The Moneychanger
Weekly Commentary
Friday, 4 May a.d. 2012 Browse the commentary archive
Here's the weekly scorecard:
  27-Apr 4-May Change % Change
Silver, cents/oz. 3,134.70 3,038.00 -96.70 -3.1
Gold, dollars/oz. 1,664.00 1,644.70 -19.30 -1.2
Gold/silver ratio 53.083 54.138 1.050 2.0
Silver/gold ratio 0.0188 0.0185 -0.0004 -1.9
Dow in Gold Dollars (DIG$) 164.33 163.87 -0.46 -0.3
Dow in gold ounces 7.95 7.93 -0.02 -0.3
Dow in Silver ounces 422.00 429.17 7.18 1.7
Dow Industrials 13,228.31 13,038.27 -190.04 -1.4
S&P500 1,403.36 1,369.10 -34.26 -2.4
US dollar index 78.75 79.51 0.76 1.0
Platinum 1,570.50 1,523.80 -46.70 -3.0
Palladium 681.60 649.90 -31.70 -4.7

Look at that scoreboard. Silver took a beating, gold took a leetle whipping, stocks were taken to the woodshed, and the platinum group taken to the woods and beaten with barbed wire.

Wall Street was telling us on Tuesday that the millennium had arrived, but doesn't look like it today. Dow puked back 168.32 points (1.27%) to close barely above 13,000 at 13,038.27. S&P500 really took it hard with a 22.47 (1.61%) drop.

I often call it the Potemkin Dow because we know that the US government manipulates that market, and has since 1987 (See President's Working Group on Financial Markets). Of all stock indices in the world, only the Dow & S&P500 have held up. Odd, don't you think? Today we saw that difference emerge as the much broader (500 companies) S&P500 sank 1.6% while the narrow Dow (30 companies) sank only 1.27%. More, the S&P500 also sank through emotional/morale/psychological support at the round number 1,400. Charts don't match, either.

Since February 2011 the S&P500 has formed a clear head and shoulders, which usually signals a top but can sometimes signal only a consolidation. Today it closed nearly slap on the neckline, & stands one and one half gnat's whiskers from breaking down. If it does break through that neckline, support appeareth not before 1,275, where awaiteth the 200 day moving average. H&S is complete.

The Dow has formed a like H&S, but the right shoulder went to a slightly higher high than the head. Does that point to a continuation upward? Today it broke down badly, falling through the 20 & 50 DMAs (13,040 & 13,061). H&S neckline stands at 12,650, so the Dow hovers 400 points above that, but the S&P500's condition flashes bright yellow caution lights on the Dow.

Folks, I don't believe this. I don't believe the phony Dow, I don't believe the stock rally, I don't believe the banks are all just fine and fatter'n October hog, I don't believe the economy is recovering, & I don't believe ne'er a word that falls from the mouths of Federal Reserve & government toadies. The closets are stuffed full of corpses, and some day soon, the doors will begin falling open.

And in the Potemkin currency markets this week, the US dollar index jes' performed mighty miracles. Broke down last week out of a two month forming triangle, and in a rational world would have followed through lower. Not the dollar! It's the World's Reserve Currency, right up there next to grocery coupons. It came back up to the lower boundary of that triangle -- yea, against all odds -- and closed at 79.505, up 31.3 basis points today and 75.7 basis points for the week.

Now I may be foaming at the mouth about nothing. Maybe the dollar index merely has climbed up to that line to give it a final kiss good-bye, but today it closed above the line a tad, and above the 20 & 50 DMAs (79.33 & 79.37).

This week's trading low at 78.60 has a twin in the first of April, so this may very well mark a double bottom for the dollar from which it will launch into the stratosphere. Well, to the tops of small outbuildings at least.

How can you tell which? If the dollar closes above 80.00 it will have sliced clean through the nose of that triangle to the upper side. That will attract more buyers. If the dollar falls below 79, then we will either suffer more of this sideways trading or a lower dollar.

I was wrong last week when I thought that silver and gold might have seen their final lows. Both went lower this week.

For the week gold lost $19.30 (1.2%) & closed at $1,644.70. In today's trading it made a low for the week, but found loads of buyers there at $1,626.50 and moved up with a plainly impulsive wave. That dive to a new low followed by a higher close is positive.

But this also sets out requirements for gold, namely, it must not close below $1,635. Up above, $1,682 awaiteth still, daring gold to cross that line & rally.

