The Moneychanger
Weekly Commentary
Friday, 19 August a.d. 2011 Browse the commentary archive
Here's the weekly scorecard:
  12-Aug 19-Aug Change % Change
Silver, cents/oz. 3,910.10 4,242.80 332.70 8.5
Gold, dollars/oz. 1,740.20 1,848.90 108.70 6.2
Gold/silver ratio 44.505 43.577 -0.930 -2.1
Silver/gold ratio 0.0225 0.0229 0.0005 2.1
Dow in Gold Dollars (DIG$) 133.86 120.95 -12.92 -9.6
Dow in gold ounces 6.48 5.85 -0.62 -9.6
Dow in Silver ounces 288.20 254.96 -33.24 -11.5
Dow Industrials 11,269.02 10,817.65 -451.37 -4.0
S&P500 1,178.81 1,123.53 -55.28 -4.7
US dollar index 74.58 73.99 -0.59 -0.8
Platinum 1,796.00 1,876.00 80.00 4.5
Palladium 743.55 750.00 6.45 0.9

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Panic has grown with the week. Gold rose an astounding $108.70 or 6.2%, while silver rose 332.7c or 8.5%. Dow lost 4.7%, S&P500 4.7%. We are now seeing volumes near what we saw in the 2008 panic, & wholesalers are stretching out delivery.

Stocks fell off the cliff at 11,300 on Thursday. Hard for me to ken how anyone might still argue stocks are coming back in the next decade or so. Stock decline looks like a completed 4 waves beginning another down leg.

Dow in Gold Dollars passed a new milestone this week, falling below G$$124.03 (6.00 ounces). Closed today at G$120.95, or 5.851 oz. Let me make clear what that means. For 5.851 oz you could buy one share of all the stocks that make up the Dow Jones Industrial Index -- 10,817.5/$1,848.90 = 5.851.

Dow in silver ounces likewise has fallen to a new low. Now you need on 254.96 ounces to buy the Dow, while at the top in 2001 you needed 2,560.

Do y'all understand that we are entering a new phase of development? That everything is moving faster, more violently, with more volatility? You must protect yourself. Ask, & linger over the meditation: with the stock market collapsing, WHAT WILL BEN DO? Will he stay on the wagon, or will he reach for that jug labeled "QE3"?

Stocks -- your ticket to a retirement under an interstate overpass in a splendid cardboard shack with access to fine dumpster dining.

One face of the new phase is that instead of falling with stocks in this panic, gold has risen, meaning that flight capital is fleeing into gold this time, not US dollars. More astonishing, SILVER is accompanying gold up, not following stocks down. O, brave new world!

Losing a modest 25.1 basis points, the US DOLLAR INDEX now flirteth with 74, in fact, 73.993. It dropped 0.32% today, but point to watch is that it seems to have bottomed Wednesday & today confirmed that bottom. Whichever Nice Government Men are managing it are laboring mightily to keep it beneath its 20 day moving average, now 74.28. Unless it breaks 73.40, they'll be hard pressed to corral it, faced by a panic.

Euro rose 0.45% today to close 1.4394, but remains in a downtrend. Only closes above 1.4697 and 1.4940 can change that. Personally, I think y'all will see 1.2000 first. Yen made an new all time intraday high today and closed at 130.65c/Y100 (Y76.54/$). Pity the NGM working for the Bank of Japan.

This week GOLD told us very loudly that it intends to make a new leg up. Not only did it gain US$108.70 this week for a new all time dollar high today (3 in the last 3 days), but gold also closed at a new high in Euros (e1,287) and yen (Y141,700). Another face of the new phase: Gold is climbing against ALL fiat currencies.

Y'all need not remind me how overbought gold is. The RSI & MACD both tell me that. But yesterday to all the rest of the panic, Venezuela's Hugo Chavez ordered foreign depositories to send Venezuela's gold home (Venezuela is the world's 15th largest gold holder), 211 metric tonnes or 6.783 Million Ounces (Moz). Bank of England holds 99 tonnes of that (3.183 Moz), while the rest is scattered amongst the usual suspects: JP Morgan Chase, Barclays, HSBC, Standard Chartered, BNP Paribas, & Bank of Nova Scotia. Some speculate that Chavez has precipitated a "short squeeze," i.e., is forcing those short gold to deliver. Nothing quite drives the price of anything like shorts scrambling to deliver, covering at any price. I am of course not accusing ancient, hoary, & respectable institutions like the BoE or JP Morgan or BNP of shorting gold they were supposed to be storing -- why, perish the thought! Yet how else does one account for gold's perpendicular rise?

