The Moneychanger
Daily Commentary
Thursday, 3 January a.d. 2013 Browse the commentary archive

This world's too stupid to live.

When month old news from the minutes of a clot of goofy apparatchiki who don't know an economy from Adam's off ox, let alone how to run one ("Ben, is this here the handle ya push to get this contraption a-goin'?" "Ed, fer heaven's sake! Don't touch that one or you'll blow up half the banks in the country. It's the OTHER one!" How many times I gotta tell ya?") can whack markets across the board, brain function in a large segment of humanity has ceased. Only thing you're left wondering is, How did these dimwits who react to such news by panic buying & selling ever get any money to invest in the first place? Isn't there some natural law that says, "Money runs away from stupid people?" Like, "Water runs downhill"? If a fool & his money are soon parted, how come these people have any left?

Minutes after the metals markets had closed, out come the FOMC minutes that hint that some members of the highly decorative but otherwise non-functioning FOMC didn't want to inflate quite so much in 2013.

But wait! What did this change? Will Ben the Beneficent slap his forehead and exclaim, "Wowser! I've got to stop inflating!" Not by the fuzz on your bald banker's pate. Nothing changes, absolutely nothing, except the money moved from the accounts of the gullible to those of the knowledgeable and the insiders.

The US dollar index, which all day long had shown all the enthusiasm of a fat boy for jogging, jumped up on the news & now is trading 71.6 basis points (0.89%) higher than this time yesterday: 80.568.

That paints a long line on the chart, but remains below the last high at 80.66, and below the 200 DMA at 80.82. It does take the dollar index above its downtrend line, & another internal resistance line. Were it to follow through, the dollar might reach 81.50, but more likely this is a short-covering panic. We'll see whether it can follow through.

'Twas the headsman's ax for the euro today. Closed down 1.01% at $1.3048. Gapped down past its 20 DMA (1.3138) & kept on falling below the last little low and below $1.3100. Might mark a downward reversal in the euro & upward reversal in the dollar.

Yen firmed today to 114.57 cents/Y100, up 0.03%. Actually rose much higher during the day, but closed up only a skootch. Preposterously, politically oversold.

A calm person would have expected a down day out of stocks today after yesterday's huge surge, but the FOMC announcement hit it hard. Dow was struggling above unchanged when the news hit. Ended down 21.19 (0.16%) at 13,391.36. S&P500 lost 3.05 (0.21%) to 1,459.37.

Gaps, those open spaces on a chart where the market doesn't trade but jumps up or down, really aren't all that common. You can search a classic like Edwards & Magee's book, & you won't find many of them. So how come they are so common this year in currency charts, in stocks, in silver & gold & in cross market charts?

Why, I reckon Mother Market -- the cousin of Mother Nature -- has just changed. After all, only other explanation might be that the Nice Government Men with their interventions & the moronic Fed with its announcements are jerking markets from side to side like a terrier with a tough weenie in his teeth.

Never mind, forget the philosophical, & look at the Dow/Gold chart. It makes a topping formation that looks like an Island Reversal, then reverses the reversal & today even gaps up, nearly to the top of the island. Durned if I can figure it.

What mystifies all the more is how markets -- which, by the way, are NOT by any means always right in processing information accurately -- keep moving contrary to reasonable cause & effect expectation. The Fed promises more inflation -- sure to poison the economy -- and stocks rise. Makes no sense, except that people have been brainwashed by Keynesianism.

And folks, over the long term, silver & gold do NOT move tandem to the stock market, I don't care what they've done this year. Leave it be, my job is to report, not to criticize.

By Comex closing today silver had lost 28.1 cents to 3067.1c while gold had backed off $14.20 to $1,673.70. FOMC announcement panicked them down to $1,663.90 & 3013c. Clearly they didn't hold my lower boundaries set yesterday at 3100c and $1,685.

Well, good enough. I can wait. I bought a little silver at day's end anyway, and some gold, just because today's action might not follow through, and because I know there's a bottom around here somewhere.

