The Moneychanger
Daily Commentary
Wednesday, 5 September a.d. 2012 Browse the commentary archive

To give y'all an idea how silly, yea, brainless the world hath become, markets are all holding their breath to see what Super Mario Draghi & his Eurocrats will say tomorrow about the plan to buy up bonds of the ailing EZ members. How preposterous is this? Why it's 106 CBs (Central Bankers, a measure of Gross Preposterousness).

Let me give you a comparison measure. The usual State of the Onion -- whoops, make that State of the Union -- presidential message hits 65 to 85 CBs. Politicians' speeches about their "faith" usually reach 85 - 103.7 CBs. A drunken husband's explanation of why it was his friend's fault ranks only about 8 CBs. Thus, Draghi is hitting the ball out of the GP park before he even steps up to bat, because he has less chance of fixing the European debt mess as a fruit fly has of finding a banana in Antarctica.

The plan to fix the European sovereign debt mess is the famous Garbage Can Ploy. Y'all remember the Resolution Trust Corporation that "solved" the Savings & Loan Crisis after 1989? Basically, the Garbage Can Ploy creates a big garbage can entity which then BUYS (can y'all believe this?) the rotten paper assets, eventually shifting the load off onto the taxpayers after giving the garbage long enough to compost & lose its stench. Draghi is actually trying to make this broken-down old dog hunt!

US dollar index fell 11.4 basis points (0.15%) to 81.226, moving sideways. Euro closed above $1.2600 at -- $1.2601, up 0.29% but not broken out yet. Speculators clearly expect great things from Super Mario tomorrio. Yen rose a microscopic 0.3% to 127.58c (y78.38). All of this mirrors markets waiting for the event.

All the stock indices except the Dow fell today. After a rocky day falling down a hill, Dow scrabbled up 11.54 points to 13,047.48. S&P500 fell down the hill a bit, down 1.5 to 1,403.44. Something good better happen or the hill becomes a cliff.

Range on silver & gold tightened up today, too. Silver fumbled 7.6 cents to 3227.2c while gold lost $2.10 to $1,690.80.

Today gold traded in a tight $8 range between $1,687.39 and $1,695.10 -- flatlining. Needs a close through $1,700, but won't go anywhere until after tomorrow's tiresome pronouncement.

Silver merely backed off to a 3194c low, validating 3190c as solid support. High at 3234c moved toward yesterday's 3236c, but without conviction. Quiet, waiting for domani.

I'm leaving Friday for a week's vacation, so I'd like to leave y'all with a few ideas about what the next week might look like. First, though, I want y'all to remember that what I do every day is merely entertainment to keep y'all steady in silver & gold. The only sensible investment strategy, the one that always profits more than any other, is to ride the primary trend of a bull market. In other words, buy & hold, get right & sit tight, that's the money maker, not trading in & out.

If, as we can expect, Draghi makes some remark that markets desperate to deceive themselves can color as favorable, i.e., inflationary, silver & gold will shoot on up toward the targets indicated by their flags, $1,740 & 3445 cents. Should he disappoint markets, something central bankers are loathe to do, it will clip gold and silver's wings a day or two, but they'll still advance.

Once they hit those targets, expect a correction that will dip toward the points where they broke out over their year-long downtrend lines, say, $1,650 or $1,640, maybe $1,680 and 3050c to 3000c. After a sharp but not lengthy drop they should rapidly recover and rise into the end of the year. After that correction the barrier will become $1,880 gold.

Steady, steady -- hold your gold & silver & get ready to buy more on a correction.

It will make you laugh, it will make you cry, it may make you mad, and it will you gasp & wonder how people could make so many stupid mistakes without either getting killed or arrested. That's AT HOME IN DOGWOOD MUDHOLE (Vol. I), my new book that recounts my family's move to the country and farming education. Par for the course in my execution of technical excellence, the link to the page I gave y'all in yesterday's commentary was broken. Try That's so short even I can't mess it up, and it will get you an autographed copy and a $5 shipping savings if you order before publication on October 15 (approximately). Dr. Clyde Wilson says, it is "an agrarian epic -- no, THE agrarian epic."

On 5 September 1914 began the First Battle of the Marne in France. In the next 7 days, over 500,000 men became casualties. That's why they called it The Great War.

On 5 September 1795 in France began the Reign of Terror when the National Convention passed measures to repress anti-revolutionary activities. They were so anxious to repress them that they began beheading people, lots of people. The Revolution always eats her children.

On 5 September Sam Houston was elected first president of the Republic of Texas. He came from Tennessee, of course.

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
5-Sep-12 Price Change % Change
Gold, $/oz 1,690.80 -2.10 -0.12%
Silver, $/oz 23.27 -0.08 -0.33%
Gold/Silver Ratio 72.654 0.147 0.20%
Silver/Gold Ratio 0.0138 -0.0000 -0.20%
Platinum 1,574.60 8.60 0.55%
Palladium 646.15 5.90 0.92%
S&P 500 1,403.44 -1.50 -0.11%
Dow 13,047.48 11.54 0.09%
Dow in GOLD $s 159.52 0.36 0.22%
Dow in GOLD oz 7.72 0.02 0.22%
Dow in SILVER oz 560.65 2.32 0.42%
US Dollar Index 81.23 -0.11 -0.14%
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: 1,691.20      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,735.17 1,750.17 1,750.17
1/2 AE 0.50 862.00 887.88 1,775.76
1/4 AE 0.25 435.23 448.17 1,792.67
1/10 AE 0.10 179.16 183.50 1,834.95
Aust. 100 corona 0.98 1,649.43 1,659.71 1,693.24
British sovereign 0.24 398.11 405.11 1,720.94
French 20 franc 0.19 315.75 322.75 1,728.69
Krugerrand 1.00 1,704.73 1,719.73 1,719.73
Maple Leaf 1.00 1,701.20 1,721.20 1,721.20
1/2 Maple Leaf 0.50 837.14 879.42 1,758.85
1/4 Maple Leaf 0.25 418.57 448.17 1,792.67
1/10 Maple Leaf 0.10 167.43 182.65 1,826.50
Mexican 50 peso 1.21 2,022.60 2,039.60 1,691.63
.9999 bar 1.00 1,697.12 1,708.12 1,708.12
SPOT SILVER: 32.18      
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 22,794.20 23,044.20 32.23
US 40% silver 1/2s 0.30 9,021.10 9,196.10 31.17
100 oz .999 bar 100.00 3,218.00 3,268.00 32.68
10 oz .999 bar 10.00 326.80 329.30 32.93
1 oz .999 round 1.00 32.03 32.88 32.88
Am Eagle, 200 oz Min 1.00 33.78 34.43 34.43
SPOT PLATINUM: 1,574.60      
Plat. Platypus 1.00 1,599.60 1,639.60 1,639.60
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© 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.

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