Cheery Chavez also nationalized all the private gold producers in Venezuela, which casts a pall over the gold mining community. Also reminds owners of gold stocks what the words "political risk" mean. Bound to make it harder for miners to borrow and float shares, if only for a while.

So today gold rose $30 to a new all time high of $1,848.90. Yes, it's high, parabolic, and overbought, but how much higher will panic drive it? $2,000? $2,050? $2,100? Higher? I bought some at $1,854, and will buy more.

SILVER gobbled down a colossal 332.7c this week, rising 8.5% to close Comex today 4242.8. I knew once it got thru 4100c resistance it would jump, but 174.1c in one day? Time I got up this morning silver had already burst thru 4150c (about 6:45 New York time), then it shot clean to 4250c. It backed off a little on the open, rose to 4250c again, reacted after testing that ceiling, then bulldozed from 4140c the rest of the day to trade at 4289c in the aftermarket.

Technically silver's close today takes it above the last intraday high (4229c) and clears the way for another test of 5000c. Unlike gold -- get this -- silver is NOT overbought & has only this week crossed its 20 DMA (3988c). Plenty of room for a sprint to 5000c.

On 19 August 1692 five women and a clergyman were executed in Salem, Massachusetts after being convicted of witchcraft. The Salem trials roughly marked the end of a witchcraft mania that had flared off and on in Europe for 300 or more years. Worst of it was the judicial procedure, which included trial by ordeal. Walk across that 10 years of burning coals barefooted, and if you can do it unharmed, you're innocent. Not a high water mark of jurisprudence.

On 19 August 1848 the gold discovery in California was reported in the New York Herald.

On 19 August 1934 Adolf Hitler won sole executive power in Germany by a plebiscite. Now if an educated, cultured people like the Germans could be hoodwinked like that, what chance have Americans? Not the world's best argument for "democracy."

YESTERDAY I encouraged y'all to go back and review the crisis recommendations I made earlier. Both the links & the dates were wrong, so I am reprinting the recommendations from 5 August & 16 August below.

By the way, my web-wizard Mike Crane the Great will shortly have available an index to all the commentaries so you can easily refer to them.

HERE ARE THE RECOMMENDATIONS FROM 5 AUGUST 2011. Europe will drag the US into crisis. Here are my suggestions for self-protection:

1. Get liquid. Pay down debt as much as you can. Sell non-performing investments, like stocks, or investments that will suffer from depression or inflation.

2. Close out leveraged positions. Markets are way too volatile for that.

3. Hold on to silver & gold.

4. Hang on to cash anticipating great bargains in a crisis. Remember gold went to $700 & silver to 880c. Gold/silver ratio went to 84, offering a great gold to silver swap. Not expecting those numbers again, but we might see the analogs.

5. Fill up propane tanks, home gasoline or diesel tanks.

6. Stock up on food -- long term storage food, not smoked oysters & tomato soup. Rice, for instance. Dehydrated food. MREs.

7. Stock up on ammo.

8. Get out of the city, or at least have a country place waiting to receive you.

Don't be fooled by my calm words, either. Y'all are reading the equivalent of an air raid siren, and y'all had better run for cover.


My friend Michael wrote to castigate me for misleading y'all.  Ahh, I receive the rebuke gladly, because he is right, I did mislead y'all.

On 5 August I gave y'all a list of several ways to protect yourselves from the ongoing currency destruction and depression.  I left out the most important thing.  Over the years I have watched many, many people pile up stuff and silver & gold, believing they could protect themselves from every threat, only to spend their days in wretched fear and worry still.  In the end, you cannot protect yourself.   You cannot think carefully enough, or long enough, or stay awake enough hours to protect yourself.  Too many bad surprises lurk in the world.  The only safety lies in these words from Psalm 56, "The Lord is for me, I will not fear what man can do to me."  The only peace lies in the peace of Christ.

