The Moneychanger
Weekly Commentary
Friday, 24 August a.d. 2012 Browse the commentary archive
Here's the weekly scorecard:
  17-Aug 24-Aug Change % Change
Silver, cents/oz. 2,799.50 3,060.60 261.10 9.3
Gold, dollars/oz. 1,616.30 1,669.80 53.50 3.3
Gold/silver ratio 57.735 54.558 -3.180 -5.5
Silver/gold ratio 0.0173 0.0183 0.0010 5.8
Dow in Gold Dollars (DIG$) 169.78 162.71 -7.08 -4.2
Dow in gold ounces 8.21 7.87 -0.34 -4.2
Dow in Silver ounces 474.20 429.42 -44.77 -9.4
Dow Industrials 13,275.20 13,142.95 -132.25 -1.0
S&P500 1,418.16 -1,418.16 -1.00  
US dollar index 82.61 81.56 -1.05 -1.3
Platinum 1,471.80 1,553.10 81.30 5.5
Palladium 604.50 651.55 47.05 7.8

My, O, my! It's been many a week, yea, many a month since we've seen silver & gold dance like they did this week. Yet the falling dollar helped stocks not a bit. Labor strife at Lonmin's South African mine at Rustenburg drove platinum & palladium up a tree. I believe we will look back two months from now and say, "Yep, that's where silver & gold broke out into a new rally."

The currency story is quickly told. US dollar index lost 1.3% this week, falling to 81.563 today. No doubt this arises from the Nice Government Men's market operations, as they need to float that euro. Surprise of the week was the yen, unusually and poisonously strong for export-addicted Japan. Euro backed off today 0.36% to $1.2518, bouncing off $1.2600 resistance. Still, it remains in an uptrend. Yen backed off 0.26% to 127.07c (Y78.70). I can't imagine those Japanese NGM letting it rise much higher.

STOCKS had a rotten week, falling to the bottom boundary of their rising wedge formation. Dow would have finished the week down over 200 points if it hadn't rallied today and pared that loss to 132.25 (1%). Dow gathered in 100.51 (0.77%) today to a 13,157.97 close. S&P500 rose 9.05 (0.65%) to 1,411.13. Unless the Dow closes below 13,000 stocks probably have one last upward spurt before the weeping, wailing, & tooth-gnashing begins.

Following the seasonal pattern, it seems, silver & gold have begun a rally in August. Before I follow that up, bear this in mind for everything else I say about metals today. There still exists a possibility that silver & gold will correct sharply after this rally, leaving y'all thinking that the bottom has dropped out. Might even revisit those lows that have held so strongly for a year. If that does happen, it will only be the bull trying to shake off new riders, for gold and silver will return with a vengeance.

On the other hand, having now reached the downtrend lines from their 2011 lows, silver & gold may merely return to their breakout points ($1,625 & 2830 cents) for a final kiss good-bye. A third route: silver & gold next week punch clean through resistance at 3100c & $1,680 and never look back.

Regardless, it is best to BUY THE BREAKOUTS & too much subtlety will stall you out of buying. So even facing all those possible reactions, I would still buy the breakout. If the reactions come, know that they are merely confirming the breakout, and buy more.

From its 2799.5c close last week silver gained 261.1c or 9.3% to 3060.6. Whoo-eee! Gold sparkled but only gained $58.50 (3.3%) to $1,669.80. Gold punctured and stepped through its 200 DMA ($1,649.56) and 150 DMA ($1,642.09), while silver yesterday closed right at, and today above, its 200 DMA (3051). In a second I'll explain why that doesn't mean as much for silver as for gold, but meantime all those "trend followers" with money burning up to be invested someplace saw that 200 DMA crossover & hopped aboard, adding fuel to the rise -- as if it needed fuel, since both metals have shot straight skyward.

On the weekly chart, gold's fury this week took it above the 50 week moving average for the first time since March. Why do you and I care about the 50 WMA? Because since this gold bull began charging, it has been skimming along atop that 50 WMA except for breaches in 2008 and 2011 & 2012. In silver the 50 WMA (now 3096c) has performed the same service, & silver is mere fingertips away from crossing over that.

On a daily chart, more volatile silver treats its 300 DMA as other markets treat their 200 DMAs. That 300 DMA now stands above silver at 3263c, and crossing that will confirm silver has left the dreary woods of correction.

