The Moneychanger
Daily Commentary
Wednesday, 19 December a.d. 2012 Browse the commentary archive

There's a proverb that says, "Because the sentence against evil is not executed speedily, men's hearts are fully set to do evil." We're all such goofs that we see only what's going on around us, and figure it'll pretty much stay the same forever. After all, the old rules, the ancient law, doesn't count anymore in this new age. We're in a new era, and that changes everything.

That reasoning is what I call "a mite previous." Just as people do more & more wicked things when they see evil men go unpunished (no time to list even 1/100 of those recent names!), assuming they can get away with evil, too, so they think that all the injustices, inequities, and frauds built into the American economic & financial system will never come home to roost. Washington & the rest of us will just muddle through in the end, somehow, & prosperity will return. The electrons will save us. The ancient law has died.

Ponder only the US monetary & banking system, which builds in the twin frauds of inflation & fractional reserve. Every dollar they create steals a dollar from someone, & hurts the least & poorest most of all. Do Americans really believe that any society built on a foundation of theft can last?

I have bad news for y'all: the ancient law has never died. It may delay but it will appear. Rudyard Kipling said it quite clearly in his poem, "Gods of the Copybook Headings":

"And that after this is accomplished, & the brave new world begins

"When all men are paid for existing & no man must pay for his sins,

"As surely as Water will wet us, as surely as Fire will burn,

"The gods of the Copybook Headings with terror & slaughter return."

If you ask me why I invest in silver & gold, I could quickly cite you twenty or so sound logical reasons, but underlying them all is this warm certainty & fear: the ancient law has never died.

But what do I know? I'm just a natural born fool from Tennessee, & tom-foolish enough to be glad of it.

One of those worrisome harbingers is theyield on Ten year US treasuries. The criminals at the Federal Reserve haver created a bubble in bonds with their zero interest rate policy, & someday the pin will stick. Last few days the yield has risen to near the top of the range, 19 on the chart linked below. It's not near, yet, most likely, but when it hits a panic out of bonds & the dollar will spawn problems so thorny they'll leave Ben Bernanke looking like he's been cuddling a porcupine. See

After falling overnight to a V-bottom at 79.008, the dollar index turned around and climbed to a close 15.4 basis points (0.2%) above yesterday's. This is nothing to brag about, unless you are drunk. Dollar's trend is firmly down with plenty of room to go downer.

Euro rose today to $1,132.26, but 99% of that gain came yesterday. Yen has fallen again, down 0.24% today to 118.5 cents/Y100. Both the Yen & the Euro are reaching for what I suspect are the limits of the range the Nice Government Men, with their chain pulled globally by the Fed Reserve's NGM, will tolerate, namely, Y85 or E0.85 below and Y135 or E$1.35 above. Japanese must be in real trouble to let them drive their currency so low.

US$1=Y84.46=E0.7555=0.032 211 oz Ag=0.000 600 oz. Au.

Stocks crumpled again at 13,300 and fell today almost as much as they rose yesterday, down 98.96 (0.74%) after rising 115.57 yesterday. Dow scored 13,251.97 at closing, while the S&P had lost 0.76% (10.98) at 1,435.81.

While that might mark the end of stocks' rally, a trend in force deserves the presumption it will remain in force until it confirms it's not. Today's fall wasn't near enough to do that. Expect higher stock prices, although we are reaching that time around the holidays when markets go dead, & that might dampen things until Boxing Day.

Gold lost $3.00 to end Comex at $1,666.50 whilst silver took the big beating, down 55 cents to 3104.5c.

First gold. Yesterday gold went down & pierced its 200 day moving average ($1,663.33) with a $1,662.70 low, but todays $1,666.90 low didn't touch it. Gold has its feet tangled in its 150 DMA (1,669.56) & 200 DMA. Todays high poked up to $1,676.41.

All this speaks three ways: it might have reached its lower limit, it might sink to $1,645 where the June 2012 low uptrend line will catch it, or it might sink to $1,620 - $1,600 where the downtrend from the September 2011 high will catch it.

Gold had a lot of positive sentiment to work off. That's what corrections are all about, the market pendulum swinging from way-too-optimistic to way-too-pessimistic, before it swings back to way-too-optimistic. What we want for gold is REALLY negative sentiment, lots more of those internet articles that are now starting to appear calling for gold at $1,400 or lower. Of course, these all come from the folks who were also wrong when gold stood at $1,800.

Silver was robbed of 55 cents today to close at 3104.5c. That takes silver through the 300 DMA (3135) and almost to the 200 DMA (3086c). That 200 also stands even with the uptrend from June, so it ought to hold. Today's low nearly touched it at 3090c. Only other logical target is the downtrend line from the April 2011 high, now about 2900c.

Be patient, lift your head above the crowd & watch the horizon. It's a primary uptrend.

On 19 December 1777 General George Washington led his patriot army of about 11,000 men to Valley Forge, Pennsylvania, into winter camp. Destitute of supplies, some of his men so naked they could not with decency stand for inspection when his wife visited, nealy 3,000 died that winter. A few miles away in Philadelphia the British spent a warm, cozy, and well-fed winter. The difference? Inflation. Fiat money. The British paid in gold, while the Americans had only the depreciated paper Continental currency.

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-Dec-12 Price Change % Change
Gold, $/oz 1,666.50 -3.00 -0.18%
Silver, $/oz 31.05 -0.55 -1.74%
Gold/Silver Ratio 53.680 0.840 1.59%
Silver/Gold Ratio 0.0186 -0.0003 -1.56%
Platinum 1,592.90 -15.00 -0.93%
Palladium 697.35 -7.35 -1.04%
S&P 500 1,435.81 -10.98 -0.76%
Dow 13,251.97 -98.96 -0.74%
Dow in GOLD $s 164.38 7.50 4.78%
Dow in GOLD oz 7.95 0.36 4.78%
Dow in SILVER oz 426.86 4.30 1.02%
US Dollar Index 79.41 -0.15 -0.19%
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: 1,668.00      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,719.71 1,726.38 1,726.38
1/2 AE 0.50 850.17 875.70 1,751.40
1/4 AE 0.25 429.25 442.02 1,768.08
1/10 AE 0.10 176.70 180.98 1,809.78
Aust. 100 corona 0.98 1,626.80 1,636.97 1,670.04
British sovereign 0.24 392.65 396.65 1,684.99
French 20 franc 0.19 311.42 315.42 1,689.42
Krugerrand 1.00 1,694.69 1,709.69 1,709.69
Maple Leaf 1.00 1,678.00 1,698.00 1,698.00
1/2 Maple Leaf 0.50 825.66 867.36 1,734.72
1/4 Maple Leaf 0.25 412.83 442.02 1,768.08
1/10 Maple Leaf 0.10 165.13 180.14 1,801.44
Mexican 50 peso 1.21 1,994.85 2,011.85 1,668.62
.9999 bar 1.00 1,673.84 1,684.84 1,684.84
SPOT SILVER: 31.06      
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 22,168.58 22,418.58 31.35
US 40% silver 1/2s 0.30 8,969.48 9,144.48 31.00
100 oz .999 bar 100.00 3,105.50 3,155.50 31.56
10 oz .999 bar 10.00 315.55 318.05 31.81
1 oz .999 round 1.00 30.91 31.76 31.76
Am Eagle, 200 oz Min 1.00 32.66 33.31 33.31
SPOT PLATINUM: 1,592.90      
Plat. Platypus 1.00 1,617.90 1,657.90 1,657.90
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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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