The Moneychanger
Daily Commentary
Wednesday, 14 November a.d. 2012 Browse the commentary archive

The Germans have a word: Schadenfreude or "shame-joy." That describes the feeling someone has when he gloats over an evil that happens to another.

I hasten to add that I find no joy in reporting painful events, like huge drops in the stock market, even as rotten as the system is. In fact, it pains me to ponder how much more pain lies in the future, not merely for the stock markets, but for the abused US economy while that dying power class, central bankers, struggle to hold on to power.

Today's currencies: US$1=Y80.24=E0.7851= 0.0304 silver oz = 0.0058 gold ounce.

OWCH! The Yen gapped down today with a massive 1.01% loss. Ended at 124.63 cents/Y100. Today it fell about 2/3 of the way to its last low at 123.97.

With rioting in Spain, Italy, and Greece, the euro still managed to rise on news that Greece will not be repo'ed this Friday. It was up 0.27% to $1.2737. It didn't jump much, & only managed to touch the downtrend line above. Remains below all moving averages, including the crucial 62 DMA. Sick, sick, & looking at $1.2000.

US dollar index is now trading at 81.122, up an inconsequential 0.009. Dollar had a wearing day with a spike low to 80.90. May be rolling over for a few day's correction. If not, twill clear 81.25 tomorrow.

Stocks hurt almost too much to talk about. Dow lost a colossal 185.23 (1.45%) to 12,570.95 & S&P500 lost 19.04 (1.97% to 1,355.49.

This tumble came not with a great cliff-plunge, but rolled steadily downhill all day like a snowball gaining momentum. I keep thinking, "This looks like the last downleg of this move," and stocks keep beating even my low expectations If they break through this level the next support comes at the June low, way down there at 12,035.

The Dow in Gold Dollars has simply collapsed, straight down with hardly a pause. Today landed at G$150.25 (7.269 oz). Has now broken down past the bottom of that diamond topping formation sketched out from February through August. That is the final confirmation of a breakdown. Ultimate target for this move is BELOW G$117.62 (5.69 oz), the August 2011 low.

Miss not this message: stocks will weaken against gold for a long time.

Against silver today stocks lost over 52 ounces, falling to 382 ounces, a new low for the move. Message is the same: stocks will weaken against silver for a long time. (I caught myself wanting to say "weaken strongly." Should it be "weaken weakly"?)

Silver gained 39.3 cents today to 3287.1 cents, while gold gained $5.30 to $1,729.50

Gold preserved yesterday's spike bottom or upside-down head & shoulders by not violating the neckline. Low came a little higher than yesterday's $1,717.80 at $1,720.81. Solid support there. Gold reached a little higher today, to $1,733.29. 'Twas a day of consolidation, that's all. $1,740 looms as gold's next hurdle.

Now that five day silver chart looks much stouter. Silver fell no lower than 3234c today, & flew as high as 3291, closing near the high. Silver remains comfortably above its 20 DMA (3209c) and is stretching out its hands toward the 50 DMA (3329). Barrier standing before silver is 3300c. Once silver overcomes that it can concentrate on 3550c again.

Silver & gold both continue to confirm their November 2 lows and affirm their aim to move much higher.

Another indicator that silver aims to move higher is the premium on US 90% silver coin, which continues to rise. I associate that with past similar rises that usually presage higher silver prices. Also, the gold American Eagle premiums has risen a bit, but this is due alone to the same tiresome year-end drama we see every year. The US mint, that wondrous socialist enterprise, ceases producing current year American Eagles and begins minting next year's date in December. That shortens supply a bit, and dealers & collectors, who appear to have the same memory span as a gnat, forget the same thing happened last year & grow frantic for Eagles, both this & next year's. By February when the mint begins delivering, all those premiums settle back to usual.

Let me go on record now by forecasting that the "fiscal cliff," mentioned 2,000 or 3,000 times a day right now in the news, will prove no more catastrophic than a speed breaker. Not because America has any statesman bold enough to address the underlying issues (fiat money & a government-spending dependent economy), but because all those rabbity Congressional cowards will merely cobble up some six or twelve month patch to delay the inevitable -- until they are out of office. European Union shirkers have been dancing this same lily-livered waltz for several years. Of course, it won't work forever, but show me a politician with a time horizon longer than 5:00 p.m. & I'll show you a creature rarer than a passenger pigeon.

I made a mistake yesterday when I wrote that Texas reserved the right to secede in its 1845 annexation treaty with the US. I must have been thinking about Tennessee.

On 14 November 1812 as Napoleon Bonaparte's Grand Armee retreated from Moscow, temperatures dropped to 20 degrees below zero. Lesson? Check the weather forecast before you invade Russia.

On 14 November 1863 CSA General Nathan Bedford Forrest was assigned to command of West Tennessee. This was after a confrontation with Army of Tennessee commander Braxton Bragg in which Forrest told Bragg that "If you were any part of a man, I'd slap your jaws & make you resent it." After the meeting a friend who had witnessed it told Forrest he had ruined himself in the army. Forrest, an unerring judge of men, responded, "He'll never say a word about it." Bragg never did.

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
14-Nov-12 Price Change % Change
Gold, $/oz 1,729.50 5.30 0.31%
Silver, $/oz 32.87 0.39 1.21%
Gold/Silver Ratio 52.615 -0.473 -0.89%
Silver/Gold Ratio 0.0190 0.0002 0.90%
Platinum 1,588.60 5.20 0.33%
Palladium 640.75 4.95 0.78%
S&P 500 1,355.49 19.04 1.42%
Dow 12,570.95 1,855.23 17.31%
Dow in GOLD $s 150.25 21.80 16.97%
Dow in GOLD oz 7.27 1.05 16.97%
Dow in SILVER oz 382.43 52.50 15.91%
US Dollar Index 80.93 -0.18 -0.22%
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: 1,726.90      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,778.71 1,787.34 1,787.34
1/2 AE 0.50 880.21 909.64 1,819.29
1/4 AE 0.25 440.10 463.46 1,853.83
1/10 AE 0.10 181.22 189.10 1,890.96
Aust. 100 corona 0.98 1,684.24 1,694.71 1,728.94
British sovereign 0.24 406.51 410.51 1,743.89
French 20 franc 0.19 322.41 326.41 1,748.32
Krugerrand 1.00 1,752.80 1,769.80 1,769.80
Maple Leaf 1.00 1,736.90 1,751.90 1,751.90
1/2 Maple Leaf 0.50 854.82 897.99 1,795.98
1/4 Maple Leaf 0.25 427.41 457.63 1,830.51
1/10 Maple Leaf 0.10 170.96 186.51 1,865.05
Mexican 50 peso 1.21 2,065.30 2,082.30 1,727.04
.9999 bar 1.00 1,732.94 1,743.94 1,743.94
SPOT SILVER: 32.70      
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 23,448.43 23,698.43 33.14
US 40% silver 1/2s 0.30 9,453.28 9,653.28 32.72
100 oz .999 bar 100.00 3,261.50 3,309.50 33.10
10 oz .999 bar 10.00 331.95 334.45 33.45
1 oz .999 round 1.00 32.55 33.25 33.25
Am Eagle, 200 oz Min 1.00 34.20 34.90 34.90
SPOT PLATINUM: 1,588.60      
Plat. Platypus 1.00 1,598.60 1,638.60 1,638.60
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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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