The Moneychanger
Daily Commentary
Wednesday, 24 August a.d. 2011 Browse the commentary archive

Sometimes markets speak with fork├ęd tongue. Sometimes they speak loud and clear. Today was one of those days.

Stocks traded up & down raggedly today, but managed to add 143.95 (1.29%) to the Dow by day's end, taking the average to 11,320.71. S&P rose 1.31% (15.25 points) to 1,177.60.

Dow turned up from the dreaded Death Cross today as the 50 day moving average (11,975) did not cross below the 200 DMA (11,989). Turns out it's not significant anyway in past historical performance, but as Prince Potemkin said to Catherine the Great, "Appearances are everything in the stock market"

Stocks -- your intergenerational pipeline to poverty.

Who could trade the US dollar index? One day up, next down, all in a tight range. Today it rose 13 basis points (0.17%), climbing over 74 to 74.024. Still locked in that 75.5 -73.4 range. Ben Bernancubus & the rest of the dolts managing the dollar couldn't manage a good-sized gas station successfully. A day's work would kill 'em.

The Euro, only fiat currency in the world WORSE than the US Dollar (no, no, wait -- the yen might be worse, too) fell today to 1.4414, down 0.16% as the "water wings" the Nice Government Men are putting under it fail to inflate. Stinker. Smell of death is all over it.

In the land of the blind the one-eyed man is king, and in a financial panic anything that even looks like it can see will attract money. Hence the yen's present exalted height. It fell a little today, 1/3% to 129.93c/Y100 (Y76.96/$).

GOLD put in that second part of a Key Reversal, loud and clear. It lost $104.20 today (5.6%) & closed Comex at $1,754.10. That's what happens when tinhorns & newcomers flock to a market because it's rising. When the heat turns up, they all stampede & yell, "Fire!" Okay by me, they only create buying opportunities.

Gold's fall brought it to $1,750 support, BUT it still hasn't touched its 20 DMA ($1,740.74), first tripwire of a decline. Oh, it will, tomorrow probably, but our big question is answered, namely, has a correction begun. Looks like it hath. However, gold must break support at $1,725, then there's a tiny gap about $1,675, so there's another target. 50 dma, a frequent correction target, awaits at $1,627.93. Above that is $1,650 support. If all else fails, gold can catch hold at $1,600.

Be patient. Gold has a ways to fall, ASSUMING it confirms tomorrow by breaking that $1,750 support. Frankly, these volatile tergiversations in every market have left me punchdrunk. The way they're flopping from side to side, I want PROOF that gold will carry through to the downside.

Y'all better be watching this correction like a hawk for a chance to buy more gold. Why? Because the turmoil of the last two months has given you a foretaste of trading to come. Gold will come ROARING back, whether this correction lasts a week or six months. If the whole world were a desktop, not all the politics of the last two months would have moved a pencil.

Silver made one of its largest moves in a long time. It dropped 7.4% today, 312.4c, to 3915.7c. High was 4219c, low 3905c. Silver, too, unequivocally confirmed a Key Reversal today. It WAS a lower close. And silver broke thru its 20 dma (now 4008c).

SILVER will fall further, but 3900c caught it today. Weak support appears at 3850c, but 3800c is stronger. 50 DMA meets silver at 3821c, 200 at 3468c. Lots of lateral support at 3800c.

Another little thing. Sometimes when a market traces out an equilateral triangle, then breaks out, after a long time it returns to the triangle's apex. Apex from the triangle silver formed May to mid-July falls just under 36.

Gold/silver ratio jumped from 43.951 yesterday to 44.805 today, top of the range and on its second try to break out upside. That's not helpful for silver.

Be patient, and lash yourself to the mast & stop your ears like Odysseus did to the Sirens whenever you hear parvenus & the hopelessly stock-addicted talk about the metals' "bubble" having ended. They're the same geniuses who told you to buy & hold stocks in 2001. Silver & gold are correcting, but will come back. Bull market has 3 - 10 years to run. It's just getting interesting.