Like the story of the two little boys, one an inveterate optimist and the other a pessimist. To test their responses a psychologist locked them in two different rooms, the pessimist in a room full of toys, the optimist in a room knee deep in horse hockey.

Psychologist came back an hour later, opened the door to the pessimist's room, and there he sat in the corner, doing nothing. "Son," he asked, "You've got all these toys here. Don't you want to play with them?"

"Naw," said the kid, "that stuff's dangerous. Look at that electric train: you could electrocute yourself on that thing. And that beebee gun: you'll shoot your eye out!"

Psychologist moved on to the room with the little pessimist, opened the door, and a hail of horse manure came flying through the air. Little optimist was digging with both hands as fast as he could. "Son, son, what are you doing?"

"Mister," the boy replied, "I don't have time to talk to you now. Look at all this manure! There's GOT to be a pony under here somewhere!"

Only one other thing: gold silver ratio is around 54.5. If you have gold you meant to swap for silver but missed your chance earlier in the year, your chance has returned. Give us a call if you want to swap some gold for silver. From this 54.5 level the next big move will be a fall to 30:1 or lower, offering you a 75%+ increase in ounces.

On one of the darkest days in culinary & human history, 3 January 1871, Henry Bradley of Binghamton, New York patented oleomargarine. Oh, what culinary & gustatory & nutritional sins have since been committed in the black name of margarine! The only person who really could believe that margarine is a substitute for butter is the poor deprived soul who has never tasted butter.

Argentum et aurum comparanda sunt —
Silver and gold must be bought.

— Franklin Sanders, The Moneychanger

Your source for gold and silver. Read our latest reviews and testimonials.
Market Snapshot See more charts and market data
3-Jan-13 Price Change % Change
Gold, $/oz 1,673.70 -14.20 -0.84%
Silver, $/oz 30.67 -0.28 -0.91%
Gold/Silver Ratio 54.569 0.037 0.07%
Silver/Gold Ratio 0.0183 -0.0000 -0.07%
Platinum 1,576.70 11.60 0.74%
Palladium 696.45 -10.80 -1.53%
S&P 500 1,459.37 -3.05 -0.21%
Dow 13,391.36 -21.19 -0.16%
Dow in GOLD $s 165.40 7.50 4.75%
Dow in GOLD oz 8.00 0.36 4.75%
Dow in SILVER oz 436.61 3.28 0.76%
US Dollar Index 80.57 0.72 0.90%
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: 1,663.90      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,717.98 1,723.80 1,723.80
1/2 AE 0.50 848.08 873.55 1,747.10
1/4 AE 0.25 428.20 440.93 1,763.73
1/10 AE 0.10 176.27 180.53 1,805.33
Aust. 100 corona 0.98 1,622.80 1,632.95 1,665.94
British sovereign 0.24 391.68 395.68 1,680.89
French 20 franc 0.19 310.65 314.65 1,685.32
Krugerrand 1.00 1,692.19 1,707.19 1,707.19
Maple Leaf 1.00 1,673.90 1,693.90 1,693.90
1/2 Maple Leaf 0.50 823.63 865.23 1,730.46
1/4 Maple Leaf 0.25 411.82 440.93 1,763.73
1/10 Maple Leaf 0.10 164.73 179.70 1,797.01
Mexican 50 peso 1.21 1,989.95 2,006.95 1,664.55
.9999 bar 1.00 1,669.72 1,680.72 1,680.72
SPOT SILVER: 30.13      
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 21,757.45 22,032.45 30.81
US 40% silver 1/2s 0.30 8,696.60 8,871.60 30.07
100 oz .999 bar 100.00 3,013.00 3,063.00 30.63
10 oz .999 bar 10.00 306.30 308.80 30.88
1 oz .999 round 1.00 29.98 30.83 30.83
Am Eagle, 200 oz Min 1.00 31.73 32.38 32.38
SPOT PLATINUM: 1,576.70      
Plat. Platypus 1.00 1,601.70 1,641.70 1,641.70
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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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