The Moneychanger
Daily Commentary
Thursday, 4 October a.d. 2012 Browse the commentary archive

Well, when you set a target too close, you run the risk of whiplash. SO I was whiplashed in gold today, but I still don't believe it . . .yet.

The criminals at the European Central Bank left interest rates unchanged today at 0.75%. Bank of England miscreants did the same, but at 0.5%. And there's no Spanish bailout yet.

Dollar index closed below my 79.40 target, losing 56.7 basis points (0.73%) to 79.344. Are my eyes seeing something my brain's not aware of? That ought to take the dollar down, so why am I doubting? It's mighty perilous to fight the tape.

Maybe the reason is that the closes in the dollar & in silver & gold today are not unequivocal. The euro gained 0.88% to $1.3019 (€0.7681), on what news? On Super Mario Draghi's gas-filled boast that central bank actions have "alleviated tensions" in the euro zone. Gas, pure gas, but the currency markets bought it.

Euro popped its head above the downtrend line but stands a long way from the mid-September high at $1.3172. RSI & MACD both point to lower prices.

Yen just stayed in yesterday's range, waltzing with its 50 DMA (127.54c). Closed 127.45c (Y78.46), up 0.05%.

Stocks, like currencies, feed on bloviation. They're like air ferns, but they feed on gas. Dow rose 80.75 (0.8%) to 13,575.36. S&P500 gained 10.41 (0.72%) to 1,461.40. Stocks are wanting to rise, but are slow about it.

Gold made a slightly greater high for the move today at $1,794.90. It augmented $16.80 to close at $1,794.10. Low was a lofty $1,779.88.

Yes, yes, that bested the $1,790 line I drew in the sand yesterday, & maybe I am only fighting the tape, but why didn't it clear $1,800? Why can I see nothing but a broadening top since mid-September? And the same in silver? Yes, a consolidation can resemble a broadening top, until it breaks out upward, yes, I know that.

And that silver really puts the brakes on me. It gobbled up 41 cents today to close above 3500c at 3504.1. High was 3509, low 3465c.

But why in the aftermarket is silver trading at 3485.5c? And gold below $1,790 at $1,787.90.

Then platinum & palladium argue the other way. They were like two drunks with a charge card in a liquor store today. Platinum burst through $1,700 to $1,721.20, up $30.90. Palladium rose $16.85 to $673.10. That brings platinum plumb up to & barely past its last (September) high. But couldn't that be a double top? And it it spent nearly three weeks correcting, why is it so overbought again today? And palladium's close was $30 lower than its September high.

So silver & gold along with platinum & palladium are tugging at the chain like they're dying to run off, & for some reason I can't identify I'm distrustful & doubting. Maybe I'm just out of synch with the market. Maybe I need to wind my watch. I reckon when you're nothing but a natural born fool from Tennessee it's bound to catch up with you sooner or later.

On 4 October 1535 the first complete English translation of the Bible was printed in Zurich, Switzerland. As it turned out, Henry VIII was right to fear it, because the Bible in vernacular languages would turn England & Europe upside down.

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
4-Oct-12 Price Change % Change
Gold, $/oz 1,794.10 16.80 0.95%
Silver, $/oz 35.04 0.41 1.18%
Gold/Silver Ratio 51.200 -0.121 -0.24%
Silver/Gold Ratio 0.0195 0.0000 0.24%
Platinum 1,721.20 30.90 1.83%
Palladium 673.10 16.85 2.57%
S&P 500 1,461.40 10.41 0.72%
Dow 13,575.36 80.75 0.60%
Dow in GOLD $s 156.42 -0.52 -0.33%
Dow in GOLD oz 7.57 -0.03 -0.33%
Dow in SILVER oz 387.41 -2.25 -0.58%
US Dollar Index 79.34 -0.57 -0.71%
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: 1,787.90      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,834.39 1,849.39 1,849.39
1/2 AE 0.50 911.32 938.65 1,877.30
1/4 AE 0.25 460.13 473.79 1,895.17
1/10 AE 0.10 189.41 193.99 1,939.87
Aust. 100 corona 0.98 1,743.74 1,754.50 1,789.94
British sovereign 0.24 420.87 424.87 1,804.89
French 20 franc 0.19 333.80 337.80 1,809.32
Krugerrand 1.00 1,803.99 1,818.99 1,818.99
Maple Leaf 1.00 1,797.90 1,817.90 1,817.90
1/2 Maple Leaf 0.50 885.01 929.71 1,859.42
1/4 Maple Leaf 0.25 442.51 473.79 1,895.17
1/10 Maple Leaf 0.10 177.00 193.09 1,930.93
Mexican 50 peso 1.21 2,138.25 2,155.25 1,787.55
.9999 bar 1.00 1,794.16 1,805.16 1,805.16
SPOT SILVER: 34.86      
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 24,742.58 24,992.58 34.95
US 40% silver 1/2s 0.30 10,090.48 10,290.48 34.88
100 oz .999 bar 100.00 3,485.50 3,535.50 35.36
10 oz .999 bar 10.00 353.55 356.05 35.61
1 oz .999 round 1.00 34.71 35.56 35.56
Am Eagle, 200 oz Min 1.00 36.46 37.11 37.11
SPOT PLATINUM: 1,721.20      
Plat. Platypus 1.00 1,746.20 1,786.20 1,786.20
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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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