On Saturday, 3 September we will celebrate our annual Bodacious Hoedown again at the Top of the World farm. Starts at 1:00 p.m. with an afternoon of games like raw egg toss, dunking booth which my children have set up for me, and lots of others. Or you can sit bring a stringed instrument & sit under the trees jamming with others (do NOT bring a grand piano. It has strings, but won't fit in.) After that come supper with barbecued pork raised on our own farm, slaw, beans, tomatoes, and dessert. Then comes the fun: an Old Time Band and dance caller. This year we are not charging admission, as a thank-you to all our customers. If you're interested, email me with "Hoedown Directions" in the subject line & I'll send you directions and a list of local motels -- or you can camp out, if you like rustic camping.

About noon on 24 August a.d. 79 slumbering Mt. Vesuvius on the Bay of Naples exploded. For generations Romans had lived on the slopes of the volcano, but without warning the denizens of Pompeii, Herculaneum, and Stabiae found themselves in a new world. Thousands died from the poisonous fumes and suffocating ash. If you ever get a chance to visit the excavated Pompeii, take it. Fascinating. But also this incident gives us a lesson about living on the slopes of a volcano. Y'all know anybody doing that?

Today is St. Bartholomew's Day, when in 1572 French king Charles IX ordered the massacre of thousands of French Protestants, the Huguenots. The Huguenots recovered, but remained a state within a state until the Edict of Nantes (1598) guaranteeing them certain rights was revoked in 1685. The St. Bartholomew's Day massacre drove thousands of Huguenots from France, & the revocation in 1685 drove out the rest. Since they largely represented the middle class, their leaving hurt France but blessed the rest of the world where they fled: Holland, Germany, England, South Africa, Virginia, South Carolina.

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
24-Aug-11 Price Change % Change
Gold, $/oz 1,754.10 -104.20 -5.6
Silver, $/oz 39.16 -3.12 -7.4
Gold/Silver Ratio 44.800 0.845 1.9
Silver/Gold Ratio 0.0223 -0.0004 -1.9
Platinum 1,803.50 -59.20 -3.2
Palladium 744.50 -18.45 -2.4
S&P 500 1,177.60 15.25 1.3
Dow 11,320.71 143.95 1.3
Dow in GOLD $s 133.41 9.10 7.3
Dow in GOLD oz 6.45 0.44 7.3
Dow in SILVER oz 289.11 24.77 9.4
US Dollar Index 74.02 0.13 0.2
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: 1,750.80      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,794.57 1,810.57 1,810.57
1/2 AE 0.50 898.16 919.17 1,838.34
1/4 AE 0.25 451.93 463.96 1,855.85
1/10 AE 0.10 187.34 194.34 1,943.39
Aust. 100 corona 0.98 1,704.12 1,718.12 1,752.83
British sovereign 0.24 410.08 415.08 1,763.29
French 20 franc 0.19 325.24 330.24 1,768.83
Krugerrand 1.00 1,771.81 1,787.81 1,787.81
Maple Leaf 1.00 1,765.80 1,783.80 1,783.80
1/2 Maple Leaf 0.50 916.98 927.92 1,855.85
1/4 Maple Leaf 0.25 459.59 463.96 1,855.85
1/10 Maple Leaf 0.10 178.58 201.34 2,013.42
Mexican 50 peso 1.21 2,093.88 2,110.88 1,750.75
.9999 bar 1.00 1,756.93 1,767.93 1,767.93
SPOT SILVER: 39.71      
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 27,566.83 27,916.83 39.04
US 40% silver 1/2s 0.30 11,240.98 11,465.98 38.87
100 oz .999 bar 100.00 3,945.50 3,990.50 39.91
10 oz .999 bar 10.00 397.05 404.55 40.46
1 oz .999 round 1.00 39.81 40.61 40.61
Am Eagle, 200 oz Min 1.00 41.46 42.36 42.36
SPOT PLATINUM: 1,803.50      
Plat. Am Eagle 1.00 1,803.50 1,903.50 1,903.50
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© 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.

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