The Moneychanger
Daily Commentary
Tuesday, 17 July a.d. 2012 Browse the commentary archive

I may be the king fool of all fools, but because I am I have installed a very, very sensitive hogwash meter so I'm not so easily gulled. Well, I was a-minding my own business today, just leaned back & taking it easy when that hogwash meter started squawking & blowing and the needle pushed clean over past the red. "Man!" I thought, "the presidential campaign must be closing in on Tennessee!"

I should have known better, it was just a Bernanke alert. He was blowing smoke to the congress today, & they were all a-posing & a-posturing along with him as if something they did or he said actually made a difference, when they all know 'tain't nothing in the world but Grade A ain't fit for nothing but hogs hogwash.

Today Bernanke the Bloviator warned 'em we were sure nuff in trouble if congress doesn't do something to dodge a budget crisis. Yep, unless congress lowers taxes & increases spending, why, the whole blessed economy will fall over the cliff into a recession. Boss Bloviator didn't bother to explain how we would be able to tell the recession then from the one we have now.

Cause I'm only a fool, I have to make lists so I can remember things. Yesterday, remember, I gave y'all a list of Verities, and remember Rules 2 & 4:

"Second, they care not a hoot for the long run. Like the pseudo-economist Keynes said, "In the long run we're all dead." All they care about is keeping the system running until they get off at 5:00 p.m. Permanent reforms, economic justice, equal opportunity, debt relief, rule of law, all these are just labels to make the public drink the jugs of hogwash.

"Fourth, & most important for y'all to understand because it determines the future, massive debt & government deficit spending are not an accident, not an excess of the system, but as organic to it as blood to the human body. Therefore, though they may criticize borrowing & spending, they cannot stop it because they must INFLATE OR DIE. That is the system's nature, & that is why silver & gold offer such promise. They will keep inflating, and inflating drives silver & gold up."

Fool that I am, I rest my case. And I dialed down the sensitivity on my hogwash meter. Living only 750 miles from Washington, it'll drive me crazy otherwise.

Markets today brought no great surprises. Dollar index continued to erode, down 13.1 basis points (0.17%) to 83.024, but still hanging on by its toes to that 83 mark. Euro took advantage of the dollar's head cold to creep up 0.17% to $1.2292, nothing to write to Brussels about. Yen gave back some of yesterday's gains falling 0.25% to 126.48 cents/100 yen (Y79.06/US$1). Dropped back below the 200 DMA, so that might put the finish to its climb.

Stocks bounced up off the bottom boundary of their rising wedge, but this changeth not the picture. Dow gained 0.62% to 12,805.54 (78.33 points) and the S&P500 gained 0.74% (10.03 points) to 1,363.67. A fall lieth in the future.

I read a couple of articles that examined a New York Fed study that implied the S&P500 would be 50% lower [sic] were it not for the Fed's actions. Also said that the bulk of stock returns for more than a decade have come from Fed actions. Y'all can read 'em at http://www.cnbc.com/id/48165921?__source=yahoonews&par=yahoonews or http://libertystreeteconomics.newyorkfed.org/2012/07/the-puzzling-pre-fomc-announcement-drift.html. Better take a couple of No-Doz or drink a quart of coffee before y'all attempt that second one.

Ask yourself: what does that say about the US economy? The US stock market? The limits of Fed or government action? Ain't no markets, ain't no economy, just a cardboard cutout held up by printing money.

Neither silver nor gold gave up any secrets today. Gold shaved off $2.10 to end at $1,589.10. Silver lost -- get your microscope ready -- one half cent to close 2729.2.

Gold's low stretched lower than yesterday at $1,571.80 but the high reached higher, to $1,599. And WHOOPS! There's another one of those funny formations, where gold begins to rise sharply & within a little while is slapped winded & driven down. Jes' an accident, I bet, an artifact, a fluke, or NGM playing around.

Silver's low came at 2680.5, same as yesterday's, but the high reached higher, to 2759.5. Like it's big brother, silver got slapped around by the Invisible Hand today. Closed slap on the 20 day moving average (2729c).

Today's markets merely moved sideways & changed nothing. Silver & gold are marching in place through the summer doldrums. Buy the drops.

On 17 July 1864 President Jefferson Davis replaced Gen'l. Joe Johnston with John Bell Hood as commander of the Army of Tennessee. Let's just say that was not one of his better decisions, and leave it at that.

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

— Franklin Sanders, The Moneychanger

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Market Snapshot See more charts and market data
17-Jun-12 Price Change % Change
Gold, $/oz 1,589.10 -2.10 -0.13%
Silver, $/oz 27.29 -0.01 -0.02%
Gold/Silver Ratio 58.226 -0.066 -0.11%
Silver/Gold Ratio 0.0172 0.0000 0.11%
Platinum 1,418.30 3.50 0.25%
Palladium 582.10 5.55 0.96%
S&P 500 1,363.67 10.03 0.74%
Dow 12,805.54 78.33 0.62%
Dow in GOLD $s 166.58 1.25 0.76%
Dow in GOLD oz 8.06 0.06 0.76%
Dow in SILVER oz 469.20 2.96 0.63%
US Dollar Index 83.02 -0.13 -0.16%
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: 1,584.60      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,625.80 1,640.80  
1/2 AE 0.50 800.22 831.92  
1/4 AE 0.25 404.07 419.92  
1/10 AE 0.10 167.97 174.31  
Aust. 100 corona 0.98 1,537.69 1,551.69  
British sovereign 0.24 373.01 380.01  
French 20 franc 0.19 295.84 302.84  
Krugerrand 1.00 1,599.02 1,614.02  
Maple Leaf 1.00 1,594.60 1,614.60  
1/2 Maple Leaf 0.50 784.38 823.99  
1/4 Maple Leaf 0.25 392.19 419.92  
1/10 Maple Leaf 0.10 156.88 171.14  
Mexican 50 peso 1.21 1,891.29 1,907.29  
.9999 bar 1.00 1,590.15 1,601.15  
SPOT SILVER: 27.26      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 23,082.88 26,000.00  
VG+ Peace dollar 0.77 22,082.88 25,000.00  
90% silver coin bags 0.72 19,633.90 19,883.90  
US 40% silver 1/2s 0.30 7,569.70 7,744.70  
100 oz .999 bar 100.00 2,726.00 2,776.00  
10 oz .999 bar 10.00 277.60 280.10  
1 oz .999 round 1.00 27.11 27.96  
Am Eagle, 200 oz Min 1.00 28.86 29.56  
SPOT PLATINUM: 1,418.30      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,443.30 1,483.30  
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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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