The Moneychanger
Daily Commentary
Thursday, 27 December a.d. 2012 Browse the commentary archive

Here's how kind I am to y'all: not even ONE time in this commentary will I refer to the fiscal cliff, although I will volunteer to push over it the next person I hear say it. It's all a silly mouse-burp deal that doesn't amount to a hillock of beans. Out of it will come for y'all nothing good, only higher taxes and more spending. Don't believe me? Hide & watch.

In the world of disgusting, scrofulous, scabby, cheating, no-good, low-life white trash fiat currencies the Japanese yen has run away with the race to the bottom. Let us pass over as a matter too painful for fastidious minds the bubbling folly of the next Japanese prime minister wanting the Bank of Japan to inflate by at least 2% a year. I will not bore you by repeating yet again that all the inflation in the world only hurts & can never help any economy. I only observe that the yen today hit yet another new low for the move, ending down another 0.58% at 116.16 cents/Y100. This has crossed over the Y85=US$1 line in the sand I speculate the Central banks want to protect. Probably every goof in the world has hopped on & shorted the yen, offering central bank & Nice Government Men the opportunity to prove to them that what they thought was investing genius is really only crowd-following folly. A major picking of pockets will occur. Meantime, this can't go on much longer. Yen is more oversold than membership in the US senate.

US dollar index rose a microscopic 2.8 basis points (0.04%) to 79.633. Has almost reached its 20 day moving average (79.84), & appears to have been carefully steered away from wrecking support at 79. Still headed down.

The euro rose 0.8% today to $1.3237, having bounced off $1.3300. I 'spect it has another point in it, to $1.3400, maybe higher, but I wouldn't buy euros with your money. All the European foundation, the banks, all the rest, remains rotten.

US$1=Y86.09=E0.7555=0.033 130 oz. Ag=0.006 014 oz Au.

Stocks are forcing me to question whether they will yet rally past 13,300 on the Dow (1,450 on the S&P500). Both indices are greener than a ten-year-old smoking cheap cigars. Dow has pierced its 20 DMA (13,144.44), 50 DMA (13,078.50), & 200 DMA (13,015.87), although it climbed from its 12,964 low today to close down only 18.28 (0.14%) at 13,096.31. S&P500 closed down 1.73 (0.12%) at 1,418.10.

Main spur to my doubt is the Dow in Gold & the S&P500 in Gold. Both traced out a dramatic island reversal, both have fallen away. More, the island reversal came as they broke out upside, showing exhaution. Only way I could be persuaded that stocks had not turned down against gold would be for that island reversal's top to be exceeded, chances of which are more vanishingly small than my chance of becoming the lead dancer in the Bolshoi Ballet. You can see those charts at http://bit.ly/TdQcP2 & http://bit.ly/RUZhQ0

Silver rose today 20.1 cents to 3018.4c. Gold rose $2.80 to $1,662.60.

That brings Gold plumb up to the 200 DMA ($1,662.61) & riding along the uptrend line from the June 2012 low. Not clear to me whether gold will make one more plunge down toward $1,620 or even terrifyingly lower, or it has finished its bottom-scraping.

If gold did go lower, it would only make it MORE attractive than it is now. Of course, it doesn't FEEL that way. It feels like your stomach is going to climb out of your mouth and go its own way, but that's precisely the time you have to grab hold & remember that the Primary Trend is up, that this correction will end shortly, and that 2013 will smile brightly on gold.

Silver's chart is plainer to me than gold's, & makes me expect one more push down toward 2900 cents. Here's how you will know. Low last week was 2964c, so if it trades down there, lower prices will come. On the other hand, it silver can climb above 3100, say 3132 (the 300 DMA), then the bottom is probably in.

Neither metal feels very frisky, but part of that may be the absence of traders for the holiday. By frisky, I mean a day when metals rise 2 or 3% or more, slapping all the shorts silly.

Be patient. I have been buying along here, even knowing we might see another little spike down. Other alternative is to wait and buy as it climbs, but sometimes it gets away from you.

But I'm just a natural born fool from Tennessee, & can hardly spell "cintrul bank."

ANOTHER SOUTHERN FIRST: On 27 December 1845 Dr. Crawford Long of Jefferson Georgia used anesthesia for childbirth for the first time to deliver his own child. I'm going to say the man had some kind of confidence in his anesthesia to try it on his own wife.

A YANKEE FIRST: On 27 December 1900 militant prohibitionist Carry A Nation performed her first public smashing of a bar at the Carey Hotel in Wichita, Kansas. Broke every bottle in the place, but notice that they weren't HER bottles, but somebody else's. Her campaign to make everybody as good as she [thought she] was resulted in the 18th Amendment, nationwide prohibition, and the firm establishment of organized crime in the black market for booze.

On this black day for freedom, justice, & truth in 1945, 28 nations signed an agreement to create the World bank and the International Monetary Fund. Banks raised the level of looting from the national to the international.

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
27-Dec-12 Price Change % Change
Gold, $/oz 1,662.60 2.80 0.17%
Silver, $/oz 30.18 0.20 0.67%
Gold/Silver Ratio 55.082 -0.276 -0.50%
Silver/Gold Ratio 0.0182 0.0001 0.50%
Platinum 1,531.80 -3.10 -0.20%
Palladium 707.35 15.95 2.31%
S&P 500 1,418.10 -1.73 -0.12%
Dow 13,096.31 -18.28 -0.14%
Dow in GOLD $s 162.83 7.50 4.83%
Dow in GOLD oz 7.88 0.36 4.83%
Dow in SILVER oz 433.88 -3.52 -0.80%
US Dollar Index 79.63 0.03 0.04%
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: 1,663.50      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,718.40 1,721.72 1,721.72
1/2 AE 0.50 847.88 873.34 1,746.68
1/4 AE 0.25 428.09 440.83 1,763.31
1/10 AE 0.10 176.23 180.49 1,804.90
Aust. 100 corona 0.98 1,622.41 1,632.56 1,665.54
British sovereign 0.24 391.59 395.59 1,680.49
French 20 franc 0.19 310.58 314.58 1,684.92
Krugerrand 1.00 1,690.12 1,705.12 1,705.12
Maple Leaf 1.00 1,673.50 1,693.50 1,693.50
1/2 Maple Leaf 0.50 823.43 865.02 1,730.04
1/4 Maple Leaf 0.25 411.72 440.83 1,763.31
1/10 Maple Leaf 0.10 164.69 179.66 1,796.58
Mexican 50 peso 1.21 1,989.47 2,006.47 1,664.15
.9999 bar 1.00 1,669.32 1,680.32 1,680.32
SPOT SILVER: 30.16      
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 21,743.15 21,993.15 30.76
US 40% silver 1/2s 0.30 8,705.45 8,880.45 30.10
100 oz .999 bar 100.00 3,016.00 3,066.00 30.66
10 oz .999 bar 10.00 306.60 309.10 30.91
1 oz .999 round 1.00 30.01 30.86 30.86
Am Eagle, 200 oz Min 1.00 31.76 32.41 32.41
SPOT PLATINUM: 1,531.80      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,556.80 1,596.80 1,596.80
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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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