The Moneychanger
Weekly Commentary
Friday, 5 October a.d. 2012 Browse the commentary archive
Here's the weekly scorecard:
  28-Sep 5-Oct Change % Change
Silver, cents/oz. 3,442.40 3,451.60 9.20 0.3
Gold, dollars/oz. 1,770.40 1,778.60 8.20 0.5
Gold/silver ratio 51.429 51.530 0.100 0.2
Silver/gold ratio 0.0194 0.0194 -0.0000 -0.2
Dow in Gold Dollars (DIG$) 156.90 158.18 1.29 0.8
Dow in gold ounces 7.59 7.65 0.06 0.8
Dow in Silver ounces 390.34 394.31 3.97 1.0
Dow Industrials 13,437.13 13,610.15 173.02 1.3
S&P500 1,440.67 1,460.93 20.26 1.4
US dollar index 79.92 79.42 -0.51 -0.6
Platinum 1,647.40 1,703.30 55.90 3.4
Palladium 626.80 661.75 34.95 5.6

I know a guy who's addicted to brake fluid. He says he can stop any time.

Y'all, I oughtn't be doing this job, because I am highly allergic to Hogwash. I am, quite literally, risking a fatal Hogwash reaction just reading about central banks, banks & governments, let alone thinking, pondering, & writing about 'em. One of these days they're gonna find me here on the floor, four paws in the air, dead as a ball peen hammer.

Take today. US government jobs report said 174,000 new jobs were added & unemployment rate dropped from 8.1% to 7.8%. No. 1, it's a government report & we all know the way to tell a government employee is lying is to watch his lips. If they move, he's lying. No. 2, it's in an election year, but we know NO honest administration would pressure its bean counters to fake statistics. Yes, but we haven't had an honest administration since James K. Polk retired in 1849. No. 3, they way they count unemployment, you are only "unemployed" until you despair & give up looking for a job. Then you are no longer unemployed.

For all these reasons, said report was almost as meaningful as an anemometer in a tornado, but nonetheless, markets, with the attention span of a fruit fly, reacted. If Bernanke is watching unemployment, and it drops, then he will print less money, so inflation will drop & the dollar ought to rise and gold to drop. And since clearly unemployment is improving, stocks ought to rise, too, because the economy is recuperating.

Y'all know this makes no sense at all, but markets bought it, like they always swallow the hogwash that central banks & governments can fix they economy they broke in the first place. I have to change the subject. My throat's tightening up & I'm breaking out in hives.

Not one single event today changed my suspicious mind. I still expect the dollar to stage a surprise rally, & silver & gold to correct. In fact, today hardened my suspicions.

US dollar index yesterday fell out of an even-sided triangle downward, but was that a false breakdown? Today it traded down to 79.103, sharply & suddenly, but just as suddenly climbed back up, leaving behind the V-bottom characteristic of reversals. Ended up trading 79.417, up 5.4 basis points. In other words, it tried to break down, but didn't. Provided it advances Monday beyond 79.45, and doesn't close below that 79.10, the US dollar reversed today. Whether it can now conquer resistance at 80 above, we'll see. Remember, no long dollar rally is needed here to trip silver & gold. They are already vulnerable after a long rally of their own.

Today US$1 = Y78.67 = €0.7678. Euro barely climbed, up 0.04% to $1.3025. Yesterday the head of the wicked criminal enterprise known as the "European Central Bank," Mario "The Enforcer" Draghi, announced that the ECB would soon begin buying bonds. He is a master of the gas bag, with a deep grasp of the Blarney Cannon. He fires the blarney cannon, then doesn't need to follow through with the acts, because with central bankers, words speak louder than deeds.

Yen lost again today, 0.24% to 127.12c. It draweth nigh unto its 200 DMA, 126.19c.

Friends, stocks are not right. Remember one day earlier this week all the indices dropped but the Potemkin Dow rose a skootch? It had that sulfury stench of Nice Government Men all over it. Then today, all the indices save the Dow & the Nasdaq 100 PMI (whatever that is) closed down. Nasdaq lost 0.42%, Nasdaq 100 lost 0.59%, Russell 2000 lost 0.27%, S&P500 even lost a tiny 0.3%, but not the Dow. It gained 0.28%.

Now defenestrate the Nice Government Men -- throw 'em out the window & don't even think about manipulation. Markets as interwoven as these stock indices ought, generally, all rise in step. When all the other indices close down, but the Dow closes up, it's a glaring non-confirmation. Oh, I confess that one swallow doth not a spring make, but this queasy performance twice ought to make the wary swallow hard.

'Twas not a bright day for gold & silver, but neither was it fatal. Gold shaved off $15.50 to close $1,778.60, while silver peeled away 52.5 cents to 3451.6c. Look closer.

Gold's five day chart plainly shows a peak yesterday about $1,795, followed by a sharp slide today. Yet $1,775 contained two thrusts downward, and that, I remind y'all, stands above $1,773-ish support-resistance. It held.