The modern world's worst crime is that it tries to rob us of faith, yet only faith can make sense out of a restless, unpredictable world.  Raw reason and false religion is powerless in the presence of evil and pain -- only God is not.  

For those who want to scoff at me, have at it.  As an adult God grabbed me like a child by the collar, shook me into my senses, then has walked with me, NO, carried me, alive and unhurt, through fifteen years of attack by the most powerful and vengeful enemy against whom we are all disarmed, the federal government. He raised up defenders and helpers for me, brought me through jail where death awaits every moment, and from all those fires I emerged  without even the smell of smoke on me.  He gave me a wife and children before I knew to thank him, and then brought me out into this broad place, a land and life flowing with milk and honey -- not because I deserved it, but because his lovingkindness is so great.  And like Polycarp I say, even if you burn me alive, I will still bless his name.

So Michael was right, my list was misleading because I left out the first and most important item:  make peace with God through Jesus Christ.  Without that peace, all your other preparations will be worth less than nothing, and will fail you.  

 Before the great theologian Augustine became a Christian, he was deeply depressed.  His false religion had failed him, friends and lovers had failed, his life had failed him.  He sat in a garden mourning, and over the wall he heard children calling in a game, "Tolle, lege!"  Pick it up and read!  Pick it up and read!  He did, and his life and the world was changed.  I can offer no better advice or preparation: Take God's book, pick it up and read!  He will show you what is true, and everything will change. You will find safety beneath his wing.

Y'all enjoy your weekend.

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
19-Aug-11 Price Change % Change
Gold, $/oz 1,848.90 30.00 1.6
Silver, $/oz 42.43 1.74 4.3
Gold/Silver Ratio 43.580 0.689 1.6
Silver/Gold Ratio 0.0229 0.0009 4.3
Platinum 1,876.00 29.00 1.6
Palladium 750.00 -7.00 -0.9
S&P 500 1,123.53 -17.12 -1.5
Dow 10,817.65 -172.93 -1.6
Dow in GOLD $s 120.95 -3.95 -3.2
Dow in GOLD oz 5.85 -0.19 -3.2
Dow in SILVER oz 254.96 -15.16 -5.6
US Dollar Index 73.99 -0.25 -0.3
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: 1,852.45      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,908.02 1,924.02 1,924.02
1/2 AE 0.50 950.31 972.54 1,945.07
1/4 AE 0.25 478.16 490.90 1,963.60
1/10 AE 0.10 198.21 205.62 2,056.22
Aust. 100 corona 0.98 1,803.06 1,817.06 1,853.77
British sovereign 0.24 433.89 438.89 1,864.43
French 20 franc 0.19 344.12 349.12 1,869.97
Krugerrand 1.00 1,875.61 1,891.61 1,891.61
Maple Leaf 1.00 1,867.45 1,885.45 1,885.45
1/2 Maple Leaf 0.50 970.22 981.80 1,963.60
1/4 Maple Leaf 0.25 486.27 490.90 1,963.60
1/10 Maple Leaf 0.10 188.95 213.03 2,130.32
Mexican 50 peso 1.21 2,215.45 2,232.45 1,851.58
.9999 bar 1.00 1,858.93 1,869.93 1,869.93
SPOT SILVER: 42.89      
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 30,022.85 30,372.85 42.48
US 40% silver 1/2s 0.30 12,180.55 12,405.55 42.05
100 oz .999 bar 100.00 4,264.00 4,309.00 43.09
10 oz .999 bar 10.00 428.90 436.40 43.64
1 oz .999 round 1.00 42.99 43.79 43.79
Am Eagle, 200 oz Min 1.00 44.64 45.54 45.54
SPOT PLATINUM: 1,876.00      
Plat. Am Eagle 1.00 1,876.00 1,976.00 1,976.00
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Copyright Notice

© 2015 Little Mountain Corporation, d.b.a. The Moneychanger. All rights reserved. May not be republished in any form, including electronically, without our express permission.

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.

Other Important Information

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