The Moneychanger
Daily Commentary
Monday, 19 November a.d. 2012 Browse the commentary archive

I've given up trying to make any sense at all out of the news. Their conclusions leap tall reason at a single bound, & come down in a swamp of conjecture.

Today they reported that the US dollar dropped on "hopes that US leaders will reach a budget deal." Let's see: if the government goes over the fiscal cliff then taxes will rise and spending will shrink, which by my feeble Tennessee natural born fool reasoning means the yankee government might take some tee- tiny baby steps toward solvency. On the other hand, this implies the dollar would strengthen on news that the government will spend more & tax less & the Fed will be forced to print more to keep the whole leaky tub floating.

Whoa, wait a minute. This report comes from USA Today, America's Comic Book Newspaper. Never mind. Only a fool would expect those goofs to make sense.

Look at it this way: in the land of the brainless, the man with two brain cells is king.

Fact is, the US dollar index fell 0.3% to 80.85 today. Technically, this changes nothing. Dollar remains in an uptrend, remains above its 200 day moving average (80.71), it only takes it down to the channel's bottom boundary. Close below 80.50 would turn the dollar down.

Momentum indicators (RSI & MACD) do look a mite brown around the edges, but not enough to threaten an immediate reversal.

Dollar weakness helped the yen not at all. Ended unchanged at 122.93 cents/Y100. Clearly the Japanese Nice Government Men have decided to pull the plug on the yen in the vain hope of curing their economic woes. This will work as well as using spit to glue iron plates instead of welding them.

Euro rose 0.56% today to $1.2814, trying to touch its 200 DMA (now 128.21). All the moving averages are converging, so something ought to happen, up or down. People whose judgment I respect seem to expect a higher euro, but I can't picture it. I just mention it to show how uncertain markets are, & that reasonable men can read the same facts & differ. Or maybe I'm biased.

In the end it makes no difference at all, as I would not buy euros with y'all's money, let alone my own. Long term demise of the euro is write too large in the stars & the numbers.

I've been warning y'all that stocks had fallen so far, so persistently, that they must at last rally a little. Thus my heart skipped ne'er a beat when the Dow rallied today 207.85 (1.65%) to 12,795.96. Nor did it palpitate at the S&P500's close 27.01 (1.99%) HIGHER AT 1,386.89. I was neither scairt nor amazed.

Rally ought to carry stocks quickly at least to the 200 DMA (12,992) or a tad higher, where it will also strike the downtrend line. A longer term possible target is the neckline from the January - May head & shoulders left behind, about 13,300. Conceivable, if you have a rubbery imagination, is a rally clean to the upper jaw of death, about 14,000.

'Twill all be for naught, like running pumps on the Titanic. Stocks remain locked in a primary downtrend or bear market, & nothing has happened to change that, and won't for several years.

Silver & gold confirmed their intentions loud enough today to be heard in Washington, DC, Brussels, & Tokyo. Gold vaulted $19.70 today, clearing all that resistance between $1,714 and $1,730 in one high jump. Silver smashed 3300c resistance by hopping 82 cents to 3318.1.

About the only further confirmation wanting is gold's close above $1,740, which might come tomorrow.

Gold made a textbook impulsive climb off that Friday low at $1,705.79. Today it never fell lower than $1,720.94, and closed only 75 cents off the $1,734.75 high.


Support now becomes $1,730 (mustn't close below there, maybe $1,725 in a push), & old support/ resistance at $1,740 becomes the next hurdle.

Gold closed today only $9.50 off its 50 day moving average at $1,743.50, and is above its 20 Dma (1,714.57). Momentum indicators show plenty of room to climb. The Tall Hurdle comes at $1,800, where gold twice failed in September & October. This time it will smash through $1,800 like Stonewall Jackson rolling up yankee general Hooker's flank at Chancellorsville.

Silver outran gold today, 2.53% to 1.15%. Silver closed nearly on its high (3320c), and barely shy of its 50 day moving average (3325c). A bigger hurdle than today's lies ahead at 3350c, but once silver clear that it will send the shorts & croakers flying for cover.

Up above silver must overcome those 3544 tops left in September & October, & above that the stronger resistance at 3750c.

Every new rally, like every new life, is a chancy undertaking, but this one is as strong as most you'll ever witness.

They're loose! Buy silver & gold & wait no more.

On 19 November 1919 the US senate rejected 55 to 39 the Treaty of Versailles & League of Nations. Gives you an idea how Washington has changed when you realize that back then, even after being hoodwinked into World War I, US public opinion was far too alert to watch its sovereignty given away to international institutions.

On 19 November 1863 Genocide Abraham Lincoln delivered the Gettysburg Address, wherein he did not apologize for all those whom his policies had killed, and stole the last line of his speech from 14th century church Reformer John Wycliffe's 1384 Prologue to his English Bible translation: "this Bible is for the Government of the People, by the People, and for the People." Fascinating that Lincoln replaces the Bible with War to govern the people.

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
19-Nov-12 Price Change % Change
Gold, $/oz 1,734.00 19.70 1.15%
Silver, $/oz 33.18 0.82 2.53%
Gold/Silver Ratio 52.259 -0.715 -1.35%
Silver/Gold Ratio 0.0191 0.0003 1.37%
Platinum 1,581.00 3.00 0.19%
Palladium 644.60 4.00 0.62%
S&P 500 1,386.89 27.01 1.99%
Dow 12,795.96 207.85 1.65%
Dow in GOLD $s 152.55 0.77 0.51%
Dow in GOLD oz 7.38 0.04 0.51%
Dow in SILVER oz 385.64 -3.35 -0.86%
US Dollar Index 80.85 -0.24 -0.29%
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SPOT GOLD: 1,731.00      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,781.20 1,791.59 1,791.59
1/2 AE 0.50 882.30 911.80 1,823.61
1/4 AE 0.25 441.15 464.56 1,858.23
1/10 AE 0.10 181.65 189.54 1,895.45
Aust. 100 corona 0.98 1,688.24 1,698.73 1,733.04
British sovereign 0.24 407.48 411.48 1,747.99
French 20 franc 0.19 323.18 327.18 1,752.42
Krugerrand 1.00 1,756.97 1,771.97 1,771.97
Maple Leaf 1.00 1,741.00 1,756.00 1,756.00
1/2 Maple Leaf 0.50 856.85 900.12 1,800.24
1/4 Maple Leaf 0.25 428.42 458.72 1,834.86
1/10 Maple Leaf 0.10 171.37 186.95 1,869.48
Mexican 50 peso 1.21 2,070.20 2,087.20 1,731.11
.9999 bar 1.00 1,737.06 1,748.06 1,748.06
SPOT SILVER: 33.09      
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 23,727.28 23,977.28 33.53
US 40% silver 1/2s 0.30 9,568.33 9,768.33 33.11
100 oz .999 bar 100.00 3,300.50 3,348.50 33.49
10 oz .999 bar 10.00 335.85 338.35 33.84
1 oz .999 round 1.00 32.94 33.64 33.64
Am Eagle, 200 oz Min 1.00 34.59 35.29 35.29
SPOT PLATINUM: 1,581.00      
Plat. Platypus 1.00 1,591.00 1,631.00 1,631.00
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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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