The Moneychanger
Daily Commentary
Tuesday, 6 November a.d. 2012 Browse the commentary archive

What's happened in silver & gold the last two days looks an awful lot like a key reversal. I'll explain later.

Today & yesterday takes place the Election Lottery where people take highly speculative positions anticipating some change arising from the election. For instance, lots of folks are buying stocks, probably anticipating a Romney election which they think will boost stocks. Or they're buying gold anticipating four more years of Obummer. Either way, it's just a bet. The genuine trend will avenge itself come Wednesday.

US Dollar Index fell a squeentch today, 11 basis points (0.14%) to 80.602. Now of all people I would not be suspicious, yea, paranoid enough to suggest that the head of the Federal Reserve, the Bernancubus, would jimmy with international & dollar exchange rates in the run up to an election, any more than I would ever suspect that said Fed-head would announce QE3 to boost somebody's presidential campaign, or that Federal Government bean counters would announce wildly improved employment stats just to further the incumbent's campaign. Nope, not me -- I'd never do that. [The figure of speech is called "praeteritio" or "apophasis," & means to mention by not mentioning. Handy one, that!]

Anyhow, the US dollar index aimeth yet up, & will aim up, as long as it stays above 80.25, whoever gets elected.

Euro filled yesterday's gap and hit its crucial 62 day moving average. Gained 0.14% to $1.2816. I'd as soon own euros as have a root canal done by a diesel mechanic, without anesthesia.

Japanese yen doesn't look much better. It lost 0.14% today to 124.45 cents per 100 yen, not enough to change anything at all on the chart. Remains below its 200 DMA, which resembles drawing to an inside straight at 5 card stud.

Y'all recall that 138.61 points the Dow gained on 1 November and that 139.46 points it lost on 2 November? Well, today it gained 133.24 points, remaining stuck behind the barrier at 13,250. Dow ended at 13,245.68, up 1.02% while the S&P tagged along, adding 11.13 (0.79%) to 1,428.39.

This action is sorry as gully dirt. Both the S&P500 & the Dow remain below the neckline of the Head & Shoulders formed from January to May of this year. Both broke down through the neckline thereof, both made June lows, both formed bearish rising wedges to slightly higher highs for the year.

Back away from that chart a second. Both have formed Broadening Top formations & are hovering a bit above their 200 DMAs. Both now rest right on that old neckline.

I reckon if the Nice Government Men pour buying into the market that might raise it, but nothing in the chart suggests stocks will rise under any other power.

Here's a little guessing game: Which asset has managed the highest total return since Obama's first election in November 2008? Nope, not stocks, not the dollar, not oil, not even gold, but SILVER, with a 200+% return. Gold came in second a little over 110%.

Which brings me to the precious metals today. Gold rose $31.90 to close $1,714.10 while silver leapt 90.6 cents to 3201.9c.

A Key Reversal takes place when a market breaks to a new low for the move, like gold's $1,672.40 yesterday & then closes higher than the day before, like gold's close yesterday at $1,682.20. But the needful other half of the Key Reversal is a higher close the next day, like gold's $1,714.10 close today, up $31.90.

In fact, the same thing happened yesterday in silver as well, with a new low at 3064c and a higher- than-the-day-before close at 3111.3. Today silver wreaked vengeance on the shots by gobbling up 90.6 cents and closing higher at 3201.9c.

Let's clinch this down. Silver hit $1,720.33 today and was stopped only by the Kryptonite rays from $1,725 resistance. Once it jumps that lateral resistance at $1,725, coincidentally also the 20 DMA's location at $1,724.65, 'twill run like a scalded dog.

Shucks, it don't stop there. The MACD & the RSI have both turned up, too, and both silver & gold have broken through, pierced, shattered, & penetrated the downtrend line from the early October highs. And platinum & palladium have both turned up.

And the gold/silver ratio made its high for the move yesterday & dropped today.

Folks, it don't get no better than this. Of course, the risk you're wrong hovers even over the surest thing & closest reasoning, but still, it don't get no better than this. Buy silver & gold tomorrow, & never mind the price. The ONLY contradiction to that would be if gold opened tomorrow below $1,695 -- the ONLY contradiction.

The long correction has ended. Time to jump back into silver & gold. Don't y'all make me have to tell you twice, as my Grandmamma might say.

On 6 November 1861 was elected the first president of the Confederate States of America, Jefferson Davis.

For those of you who want to know more about my daughter-in-law, Shawn Sanders, you can read this article from the Vail Daily about her work founding & running Little Chefs of Vail. Love just overflows out of some people, and must find a stream to run in.

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
6-Nov-12 Price Change % Change
Gold, $/oz 1,714.10 31.90 1.90%
Silver, $/oz 32.02 0.91 2.91%
Gold/Silver Ratio 53.534 -0.534 -0.99%
Silver/Gold Ratio 0.0187 0.0002 1.00%
Platinum 1,554.30 15.60 1.01%
Palladium 619.35 17.15 2.85%
S&P 500 1,428.39 11.13 0.79%
Dow 13,245.68 133.24 1.02%
Dow in GOLD $s 159.74 -1.38 -0.85%
Dow in GOLD oz 7.73 -0.07 -0.85%
Dow in SILVER oz 413.68 -7.76 -1.84%
US Dollar Index 80.60 -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: 1,714.50      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,764.22 1,774.51 1,774.51
1/2 AE 0.50 873.89 903.11 1,806.23
1/4 AE 0.25 436.94 460.13 1,840.52
1/10 AE 0.10 179.92 187.74 1,877.38
Aust. 100 corona 0.98 1,672.15 1,682.55 1,716.54
British sovereign 0.24 403.59 407.59 1,731.49
French 20 franc 0.19 320.10 324.10 1,735.92
Krugerrand 1.00 1,740.22 1,757.22 1,757.22
Maple Leaf 1.00 1,724.50 1,739.50 1,739.50
1/2 Maple Leaf 0.50 848.68 891.54 1,783.08
1/4 Maple Leaf 0.25 424.34 454.34 1,817.37
1/10 Maple Leaf 0.10 169.74 185.17 1,851.66
Mexican 50 peso 1.21 2,050.47 2,067.47 1,714.74
.9999 bar 1.00 1,720.50 1,731.50 1,731.50
SPOT SILVER: 32.02      
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 22,890.73 23,140.73 32.36
US 40% silver 1/2s 0.30 9,252.68 9,452.68 32.04
100 oz .999 bar 100.00 3,193.50 3,241.50 32.42
10 oz .999 bar 10.00 325.15 327.65 32.77
1 oz .999 round 1.00 31.87 32.57 32.57
Am Eagle, 200 oz Min 1.00 33.52 34.22 34.22
SPOT PLATINUM: 1,554.30      
Plat. Platypus 1.00 1,564.30 1,604.30 1,604.30
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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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