent gold screaming & stocks careening, but other than Ferkel & Sarcophagus announcing they want -- never mind the euphemisms -- a European government so ruled from the center it will make our state government look like independent republics. Oh, yes, & Bernard O'Bama is meddling in Syria's business & demands Assad give up power. Why don't any of these folks just demand right back that O'Bama give up power?

But I'm having too much fun & am getting off point. I couldn't find a single item that would launch a panic. Euro didn't even get beaten up badly until after New York Opened.

Whatever the catalyst, it threw US stocks down enough to qualify as one of the 20 or 30 biggest point moves ever, down 419.63 (3.68%- owch!) to 10,990.58 in Dowville, with the S&P500 swooning even worse by 53.24 points (4.46%) to 1,140.65. Talking heads are as stumped as I am, talking about "growing fears of global recession" on bad US economic data and more bad news from euro-banks.

IF YOU STILL HAVE STOCKS, GET OUT NOW! Put the proceeds into silver & gold, and take everything you've ever learned about "diversification," by which the experts all mean "buying different stocks" & throw it out in the carport and beat it to death with your ball peen hammer.

If stocks are the answer, the question must be, "How can I lose LOTS of money quickly without buying lottery tickets?"

Do any of y'all remember my saying not too long ago that stocks had lost more than 80% against silver & gold since 2001 & 1999, and would lose another 80% before stocks' bear market & metals' bull market ends? Do I remember that, or am I mistaken?

Today the Dow in Gold Dollars stands at G$124.91 (6.042 oz) and the Dow in Silver Ounces at 270.13. Y'all write that down someplace, & hide and watch.

Y'all want a real laugh? Go to & make a Sharp Chart for the Philadelphia Bank Index, "$BKX." Tell me what kind of strength that shows.

US Dollar index slapped 'em all in the face today by jumping 53.2 basis points, up 0.68% to 74.206, back from the bottom of the range to the middle. One wonders idly how many zillion dollars the Nice Government Men had to sell today to keep the dollar from rising through 75.50.

Mistake me not! Long term the dollar is a cooked goose, a dead duck, a terminated turkey, a poached peacock. But short term it has yet enough strength to pull in money in a panic. Proof? The yield on the 10 year treasury note (inverse of the note's value) dropped again today, nay, gapped down & plunged.

But hark! Is that a double top that the 30 year treasury bond is forming with the September 2010 high? Would that be a harbinger of great depths to come, of wailing, weeping, and gnashing of teeth as the Harbor of Dollar Refuge becomes the Maelstrom of Vanishing Value?

Euro, to put it almost politely, got the snot slapped out of it today Closed down 0.58% at 1.4341, gapped down in fact, & now resteth upon its 20 dma, preparatory to plummeting toward the Earth's Core. Yen remains suspended high above the earth at 130.57c/Y100 (Y76.58/$).

Fueled by unabated panic, gold about 6:00 a.m. pushed through $1,800 and by 10:00 stood over $1,825. Backed off a bit till noon, then began advancing again. Comex closed at $1,818.90, up $27.70 and another new all time high. Top of this channel is someplace around $2,000. When I saw gold over $1,825, I just picked up the phone and bought a bunch. Sure, sure, that's chasing a market, but what else can you do when after a 2-day close over the old high it breaks into new high territory? You buy it, and close your hanging jaw.

Before I bought gold, though, I bought lots more silver. Not as strong as gold, but all it needed to do was break through that 4000c resistance, & there it stood at 4070c. Argue with the tape if you want to, but I don't. Yes, silver still has a tough row to hoe at 4100c & 4200c, but get the picture: it is FOLLOWING gold, not moving against it. Behold, something new under the sun!

Big trouble coming. Go back to my 29 July commentary & 16 August commentary & re-read the preparations listed there. Call me Chicken Little if you like, 'twon't bother me cause I've been vilified by experts, but take that list seriously. Remember those riots in London.

Somebody asked me if I made up Davy Crockett's birth in the "State of Franklin." Now y'all know I wouldn't do anything like that. There really was a State of Franklin. The over-the-mountain men in East Tennessee wanted their own state and from 1784-1788 they set it up, naming it Franklin hoping to obtain Benjamin's sponsorship in Congress. North Carolina, needless to add, wasn't keen on the idea. After the State of Franklin collapsed North Carolina ceded the area that would become Tennessee to the United States.

On 18 August 1587 Virginia Dare became the first English child born on American soil at the Roanoke Island, NC, colony. Later that colony completely vanished, & one legend says that their descendants wandered to East Tennessee around Newman's Ridge & became the Melungeons. Those are a mixed race people, part European, but nobody is very sure where the came from. If not from Roanoke, then perhaps from the Welsh Prince Madoc who allegedly built Old Stone Fort at Manchester sometime after 1000 a.d..

There's no telling what you'll find in Tennessee. Y'all are welcome to come poke around, but bring your manners with you. And all that stuff about aliens taking over Nashville isn't true. They took over Washington.

Argentum et aurum comparanda sunt —
Silver and gold must be bought.

— Franklin Sanders, The Moneychanger

Your source for gold and silver. Read our latest reviews and testimonials.
Market Snapshot See more charts and market data
18-Aug-11 Price Change % Change
Gold, $/oz 1,818.90 27.70 1.5
Silver, $/oz 40.69 0.34 0.8
Gold/Silver Ratio 44.700 0.313 0.7
Silver/Gold Ratio 0.0224 -0.0002 -0.7
Platinum 1,847.00 0.00 0.0
Palladium 757.00 -19.00 -2.4
S&P 500 1,140.65 -53.24 -4.5
Dow 10,990.58 -419.63 -3.7
Dow in GOLD $s 124.91 -6.76 -5.1
Dow in GOLD oz 6.04 -0.33 -5.1
Dow in SILVER oz 270.13 -12.66 -4.5
US Dollar Index 74.21 0.53 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: 1,825.20      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,879.96 1,895.96 1,895.96
1/2 AE 0.50 936.33 958.23 1,916.46
1/4 AE 0.25 471.13 483.68 1,934.71
1/10 AE 0.10 195.30 202.60 2,025.97
Aust. 100 corona 0.98 1,776.54 1,790.54 1,826.71
British sovereign 0.24 427.50 432.50 1,837.31
French 20 franc 0.19 339.06 344.06 1,842.85
Krugerrand 1.00 1,848.02 1,864.02 1,864.02
Maple Leaf 1.00 1,840.20 1,858.20 1,858.20
1/2 Maple Leaf 0.50 955.95 967.36 1,934.71
1/4 Maple Leaf 0.25 479.12 483.68 1,934.71
1/10 Maple Leaf 0.10 186.17 209.90 2,098.98
Mexican 50 peso 1.21 2,182.86 2,199.86 1,824.55
.9999 bar 1.00 1,831.59 1,842.59 1,842.59
SPOT SILVER: 40.65      
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 28,421.25 28,771.25 40.24
US 40% silver 1/2s 0.30 11,519.75 11,744.75 39.81
100 oz .999 bar 100.00 4,040.00 4,085.00 40.85
10 oz .999 bar 10.00 406.50 414.00 41.40
1 oz .999 round 1.00 40.75 41.55 41.55
Am Eagle, 200 oz Min 1.00 42.40 43.30 43.30
SPOT PLATINUM: 1,847.00      
Plat. Am Eagle 1.00 1,847.00 1,947.00 1,947.00
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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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