After the huge rise we saw last week, it won't surprise me if silver & gold correct next week, gathering strength to break those overhead downtrend lines. Their rises are fed by the want of other investment opportunities. Other markets are flat or struggling, like stocks, and government bonds offer a zero or negative return after inflation. Lots of hot money is looking for a home. Gold may be upgraded 100% valuation status for bank reserves under new banking regulations, & that would help as well, especially when government bonds are offering negative returns.

Bottom line: it appears the next rally in silver & gold has begun. I don't claim to be anything more than a natural born fool from Tennessee, but ciphering around with some past gold moves (I use a board and a piece of charcoal), I arrived at some shocking forecasts: gold above $2,650 by next June, and at the top of this leg $4,125. Those are minimum figures. Now don't go chiseling those numbers on Stone Mountain next to Lee, Jackson, and Jefferson Davis. They're just forecasts, not prophecies, and loaded with all sorts of iffy assumptions. But they do sort of take your breath away, don't they?

Makes you want to buy some gold and silver.

On 24 August 410 Alaric & his Visigoths sacked Rome, not as in "dismissed from employment" but as in burn, rob, pillage, & rape. Then they settled down in Italy to become Italians, except for the ones who became Spaniards or Frenchmen. Basically all of Europe was re-peopled by Germans of one brand or the other, except for a few Celts clinging to the Celtic fringe, and the Basques. That's what makes European rivalries so amusing. It's as if they're saying, "Our Germans are better than your Germans!"

On 24 August 1574 began the St. Bartholomew's day massacre in Paris, then spread to other cities for over a month. From 3,000 to 79,000 Protestant Huguenots were murdered.

On 24 August 1814 British forces captured Washington, DC and set fire to the White House & the Capitol. I wonder how much it would cost to get 'em to come do that again?

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
24-Aug-12 Price Change % Change
Gold, $/oz 1,669.80 0.20 0.0
Silver, $/oz 30.61 0.16 0.5
Gold/Silver Ratio 54.560 0.004 0.0
Silver/Gold Ratio 0.0183 0.0001 0.5
Platinum 1,553.10 -0.50 -0.0
Palladium 651.55 -4.45 -0.7
S&P 500 1,411.13 9.05 0.6
Dow 13,157.97 100.51 0.8
Dow in GOLD $s 162.89 1.24 0.8
Dow in GOLD oz 7.88 0.06 0.8
Dow in SILVER oz 429.91 1.06 0.2
US Dollar Index 81.56 0.20 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: 1,669.20      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,714.27 1,727.60 1,727.60
1/2 AE 0.50 850.78 876.33 1,752.66
1/4 AE 0.25 429.56 442.34 1,769.35
1/10 AE 0.10 176.83 181.11 1,811.08
Aust. 100 corona 0.98 1,627.97 1,638.15 1,671.24
British sovereign 0.24 392.93 399.93 1,698.94
French 20 franc 0.19 311.64 318.64 1,706.69
Krugerrand 1.00 1,679.22 1,694.22 1,694.22
Maple Leaf 1.00 1,679.20 1,699.20 1,699.20
1/2 Maple Leaf 0.50 826.25 867.98 1,735.97
1/4 Maple Leaf 0.25 413.13 442.34 1,769.35
1/10 Maple Leaf 0.10 165.25 180.27 1,802.74
Mexican 50 peso 1.21 1,996.29 2,013.29 1,669.81
.9999 bar 1.00 1,675.04 1,686.04 1,686.04
SPOT SILVER: 30.59      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 27,500.00 29,000.00 37.91
VG+ Peace dollar 0.77 26,750.00 28,000.00 36.60
90% silver coin bags 0.72 21,764.60 22,014.60 30.79
US 40% silver 1/2s 0.30 8,891.30 9,024.05 30.59
100 oz .999 bar 100.00 3,059.00 3,109.00 31.09
10 oz .999 bar 10.00 310.90 313.40 31.34
1 oz .999 round 1.00 30.44 31.29 31.29
Am Eagle, 200 oz Min 1.00 32.19 32.84 32.84
SPOT PLATINUM: 1,553.10      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Platinum Platypus 1.00 1,578.10 1,618.10 1,618.10
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.