The Moneychanger
Weekly Commentary
Friday, 28 October a.d. 2011 Browse the commentary archive
Here's the weekly scorecard:
  21-Oct 28-Oct Change % Change
Silver, cents/oz. 3,117.30 3,527.00 409.70 13.1
Gold, dollars/oz. 1,635.10 1,746.20 111.10 6.8
Gold/silver ratio 52.452 49.509 -2.940 -5.6
Silver/gold ratio 0.0191 0.0202 0.0011 5.9
Dow in Gold Dollars (DIG$) 149.29 144.79 -4.50 -3.0
Dow in gold ounces 7.22 7.00 -0.22 -3.0
Dow in Silver ounces 378.81 346.79 -32.03 -8.5
Dow Industrials 11,808.79 12,231.11 422.32 3.6
S&P500 1,238.25 1,285.09 46.84 3.8
US dollar index 76.29 75.04 -1.25 -1.6
Platinum 1,516.00 1,645.50 129.50 8.5
Palladium 617.00 663.85 46.85 7.6

Some weeks not much happens, but that wasn't this week. While stocks rose, silver & gold rose a lot more. All this turmoil arose out of the Eurocrats' indecision about a bank bailout plan. When that uncertainty was removed yesterday -- allegedly -- euro, stocks, silver, & gold shot up and the dollar tanked. Mark it well: for stocks & the euro, yesterday was as good as it gets. Quite literally.

As good as it gets.

I checked the Dow chart today, and plain as the world there were the lip-prints of a final kiss good-bye yesterday.

What do I mean? Dow was making a long narrow triangle within a broadening top. Draw a line from the March low thru the June low. The waterfall breakdown fell through that line in August, and fell from 12,000 to 10,600.

Yesterday the Dow only accomplished a rally to that trendline. With breakdowns or breakouts upside, markets very frequently return to the point of breakout for that final kiss good-bye before continuing in the direction of the original break. Lip prints.

Stocks had been vacillating, hoping for a solution to the European financial crisis. When yesterday's counterfeit was presented, all the hungry fish jumped at it, swallowing the wooden minnow. Now that focus has been removed from Europe, eyes can return to the economy, where they will search in vain looking for any help for stocks.

Now stocks may even move higher, even to 12,800, the last top. This will complete the megaphone/Jaws of Death pattern, and cap the whole mess with a fatal triple top.

If y'all have stocks left -- in your IRA, 401(k), in your basement -- this is the last train, blowing the whistle and leaving the station. Time to sell.

Dow today rose 22.56 points (0,187%) to 12,231.11 & the S&P500 rose 0.5 (0.04%) to 1,285.09.

Stocks -- your reservation at the under-the-culvert Cardboard Hilton Retirement Home.

The European "fix" fixes nothing, but when you blow some smoke in front of it and back-light it from behind, it looks a lot bigger. They plan to leverage 440 billion euros to $1.4 trillion to buy up sovereign debt, 5:1 leverage. How might they demonstrate more plainly that they understand nothing? Leverage brought them here in the first place -- leverage will save them?

Never mind, the fix was sufficient illusion to suck in most of the world, for 48 hours at least. The dollar took a body slam, losing 121 basis points yesterday. Today the dollar re-traced all yesterday loss, but didn't hold on to all those gains. Still, it closed above 75, up 16.3 basis points (0.21%) at 75.042. 200 day moving average stands at 75.77. It would be logical that a spike thru the 200 DMA that springs back quickly ends the dollar's decline.

If that "it will rally" outcome is operating, then next week the dollar will remain above 75. On the other hand, if the dollar index sinks below 74.80, the dollar will keep right on sinking.

Euro made a big jump yesterday, but again, that was as good as it gets. High yesterday was 1.4247, about where the Euro broke down in early September. It might edge higher, but we have most likely seen the limit of its recovery. No gains from here worth chasing.

Japanese yen made another new all-time high close today at 131.90c/Y100 (Y75.82/$1), up 0.17%. Inauspiciously it has traded out a little rising wedge, & those generally break out to the downside.

Silver & gold, too, fed off the fat & phony Euro feast. They may have gobbled up so much they wind up puking it all back.

From Thursday to Thursday (yesterday), gold rose $134.80 (8.3%) hand in hand with silver up 482.9c (16%). That's as good as it gets. You can't expect moves like that to last forever -- or even very long.

Today gold flattened, losing 50c to shutter Comex at $1,746.20. Think of a baseball thrown into the air, how it rises and rises and rises, then seems to hesitate and begins to fall.

Looking at a five day chart, gold was trapped below $1,660, broke out Tuesday & ratcheted to $1,725, then yesterday stepped to $1,750. Chart shows three plain steps.

Gold hit its 50 DMA yesterday ($1,739), a frequent target for upside corrections. Above awaits also the $1,775 milestone where gold broke down in late-September -- final kiss good-bye?

Of course, gold will erase all my suspicions if it closes above $1,800 for two days. Otherwise, expect lower prices, a trip to $1,600 (150 DMA) or even $1,550 (apex of last triangle gold broke out of).

