The Moneychanger
Daily Commentary
Tuesday, 18 December a.d. 2012 Browse the commentary archive

I've got to scoot out of her early & take a much-needed break with my wife. Driving up to Cookeville & nearby Hidden Springs Nursery, a magical place hidden in a great rift in the earth like something out of an Edgar Rice Burroughs novels. And they raise great nursery stock, especially a hybrid Honey Locust that has no thorns but produces plenty of those sweet pods that horses, goats, cattle, pigs, sheep, & everything else loves to eat. Back tomorrow, God willing.

Even thought the dollar fell a hefty 19.6 basis points (0.25%) today to 79.343, stocks rose & silver & gold fell. I said yesterday that silver & gold looked tires, & they were. Rejoice, turn somersaults! This is what we've been waiting for.

Silver fell today 61.1 cents to 3159.5c. At its low it hit 3136, NOT coincidentally the 300 day moving average, one of my targets.

Think: silver might drop to the 200 DMA still, at 3088c, or it might stop at the uptrend from the June low, now about 3080c. Finally, it might even fall all the way to the downtrend line from the 4/2011 high, now about 2900c. If the worst happened & silver fell from here to 2900c, that's only an 8.3% downside risk. And today might have been the end of it. Personally, I bought a good bit of silver today.

Gold fell $27.50 to $1,669.50, right above the 150 DMA at 1,668.05. Low came below that at $1,662.70.

The 150 & 200 DMA ($1,663.43) are right beside each other, so that low hit 'em both today. That could be the end of gold's fall.

What if it ain't? Then it could fall to the uptrend line form the June 2012 low, now about $1,648, or even the downtrend line from the September 2011 high, now about $1,620.

I doubt it. I doubt either silver or gold will fall much further. I bought gold today, too, and would have bought more if I had been able to find small gold coins, which have lately all but disappeared.

But I would have bought today even if I had been fairly certain both metals would fall further. Why? Just because I like to empty my pockets? No, because I've learned that I do not know everything and cannot see the future perfectly, so I have to force myself to buy a logical, pre-determined price targets. I don't always win, doing that, but I at least I don't have to stare at a chart and ask myself, "Why in the world didn't I buy when it was so low?"

Anybody who wants to wait for the perfect price, feel free to do so. I don't do that any more.

Stocks finally made it to, and probably through, 13,300. Dow added 115.57 (0.87%) today to close at 13,350.96. S&P4500 rose 16.43 (1.15%) to 1,446.79. Exuberant enthusiasm. Let 'em spasm all by themselves. This stock rally is most likely the last one before the big plunge.

On 18 December 1717 Thomas Fleet published "Mother Gooses Melodies for Children."

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
18-Dec-12 Price Change % Change
Gold, $/oz 1,669.50 -27.50 -1.62%
Silver, $/oz 31.60 -0.61 -1.90%
Gold/Silver Ratio 52.841 0.149 0.28%
Silver/Gold Ratio 0.0189 -0.0001 -0.28%
Platinum 1,594.50 -15.00 -0.93%
Palladium 689.85 -7.35 -1.05%
S&P 500 1,446.79 16.43 1.15%
Dow 13,350.96 115.57 0.87%
Dow in GOLD $s 165.31 4.10 2.55%
Dow in GOLD oz 8.00 0.20 2.55%
Dow in SILVER oz 422.57 11.61 2.82%
US Dollar Index 79.57 -0.07 -0.08%
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: 1,670.70      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,720.82 1,729.17 1,729.17
1/2 AE 0.50 851.55 877.12 1,754.24
1/4 AE 0.25 429.95 442.74 1,770.94
1/10 AE 0.10 176.99 181.27 1,812.71
Aust. 100 corona 0.98 1,629.43 1,639.62 1,672.74
British sovereign 0.24 393.28 397.28 1,687.69
French 20 franc 0.19 311.92 315.92 1,692.12
Krugerrand 1.00 1,697.43 1,712.43 1,712.43
Maple Leaf 1.00 1,680.70 1,700.70 1,700.70
1/2 Maple Leaf 0.50 827.00 868.76 1,737.53
1/4 Maple Leaf 0.25 413.50 442.74 1,770.94
1/10 Maple Leaf 0.10 165.40 180.44 1,804.36
Mexican 50 peso 1.21 1,998.08 2,015.08 1,671.30
.9999 bar 1.00 1,676.55 1,687.55 1,687.55
SPOT SILVER: 31.62      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 26,000.00 27,750.00 36.27
VG+ Peace dollar 0.77 25,000.00 27,500.00 35.95
90% silver coin bags 0.72 22,568.98 22,818.98 31.91
US 40% silver 1/2s 0.30 9,134.68 9,309.68 31.56
100 oz .999 bar 100.00 3,161.50 3,211.50 32.12
10 oz .999 bar 10.00 321.15 323.65 32.37
1 oz .999 round 1.00 31.47 32.32 32.32
Am Eagle, 200 oz Min 1.00 33.22 33.87 33.87
SPOT PLATINUM: 1,594.50      
Plat. Platypus 1.00 1,619.50 1,659.50 1,659.50
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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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