On a longer chart, gold has now drawn two tops, with a spike low to $1,740 between. This is a broadening top, a reversal, unless & until gainsaid by a close above those double tops. The 20 DMA awaits below at $1,767.31. Should gold break that, all those cosmic gobs of trend-following hot money will dump gold quicker than a fool drops a red hot horseshoe.

WHEREFORE although gold closed barely higher (0.5%) this week, next week is more likely to weigh gold down. In fact, my boundaries from last week still hold:

Gold above $1,805 (2 day close) with silver above 3525c screams that no correction is coming soon, or

Gold below $1,738 (1 day close) with silver below 3336c sets both up for lower prices.

The 20 day moving averages, first tripwire of a decline, stand now at 3438c & $1,767.31. Any closes thereunder point down.

Correction targets are $1,700, $1,691.90 (50 DMA) and $1,650 for gold, 3200c & 3100c for 3200c & 3100c for silver. If they do fall, expect to last no more than 3 weeks.

Silver marked its low today at 3430c, high at 3509. Silver's 5-day chart is not a reflection of gold's. Silver has a range, call it 3535c - 3420c. It broke downward today and closed nearer the range's bottom than its top. 3420c support therefore becomes worth watching that much more closely.

Panic not, neither lose heart. 'Tis a natural & usual correction silver & gold will make. It will strengthen them just like pruning strengthens a pear tree. By June 2013 $2,000 gold will be ancient history.

"From where the sun now stands, I will fight no more forever." Thus surrendered Chief Joseph & the Nez Perce Indians to the US Cavalry, at Bear's Paw, Chinook, Montana, on 5 October 1877..

On 5 October 1989 evangelist & Christian TV star Jim Bakker was convicted by a Norfolk, Virginia jury of bilking 116,000 "Praise the Lord" TV show followers of $158 million. He was released from prison in 1994 after serving 5 years of his 45 year sentence (a joke from the beginning). During his imprisonment, Bakker's wife and co-host Tammy Faye divorced him because he could no longer afford to pay for her make-up bill.

Y'all cheer up. A glorious fall is coming up & the election season has almost ended.

Whoa! Two more items. First, I thank all of you most humbly for so strongly supporting my new book, At Home In Dogwood Mudhole. Y'all just keep on buying them (and thanks, Brazil, for your order). If you'd still like to order, we're still selling it at AHIDM comes with a money back guarantee: If it doesn't make you laugh, cry, gasp, hug your spouse, or jump up & down (any one of the five), I'll refund your money even though I won't believe you, and you can use the book to throw at your smart-aleck brother-in-law.

Next, I want y'all to consider one more time joining us next week for the Transformations & Renewal Gathering. We still have a few places open, & have been preparing like crazy. Check it out at


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
5-Oct-12 Price Change % Change
Gold, $/oz 1,778.60 -15.50 -0.9
Silver, $/oz 34.52 -0.53 -1.5
Gold/Silver Ratio 51.530 -0.441 -0.8
Silver/Gold Ratio 0.0194 -0.0003 -1.5
Platinum 1,703.30 -17.90 -1.0
Palladium 661.75 -11.35 -1.7
S&P 500 1,460.93 34.79 2.4
Dow 13,610.15 -0.47 -0.0
Dow in GOLD $s 158.18 1.38 0.9
Dow in GOLD oz 7.65 0.07 0.9
Dow in SILVER oz 394.31 5.89 1.5
US Dollar Index 79.42 0.05 0.1
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: 1,777.10      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,823.30 1,838.30 1,838.30
1/2 AE 0.50 905.81 932.98 1,865.96
1/4 AE 0.25 457.35 470.93 1,883.73
1/10 AE 0.10 188.27 192.82 1,928.15
Aust. 100 corona 0.98 1,733.20 1,743.91 1,779.14
British sovereign 0.24 418.33 422.33 1,794.09
French 20 franc 0.19 331.78 335.78 1,798.52
Krugerrand 1.00 1,793.09 1,808.09 1,808.09
Maple Leaf 1.00 1,787.10 1,807.10 1,807.10
1/2 Maple Leaf 0.50 879.66 924.09 1,848.18
1/4 Maple Leaf 0.25 439.83 470.93 1,883.73
1/10 Maple Leaf 0.10 175.93 191.93 1,919.27
Mexican 50 peso 1.21 2,125.33 2,142.33 1,776.84
.9999 bar 1.00 1,783.32 1,794.32 1,794.32
SPOT SILVER: 34.39      
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 24,410.10 24,660.10 34.49
US 40% silver 1/2s 0.30 9,953.30 10,153.30 34.42
100 oz .999 bar 100.00 3,439.00 3,489.00 34.89
10 oz .999 bar 10.00 348.90 351.40 35.14
1 oz .999 round 1.00 34.24 35.09 35.09
Am Eagle, 200 oz Min 1.00 35.99 36.64 36.64
SPOT PLATINUM: 1,703.30      
Platinum Platypus 1.00 1,728.30 1,768.30 1,768.30
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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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