Silver's chart looks like gold's, only moreso,. since it's more volatile upside & downside. Yesterday silver nearly reached its 200 DMA (3631c), a likely barrier to further gains. Limit to this rally appears to be 3700c, maybe 3800c at most. I will be mildly surprised if gold & silver gain much next week.

Shoot me if you will, but I still hear the charts whispering that both metals have not yet finished this correction and bottomed. If gold can close two days above $1,800 -- never mind where silver stands -- I'll confess I was wrong. Otherwise, I do the world's hardest job: WAIT.

Here's a tee-tiny investment tip for all of y'all: NEVER BUY SEMI-NUMISMATIC COINS AS A GOLD INVESTMENT. Collecting coins as a hobby is one thing, investing another.

Over time, premium always disappears. Proving it again, a fellow yesterday showed me an investment he had made -- based on the dealer's protestations that "these aren't subject to government confiscation" -- in XF & AU grade US $20 gold pieces. Bottom line is, he paid about a 35% premium, which in the last year has completely vanished. Today he could sell the whole batch for 1.5% more than he paid a year ago. If he had simply bought old tacky gold bullion Krugerrands, he would have made a 36% return on his investment, after all transaction costs.

And y'all listen: the chance of the yankee government confiscating your gold ranks substantially lower than the chance of your being abducted by Zambodian aliens on your way home tonight. This ain't 1934.

Y'all better be careful who you deal with in the silver & gold business, present company included. Some of them are ignorant, and some of them would steal the quarters off a dead man's eyes. When your money is at stake, there's no substitute for doing your own research and asking lots of questions. Of course, you ought to be equally chary of ANYBODY selling any financial ANYTHING, from stocks to insurance to mortgages.

At dawn on 28 October 1940 Italian dictator Benito Mussolini's ambassador demanded of Greek Prime Minister Ioannis Metaxas that Greece allow Axis forces to enter Greece and occupy certain strategic points. Metaxas answered with one word, "Ohi!" -- "No!" Greeks took to the streets shouting "Ohi!" Axis forces invaded and occupied Greece, but they didn't stay forever.

The Greeks understood the one word upon which all human freedom hangs: "No!"

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
CLOSES Price Change % Change
Gold, $/oz 1,746.20 -0.50 -0.0
Silver, $/oz 0.35 0.17 97.4
Gold/Silver Ratio 4,950.950 -25.971 -0.5
Silver/Gold Ratio 0.0002 0.0001 97.4
Platinum 1,645.50 8.50 0.5
Palladium 663.85 -2.40 -0.4
S&P 500 1,285.09 0.05 0.0
Dow 12,231.11 22.56 0.2
Dow in GOLD $s 144.79 0.32 0.2
Dow in GOLD oz 7.00 0.02 0.2
Dow in SILVER oz 34,678.51 -33,640.18 -49.2
US Dollar Index 75.04 0.16 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: 1,743.70      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,785.55 1,801.55 1,801.55
1/2 AE 0.50 894.52 915.44 1,830.89
1/4 AE 0.25 450.09 462.08 1,848.32
1/10 AE 0.10 186.58 193.55 1,935.51
Aust. 100 corona 0.98 1,697.21 1,712.21 1,746.80
British sovereign 0.24 410.47 417.47 1,773.44
French 20 franc 0.19 325.55 332.55 1,781.19
Krugerrand 1.00 1,752.42 1,768.42 1,768.42
Maple Leaf 1.00 1,755.70 1,776.70 1,776.70
1/2 Maple Leaf 0.50 913.26 924.16 1,848.32
1/4 Maple Leaf 0.25 457.72 462.08 1,848.32
1/10 Maple Leaf 0.10 177.86 200.53 2,005.26
Mexican 50 peso 1.21 2,087.49 2,104.49 1,745.45
.9999 bar 1.00 1,749.80 1,760.80 1,760.80
SPOT SILVER: 35.09      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 25,500.00 28,000.00 36.60
VG+ Peace dollar 0.77 25,000.00 27,000.00 35.29
90% silver coin bags 0.72 24,656.78 25,056.78 35.04
US 40% silver 1/2s 0.30 9,760.08 10,060.08 34.10
100 oz .999 bar 100.00 3,533.50 3,593.50 35.94
10 oz .999 bar 10.00 350.85 356.85 35.69
1 oz .999 round 1.00 35.19 35.94 35.94
Am Eagle, 200 oz Min 1.00 36.84 37.84 37.84
SPOT PLATINUM: 1,645.50      
Plat. Am Eagle 1.00 1,645.50 1,745.50 1,745.50
Home Questions & Answers Articles & Resources
The Moneychanger, P.O. Box 178, Westpoint, TN 38486

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

This is not an offer to buy or sell. Prices subject to change without notice. To enter an order, call us at (888) 218-9226 or (931) 766-6066. Sorry, no sales to Tennessee.

For complete details on how to buy from us or sell to us, please click here.