The Moneychanger
Daily Commentary
Monday, 12 November a.d. 2012 Browse the commentary archive

Today was a holiday in the US, Veteran's Day, which once upon a time was "Armistice Day" commemorating the end of World War I at 11:00 a.m. on 11/11/1918: the eleventh hour of the eleventh day of the eleventh month. Anyhow, nobody much pays any attention to it, except the post office, and certainly not markets because they are too busy getting & spending to let even a single day slip by in remembering, celebrating, or silence.

Still, enough folks stayed home to make it an astonishingly dull day.

Stocks rode the roller coaster today, up, down, way up, & way down again to close changed by a massive 2.00 for the Dow at 12,817.39. S&P500 rose 0.18 to 1,380.03. Bewilderment reigned as other indices fell by like minute amounts. The big boys will return tomorrow to give stocks some direction.

Best outcome I can see for stocks is a rally back up to the neckline of the head & shoulders formed January through March 2011. That would carry them up to about 13,300 (1,410 for the S&P500) where they last broke down. After that final, tender kiss good-bye you can kiss 'em good-bye. Stocks have formed a gigantic broadening top enclosing a smaller broadening top & the outcome will be weeping & wailing & gnashing of teeth & pulling of hair amongst stock investors. Y'all don't say I didn't warn you.

The scrofulous & disgusting US Dollar index rose today 11.4 basis points to trade now at 81.056 (up 0.15%).

Dollar has floated up against the 81.10 level now for two days, & looks set to break through for higher altitudes. If -- IF -- the dollar can climb through 81.10 then it will keep flying to 81.50 or even 82. What's odd here? That dollar strength sloweth not down silver & gold.

That is an epochal change, likely not permanent yet, but certain to become so. Silver & gold are de-coupling from the US dollar & the other scabrous fiat currencies. They have already established themselves as alternatives to all fiat currencies, but we've seen them move generally inversely to the dollar & not really independently. That's changing, & what I mean by "de-coupling." As silver & gold attract more & more buyers the course of the US dollar or euro or yen will have less & less influence on their course, which will grind steadily upward, disregarding the fiat currencies.

I call this "epochal" because it reflects the public REPUDIATING fiat currencies and their unreal, fractionalized, hypothecated financial system. Desire for safety is outweighing greed. Oh, all this won't bear its final fruit for a number of years, but it's coming: a from-the-ground-up reform of the monetary & financial system, & silver & gold will play a star role. Today's dollar values: US$1 = Y79.47 = E0.7867 = 0.00058 gold ounce = 0.03076 silver ounce.

Silver & gold spent a quiet day. Silver lost 7.7 cents to 3251.3c while gold remained unchanged at $1,730.30.

Those closes might mislead you. Five day chart suggests both metals will drop for a day or two, gold to $1,720 or even $1,700. The market proverb says that the bull always tries to shake off as many riders as possible, hence these frights to send the timid flying.

Gold today traded in a narrow range between $1,737.73 & $1,725.59. That leaves $1,737 as the next barrier in gold's path. I continue to expect gold's rise off last week's bottom will be speedy and stout, given a few day's lull right here to consolidate gains.

Silver ranged today from 3272 to 3221, pretty narrow. Silver might drop back to 3200c, even 3150c. That's typical of a market feeling with its feet for the bottom before it flies higher.

Y'all know I watch silver's behavior against its 300 day moving average. In a bull (primary uptrend) market, of course, silver will spend most of its time above the 300 DMA, but in heavy corrections such as we've seen in the past 17 months, it falls below the 300 DMA, and before it breaks finally above will dance back & forth over it. That's happened in the last three weeks, & now the 300 stands at 3158c.

Momentum indicators also, like the MACD & RSI, show that silver has miles of upward room to fly.

From time to time I remind y'all that you should take these commentaries as "entertainment," just interesting chit-chat while we are watching silver & gold inexorably climb. 'Twould be a terrible tragedy to get so focused on the short term that you miss the longer term trend. First principle of investing is "always align your investments with the primary trend." Primary trend for stocks & the US dollar is DOWN, for silver & gold UP. Your job is to get on the right side of that trend. Once you've done that, you can watch these daily fluctuations, even 17 month corrections, with all the equanimity of a fat rooster in a possum- proof coop.

Long & short is, stop vacillating & buy silver & gold now. The market has handed you a correction-rally-correction that offers about as low risk an entry point as you will ever see. Not 100% safe of course, but neither is sitting there in your living room waiting for a meteor to drop through the roof into your lap.

On 12 November 1849 Frenchman Jules Leotard performed the first flying trapeze circus act in Paris. He also designed the garment that bears his name. Tomorrow I'll talk about Fred Bustle and Ralph Overcoat.

Since on 12 November 1847 Sir James Young Simpson, a British physician, is said to have first used chloroform as an anesthetic, I ought to once again straighten y'all out on Southern primacy in anesthesia. Because he was an modest man, Georgia Dr. Crawford W. Long did not go bragging about being the first man to use anesthesia when he successfully removed a patient's tumor under ether anesthetic on 30 March 1842. New England dentist William T.G. Morton did not use anesthesia (nitrous oxide) until 30 September 1846. Even in New England, 1842 comes before 1846.

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
12-Nov-12 Price Change % Change
Gold, $/oz 1,730.30 0.00 0.00%
Silver, $/oz 32.51 -0.08 -0.24%
Gold/Silver Ratio 53.219 0.126 0.24%
Silver/Gold Ratio 0.0188 -0.0000 -0.24%
Platinum 1,562.50 7.10 0.46%
Palladium 607.25 -3.00 -0.49%
S&P 500 1,380.03 0.18 0.01%
Dow 12,817.39 2.00 0.02%
Dow in GOLD $s 153.13 0.04 0.03%
Dow in GOLD oz 7.41 0.00 0.03%
Dow in SILVER oz 394.22 0.99 0.25%
US Dollar Index 81.04 0.09 0.12%
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: 1,727.88      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,777.99 1,788.36 1,788.36
1/2 AE 0.50 880.71 910.16 1,820.32
1/4 AE 0.25 440.35 463.72 1,854.88
1/10 AE 0.10 181.32 189.20 1,892.03
Aust. 100 corona 0.98 1,685.20 1,695.67 1,729.92
British sovereign 0.24 406.74 410.74 1,744.87
French 20 franc 0.19 322.60 326.60 1,749.30
Krugerrand 1.00 1,753.80 1,770.80 1,770.80
Maple Leaf 1.00 1,737.88 1,752.88 1,752.88
1/2 Maple Leaf 0.50 855.30 898.50 1,797.00
1/4 Maple Leaf 0.25 427.65 457.89 1,831.55
1/10 Maple Leaf 0.10 171.06 186.61 1,866.11
Mexican 50 peso 1.21 2,066.47 2,083.47 1,728.01
.9999 bar 1.00 1,733.93 1,744.93 1,744.93
SPOT SILVER: 32.43      
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 23,187.45 23,437.45 32.78
US 40% silver 1/2s 0.30 9,375.10 9,575.10 32.46
100 oz .999 bar 100.00 3,235.00 3,283.00 32.83
10 oz .999 bar 10.00 329.30 331.80 33.18
1 oz .999 round 1.00 32.28 32.98 32.98
Am Eagle, 200 oz Min 1.00 33.93 34.63 34.63
SPOT PLATINUM: 1,562.50      
Plat. Platypus 1.00 1,572.50 1,612.50 1,612.50
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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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