Most optimistic for gold is this: from last week's middle to this week's end, gold pierced the upper boundary of that bullish falling wedge & came back to that boundary line. That famous kiss good-bye? Could be. You'll know when gold crosses above $1,682. This might be a very good time to buy.

That falling wedge line was what gold hit today at $1,626. For now, the odds favor gold rising next week. Watch that $1,626.

Silver closed Comex today at 3038c, up 42.1c.

Friends, at silver's 2974 cent low today it stopped smack on the lower boundary line of that falling wedge, then bounced right back. To this add a vaguely upside-down head & shoulderish or V-bottom pattern. If that was silver's turnaround, then low, it will not again close below 3010c, & next week must speedily trade above 3100c. Otherwise, silver has just been conning us all.

Gold/Silver ratio reached 54.5 this week. If you are sick of waiting for my (perhaps quixotic) 57.5:1 ratio, go ahead & swap gold for silver, quickly.

A great heaviness has fallen on the silver & gold markets, but don't let it mislead you. 'Tis not the heaviness of a bull market that has turned to bear, but the dolor of a bull market correcting long & hard. The bull loves to wear out its riders so it can throw them off and laugh at them in the dust while it runs away. All the media have soured on silver & gold, the market has gone flat & keeps disappointing. It's just about time for the turnaround.

Before you listen to those croakers, listen here: silver & gold are barely one-third of the way through their price gains. Now is not the time to panic, but to gird up your loins and buy more.

On 4 May 1981 the Federal Reserve raised its interest rate to 19%. That was down from 21.5% in December. Paul Volcker had been appointed as FedHed in 1979 with the brief of wringing inflation out of the monetary system. One thing for sure: raising the interest rate to 21.5% will pull people into dollars. Whatever sense the Fed had back then (& it wasn't much) is long gone now, along with all the serious people and adults.

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
4-May-12 Price Change % Change
Gold, $/oz 1,644.70 10.50 0.6
Silver, $/oz 30.38 0.42 1.4
Gold/Silver Ratio 54.140 0.338 0.6
Silver/Gold Ratio 0.0185 0.0003 1.4
Platinum 1,523.80 -8.50 -0.6
Palladium 649.90 -10.50 -1.6
S&P 500 1,369.10 -22.47 -1.6
Dow 13,038.27 -168.32 -1.3
Dow in GOLD $s 163.87 -3.17 -1.9
Dow in GOLD oz 7.93 -0.15 -1.9
Dow in SILVER oz 429.17 -11.65 -2.6
US Dollar Index 79.51 0.31 0.4
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: 1,642.00      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,678.12 1,694.12 1,694.12
1/2 AE 0.50 829.21 862.05 1,724.10
1/4 AE 0.25 418.71 435.13 1,740.52
1/10 AE 0.10 174.05 180.62 1,806.20
Aust. 100 corona 0.98 1,593.39 1,608.39 1,640.88
British sovereign 0.24 386.53 393.53 1,671.74
French 20 franc 0.19 306.56 313.56 1,679.49
Krugerrand 1.00 1,645.28 1,661.28 1,661.28
Maple Leaf 1.00 1,652.00 1,672.00 1,672.00
1/2 Maple Leaf 0.50 812.79 853.84 1,707.68
1/4 Maple Leaf 0.25 406.40 435.13 1,740.52
1/10 Maple Leaf 0.10 162.56 177.34 1,773.36
Mexican 50 peso 1.21 1,959.80 1,976.80 1,639.54
.9999 bar 1.00 1,647.75 1,658.75 1,658.75
SPOT SILVER: 30.28      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 25,914.69 29,000.00 37.91
VG+ Peace dollar 0.77 24,414.69 28,000.00 36.60
90% silver coin bags 0.72 21,074.63 21,324.63 29.82
US 40% silver 1/2s 0.30 8,459.13 8,634.13 29.27
100 oz .999 bar 100.00 2,997.50 3,037.50 30.38
10 oz .999 bar 10.00 305.25 309.25 30.93
1 oz .999 round 1.00 30.03 30.93 30.93
Am Eagle, 200 oz Min 1.00 31.88 32.58 32.58
SPOT PLATINUM: 1,523.80      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Platinum Platypus 1.00 1,563.80 1,618.80 1,618.80
Home Questions & Answers Articles & Resources
The Moneychanger, P.O. Box 178, Westpoint, TN 38486
888-218-9226

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.