The Moneychanger
Daily Commentary
Wednesday, 17 October a.d. 2012 Browse the commentary archive

Everybody except the stock market optimists is laying low until after the US election. That doesn't make for very interesting markets.

Currencies today stand at US$1 = Y78.95 = E 0.7621.

Dollar index continued to slide today, down another 20.5 basis points (0.26%) to 79.016, crashing through its second line of defense support. Burden of proof now rests on the buck to prove it's not aiming to fall further, say, another 40 basis points anyway.

Yen & euro have taken different forks in the road. Yen gapped down two days ago, is below its 50 & 20 day moving averages, & dropped again today, -0.12%, to 126.57c. 200 DMA lurks only 43 basis points below at 126.13, and if the yen falls through that it will attract sellers like a pretty girl attracts invitations to dance.

Euro, on the other hand, has gapped up twice in the last two days. Added another 0.41% to $1.3122 today. Yet it hath not yet exceeded the September intraday high at 1.3172. Why, O, why am I so suspicious? Why do I suspect the Euros made a deal with the US administration to keep things as quiet as possible until after the election? Am I just mean, or insightful?

Stocks gained again today, the Dow lagging. Dow added only 5.22 (0.04%) to 13,557.00 while the S&P500 jumped 5.99 (0.41%) to 1,460.91.

Stocks are reaching for that place they stalled (13,660) earlier this month. If they can pass that, they'll make a new high & all the touts & sirens will be crowing, Dow will push toward 14,000, & the jubilating will be general. Of course, after Obama is re-elected, the gas will come out of that balloon.

Y'all have heard of "counter-cyclical" rallies? Well, this is a "counter-reality" rally.

Silver & gold edged up once again today. Gold gained $6.80 to close at $1,751.50 and silver added 27.5c to close 3319.7c.

Gold has reached the support/resistance where it fell off before, $1,755. It is also about to bump forehead first into the downtrend line from the last top, so will meet opposition from two angles. Not promising.

However, if gold can close above $1,760, I might change my mind. Right now, however, it appears lower prices are coming.

Charts for silver are virtually identical with those Silver is hitting lateral resistance at 3335c and the sloping downtrend line about 3350c. Can this work out to the upside? Lo, 'tis doubtful. A close above 3400c would slay my doubts.

Before y'all wax cross with me, remember not to shoot the messenger. Corrections are uncomfortable for me, too, but better the painful truth than a buttery lie.

Lately I've been getting lots of questions about manipulation of silver & gold. No question in my mind that central banks and the US government manipulate the gold price through Wall Street agents. That's in the statute (Exchange Stabilization Fund in the 1934 Gold Reserve Act authorizes covert gold price manipulation by the US treasury), policy, and observed fact. Go see GATA's work at or Bill Murphy's for all the proof any reasonable person might need.

Then I am asked, "But what good is technical analysis if the market is manipulated?" Plenty, because the manipulation has failed, is failing, & will fail. Typical of any government operation, the conspiracy has succeeded in suppressing the gold price from $252 to $1,750 and silver from $4.02 to $33. Almost as successful as Medicare, social security, & Amtrak.

Put yourself in the manipulators' shoes. They know they can't turn back the powerful tide of gold & silver's primary trend, because they are driven by monetary inflation & they're not about to stop that. Thus the best they can do is try to slow gold down, to harass, to dog, to badger, but no more. Hence, if you were manipulating, wouldn't you stand back when gold is screaming upward, accumulate short positions, then when it begins to weaken sell with both hands? Makes sense to me, but then, I'm only a natural born fool from Tennessee.

My friends from up north often say to me, "The war's over -- get over it!" Here's a book that might help explain why, after 147 years and 4 or 5 generations, we're not over it yet: "Jack Hinson's One-Man War, A Civil War Sniper" by Tom C. McKenney (Pelican Publishing Co., Gretna, Louisiana 2009). Hinson was a Unionist still when Grant invaded Tennessee, until Yankee soldiers killed both his sons, cut their heads off, and stuck the heads on his gateposts. Thus they made of Jack Hinson the most successful Confederate sniper of the war. McKenney spent years gathering his facts, visiting the sites, and even interviewing Hinson descendants, and has produced a minutely detailed but eminently readable study. Y'all can order from Pelican, or

On 17 October 1814 in St. Giles Parish, London the London Beer Flood came pouring out of Meux & Co. Brewery on Tottenham Court Road. A vat containing 161,000 gallons (610,000 liters) of beer burst, setting off a domino failure in the other vats. Altogether 388,000 gallons (1,470,000 liters) of beer burst out into the street, crushing two buildings and filling basement homes with beer. In all eight people drowned. Not recorded is what happened to the rest of the beer.

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
17-Oct-12 Price Change % Change
Gold, $/oz 1,751.50 6.80 0.39%
Silver, $/oz 33.20 0.28 0.84%
Gold/Silver Ratio 52.761 -0.234 -0.44%
Silver/Gold Ratio 0.0190 0.0001 0.44%
Platinum 1,668.00 11.40 0.69%
Palladium 653.70 6.35 0.98%
S&P 500 1,460.91 5.99 0.41%
Dow 13,557.00 5.22 0.04%
Dow in GOLD $s 160.00 -0.55 -0.34%
Dow in GOLD oz 7.74 -0.03 -0.34%
Dow in SILVER oz 408.38 -3.25 -0.79%
US Dollar Index 79.02 -0.21 -0.26%
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: 1,747.90      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,793.35 1,809.08 1,809.08
1/2 AE 0.50 890.92 920.71 1,841.41
1/4 AE 0.25 445.46 469.09 1,876.37
1/10 AE 0.10 183.42 191.40 1,913.95
Aust. 100 corona 0.98 1,704.73 1,715.29 1,749.94
British sovereign 0.24 411.46 415.46 1,764.89
French 20 franc 0.19 326.33 330.33 1,769.32
Krugerrand 1.00 1,768.87 1,785.87 1,785.87
Maple Leaf 1.00 1,757.90 1,772.90 1,772.90
1/2 Maple Leaf 0.50 865.21 908.91 1,817.82
1/4 Maple Leaf 0.25 432.61 463.19 1,852.77
1/10 Maple Leaf 0.10 173.04 188.77 1,887.73
Mexican 50 peso 1.21 2,090.41 2,107.41 1,747.87
.9999 bar 1.00 1,754.02 1,765.02 1,765.02
SPOT SILVER: 33.15      
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 23,484.18 23,734.18 33.19
US 40% silver 1/2s 0.30 9,586.03 9,786.03 33.17
100 oz .999 bar 100.00 3,306.50 3,354.50 33.55
10 oz .999 bar 10.00 336.45 338.95 33.90
1 oz .999 round 1.00 33.00 33.70 33.70
Am Eagle, 200 oz Min 1.00 34.65 35.35 35.35
SPOT PLATINUM: 1,668.00      
Plat. Platypus 1.00 1,678.00 1,718.00 1,718.00
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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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