The Moneychanger
Weekly Commentary
Thursday, 11 October a.d. 2012 Browse the commentary archive
Here's the weekly scorecard:
  5-Oct 11-Oct Change % Change
Silver, cents/oz. 3,451.60 3,404.60 -47.00 -1.4
Gold, dollars/oz. 1,778.60 1,768.80 -9.80 -0.6
Gold/silver ratio 51.530 51.953 0.420 0.8
Silver/gold ratio 0.0194 0.0192 -0.0002 -0.8
Dow in Gold Dollars (DIG$) 158.18 155.74 -2.44 -1.5
Dow in gold ounces 7.65 7.53 -0.12 -1.5
Dow in Silver ounces 394.31 391.42 -2.89 -0.7
Dow Industrials 13,610.15 13,326.39 -283.76 -2.1
S&P500 1,460.93 1,432.84 -28.09 -1.9
US dollar index 79.42 79.78 0.36 0.5
Platinum 1,703.30 1,687.80 -15.50 -0.9
Palladium 661.75 649.45 -12.30 -1.9

England has no kidney bank, but it does have a Liverpool.

I'm sending you this weekly summary early this week, because tomorrow I will be busy with the Transformations & Renewals Conference. God willing, I will return Monday, having enjoyed an enlightening & uplifting weekend.

The weekly scoreboard always tells the tale. First, confusion abounds. Markets that should move together show mixed & contradictory closes, e.g., Dow down and S&P500 up, gold up, silver down. However, all these closed lower this week: gold, silver, platinum, palladium, the Dow, and the S&P500. On that board, only the dollar rose this week, & that grudgingly. Seems obvious that investors are wary of committing themselves before the election, although whether Peter Pan or Tinkerbelle is elected, it won't make any difference in anything, except the rate at which we are fleeced & enslaved.

Yesterday morning on National Proletarian Radio, the Voice of International Socialism & Stupidity, I heard some college students interviewed about the election. I pass over in silence exactly how much deep judgment a 21 year old can have, and get to the point. One girl said she was voting for Romney because he could create jobs. Could y'all hear me groan?

You cannot have an intelligent conversation with a person who believes that politicians create jobs. They simply don't know enough to form the words. PRODUCERS create jobs, governments consume resources. Any money government spends must by inflating or taxing come first from producers, curtailing their resources, causing them to consume less, and, obviously, employ fewer workers.

Maybe the government is putting something in the water that makes people believe stupid ideas really will work: stupidium, the last and dumbest element.

At the moment the big question overhanging the market is whether the US dollar index is down for the count or intending to rally. It has twice sought to break through 80, with wretched impotence. Today it held on above its 20 DMA, so technically remains pointed up. Dollar is battling its downtrend line from July, & should it conquer, will run to the 200 DMA at 80.70, or even to 81. This will spook stock & metals investors the way a green dog spooks quail in an open field. (He doesn't know to stop and point at 'em.)

To maintain upward momentum the US dollar index must remain above 79.50.

US1.00 = E0.7737 = Y78.33. Euro closed up 0.46% at $1.2925 but beneath its $1.2958 20 DMA. Has failed to breach that downtrend line & advance. Looks mighty poorly, kinda green around the gills.

Yen closed 127.67 cents, down 0.18%. Every bit as flakey as the euro.

Stocks have reached the Fish or Cut Bait crossroads. If the Dow closes below 13,300 (50 DMA is 13,326) it will fly like your seven-year old trying his batman cape off the garage roof.

Dow today dropped 18.58 (0.14%) to 13,326.39 while the gainsaying S&P500 rose 0.28 to 1,432.84. Both the Dow & S&P500 have fallen down from their rising wedges & unless they can catch their balance & rise, a fall yet huger awaits.

Let's think first about the Gold/Silver Ratio before we talk silver & gold. Today's ratio closed at 51.953, near the top of the last month and a half's range. Above, between 53.5 and 54 is a gap the ratio left on the way down. More, the 50 DMA stands at 53.74 and the 200 DMA at 54.05, & both are likely targets for an upside correction. Odds here favor a rise to 54. Remember that a rising ratio means falling gold & silver, & vice versa.

Gold closed up $5.60 to $1,768.80 while silver gainsaid with a lower close, down 2.7 cents to 3404.6.

