The Moneychanger
Daily Commentary
Tuesday, 21 August a.d. 2012 Browse the commentary archive

Breakout confirmations came sharp & fast in silver & gold today, but the day didn't treat stocks or the US dollar index quite so kindly.

Here is one of those silly anomalies that allow our Rulers to herd us like sheep: talking obviates acting for central banks. Back in July the gassy head of the European Central Bank, Super-Mario Draghi, boasted that he would do anything necessary to keep the euro together. Gas, all gas -- he did nothing, but in the world of pure illusion we live in, where even most of the people are wet cardboard, that's enough to boost markets. Euro rose to a 7-week high against the US dollar today, but on news of -- what? Nothing. Speculation, gas, that the ECB may act soon to do something about Italy & Spain's ballooning borrwwoing costs.

Take this to the next level of ludicrousness: there's nothing Draghi can do. Nothing. He can't buy the bonds, he can't bail out Italy & Spain, he has no bucket big enoguh to hold all the garbage. Yet he spoke, & therefore need not act.

More likely than the talk is a behind the door intervention by the Nice Government Men, since the dollar tumbled through 82 resistance today and skidded to a stop at 81.885, down 57 basis points or 0.73%, a meaty move that technically breaks the last low & threatens to drag the dollar lower (as if something that low could be dragged lower!).

More to the technical point, the euro today did gap up, above the crucial 62 day moving average (123.98) AND piercing the reigning downtrend line. This doesn't put the scabby euro in any great position, since the downtrend line higher, around 127.70 today, promises to stop it as well. Euro closed at $1.2472, up 1.01%.

Trying to be objective as I deal with such a hateful topic, is like trying to write compliments about the slugs eating your tomato plants. I confess the euro has built a uptrend from its July 120.42 low and today broke out upwards from an even-sided triangle. Higher prices are in its future, insofar as one can make a rational and logical inference about an irrational & illogical government-manipulated market.

Japanese yen rose 0.17% to 126.16 cents (Y79.26). Remains beneath 200 and 50 DMAs, headed lower.

STOCKS fell across the board today. Tried to climb the mountain early, but about 10:45 tripped, stumbled all the way down the mountainside, then over the edge into the gully at the mountain's foot. Owch.

Dow slipped 68.06 or 0.51% to 13,203.58. S&P500 dwindled 4.96 (0.35%) to perch at 1,413.17.

Looking at the Dow, it reached its rising wedge's top boundary today and fell back like the Wicked Witch of the East facing Dorothy with a bucket of water. S&P500 looks the same. Both are struggling against this year's highs. If they can beat that mark, they will benefit from a wave of enthusiasm that will blow out like a bad tire on hot concrete, but it will carry them slightly higher.

Let us now talk about gold. Oernight it knocked & knocked on $1,622, then at the New York Open gapped up, jumping clean from 1628 to $1,635, then hitting $1,641. Close found it up $19.80 at $1,639.90. Thus gold today loudly broke out, & confirmed silver's breakout yesterda.

It doesn't stop there. Generally gaps come in pairs, the first a "breakaway" gap, then a little sideways trading, then another gap near the move's top, the "exhaustion" gap. This move probably has another $15 in it before it slows down. Gold is set up now for a rush to $1,680 - $1,725.

Silver broke through 2900 cents on its New York open, then climbed like a young Sherpa all day. After a 2949c high, it ended 83.5 cents more expensive at 2942.1c. I can't stand it when people say "I told you so," but do I remember somebody saying if silver got through 2860c it would run? Did I imagine that?

Silver rose 2.9% today, gold 1.2%. Add to that mix: yesterday the gold/silver ratio fell 1.06%, today another 1.6% to 55.739:1. All this is moving in the right direction for much higher silver & gold prices. Silver ought to reach its 200 DMA (30.56) on this move. Owch! I nearly forgot. Gold finished the day just above its crucial 150 DMA ($1,624.09). Today gold also smashed its way out of that even-sided triangle that has contained it all month long.

Buy the breakouts! Buy the breakouts!

On 21 August 1864 Confederate General Bedford Forrest attacked Memphis in a surprise raid. Some of his men even rode his horse their horses into the lobby of the Gayoso Hotel and attacked the Irving Block Prison. He also met in personal horseback combat a yankee colonel who had been bragging that he would take care of Forrest if he ever met him. He did. Forrest charged, lifted him off his horse bodily with his right hand and brought down his saber on him with his left. Embarassed also was the yankee commander, General Washburn, who fled his quarters in his nightshirt. Forrest took his uniform, but like a gentleman returned it later under a flag of truce.

On 21 August 1863 William Quantrill's Confederate raiders struck Lawrence, Kansas leaving 150 civilians dead. Hard to express the bitterness of the war in Missouri, where genocide was carried out and four counties were forcibly cleared of all inhabitants. A very fair movie rendition of the evnets is Ang Lee's "Ride With The Devil." Not for children!

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
21-Aug-12 Price Change % Change
Gold, $/oz 1,639.90 19.80 1.22%
Silver, $/oz 29.42 0.83 2.91%
Gold/Silver Ratio 55.739 -0.930 -1.64%
Silver/Gold Ratio 0.0179 0.0003 1.67%
Platinum 1,506.50 9.60 0.64%
Palladium 623.60 16.50 2.72%
S&P 500 1,413.17 -4.96 -0.35%
Dow 13,203.58 -68.06 -0.51%
Dow in GOLD $s 166.44 -2.89 -1.70%
Dow in GOLD oz 8.05 -0.14 -1.70%
Dow in SILVER oz 448.78 -15.44 -3.33%
US Dollar Index 81.89 -0.57 -0.69%
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: 1,637.90      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,680.49 1,695.49 1,695.49
1/2 AE 0.50 834.82 859.90 1,719.80
1/4 AE 0.25 421.50 434.04 1,736.17
1/10 AE 0.10 173.51 177.71 1,777.12
Aust. 100 corona 0.98 1,597.44 1,607.47 1,639.94
British sovereign 0.24 385.56 392.56 1,667.64
French 20 franc 0.19 305.80 312.80 1,675.39
Krugerrand 1.00 1,647.73 1,662.73 1,662.73
Maple Leaf 1.00 1,647.90 1,667.90 1,667.90
1/2 Maple Leaf 0.50 810.76 851.71 1,703.42
1/4 Maple Leaf 0.25 405.38 434.04 1,736.17
1/10 Maple Leaf 0.10 162.15 176.89 1,768.93
Mexican 50 peso 1.21 1,958.86 1,975.86 1,638.76
.9999 bar 1.00 1,643.63 1,654.63 1,654.63
SPOT SILVER: 29.35      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 26,000.00 27,750.00 36.27
VG+ Peace dollar 0.77 25,000.00 27,500.00 35.95
90% silver coin bags 0.72 20,913.75 21,163.75 29.60
US 40% silver 1/2s 0.30 8,186.25 8,361.25 28.34
100 oz .999 bar 100.00 2,935.00 2,985.00 29.85
10 oz .999 bar 10.00 298.50 301.00 30.10
1 oz .999 round 1.00 29.20 30.05 30.05
Am Eagle, 200 oz Min 1.00 30.95 31.60 31.60
SPOT PLATINUM: 1,506.50      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,531.50 1,571.50 1,571.50
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.