Both silver & gold have traced out broadening tops formations punctuated by a double top. This might instead prove to be a consolidation formation, it's true, but until gainsaid, gravity has control.

Gold must sling its leg over $1,800 & step out smartly to contradict this broadening top view. Down below, if it breaks the last low ($1,738) it will probe beneath down to $1,700 or $1,650.

Silver has double tops about 3544c, and a hammock beneath at about 3350c. Targets if it falls out of that hammock are 3100c and 3200c.

Instead of whining & griping, let loose that smile & thank Heaven for the opportunity to buy silver & gold at reduced prices before they launch moonward.

Here's an example why I don't worry too much about short term timing. Customer reminded me today he had bought in August 2008 at $805 gold and $14.15 silver. After August 2008 both nosedived, silver down to $8.80 and gold to $705. Owch! We're ruined!

Not quite. As of today, that silver had gained 123% (was 2.23 times what he paid for it) and the gold had gained 108% (was 2.08 times cost).

Looking from here, that temporary spasm of bad timing doesn't look so bad after all.

On this day in 1884 was born Eleanor Roosevelt, wife of President Franklin D Roosevelt. Not everybody loved her. When she died, Westbrook Pegler wrote that "Thousands came. Some to mourn, but most to make sure."

Whoopie! The digital versions of At Home In Dogwood Mudhole are ready. Hard copies won't be here until 26 October, but if you want to purchase AHIDM in PDF, Kindle, or e-Book format for $16.95, you can order at http://store.the-moneychanger.com/products/at-home-in-dogwood-mudhole-vol1

Sorry, I've worn out two pencils and a fountain pen trying to figure out how to autograph those digital versions, but it's licked me. I can't do it.

And once y'all order & have a chance to read a little, let me know what you think. If it doesn't make you gasp, laugh, cry, or jump up and down (or all at once), I'll refund your electrons.

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
11-Oct-12 Price Change % Change
Gold, $/oz 1,768.80 5.60 0.3
Silver, $/oz 34.05 -0.03 -0.1
Gold/Silver Ratio 51.950 0.165 0.3
Silver/Gold Ratio 0.0192 -0.0000 -0.1
Platinum 1,687.80 11.10 0.7
Palladium 649.45 1.00 0.2
S&P 500 1,432.84 -18.58 -1.3
Dow 13,326.39 0.28 0.0
Dow in GOLD $s 155.74 -0.48 -0.3
Dow in GOLD oz 7.53 -0.02 -0.3
Dow in SILVER oz 391.42 0.32 0.1
US Dollar Index 79.78 -0.32 -0.4
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: 1,768.40      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,814.38 1,830.29 1,830.29
1/2 AE 0.50 901.37 931.50 1,863.01
1/4 AE 0.25 450.69 474.59 1,898.38
1/10 AE 0.10 185.58 193.64 1,936.40
Aust. 100 corona 0.98 1,724.72 1,735.39 1,770.44
British sovereign 0.24 416.28 420.28 1,785.39
French 20 franc 0.19 330.16 334.16 1,789.82
Krugerrand 1.00 1,786.08 1,803.08 1,803.08
Maple Leaf 1.00 1,778.40 1,793.40 1,793.40
1/2 Maple Leaf 0.50 875.36 919.57 1,839.14
1/4 Maple Leaf 0.25 437.68 468.63 1,874.50
1/10 Maple Leaf 0.10 175.07 190.99 1,909.87
Mexican 50 peso 1.21 2,114.93 2,131.93 1,768.21
.9999 bar 1.00 1,774.59 1,785.59 1,785.59
SPOT SILVER: 34.08      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 30,500.00 32,500.00 42.48
VG+ Peace dollar 0.77 30,000.00 32,000.00 41.83
90% silver coin bags 0.72 24,224.20 24,581.70 34.38
US 40% silver 1/2s 0.30 9,861.85 10,061.85 34.11
100 oz .999 bar 100.00 3,400.00 3,448.00 34.48
10 oz .999 bar 10.00 345.80 348.30 34.83
1 oz .999 round 1.00 33.93 34.63 34.63
Am Eagle, 200 oz Min 1.00 35.58 36.28 36.28
SPOT PLATINUM: 1,687.80      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Platinum Platypus 1.00 1,697.80 1,737.80 1,737.80
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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.

Other Important Information

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