The Moneychanger
Weekly Commentary
Monday, 14 January a.d. 2013 Browse the commentary archive
Here's the weekly scorecard:
  4-Jan-13 14-Jan-13 Change % Change
Silver, cents/oz. 2,989.60 3,108.00 118.40 4.0
Gold, dollars/oz. 1,648.10 1,668.90 20.80 1.3
Gold/silver ratio 55.128 53.697 -1.430 -2.6
Silver/gold ratio 0.0181 0.0186 0.0005 2.7
Dow in Gold Dollars (DIG$) 168.52 167.31 -1.21 -0.7
Dow in gold ounces 8.15 8.09 -0.06 -0.7
Dow in Silver ounces 449.40 434.60 -14.80 -3.3
Dow Industrials 13,435.21 13,507.32 72.11 0.5
S&P500 1,466.47 1,470.68 4.21 0.3
US dollar index 80.49 79.52 -0.97 -1.2
Platinum 1,555.20 1,656.30 101.10 6.5
Palladium 687.80 702.55 14.75 2.1

Since I was gone most of last week, today I'm giving y'all a review of the last six day's trading. Notice the gains silver & gold have gotten not clear of the woods yet, but at least free from the witch's house, at least. Stocks continued to rise, while the dollar spread its wings to fly & all the feathers fell off.

Don't miss what platinum & palladium have done. Platinum rose $27 today to just about close the gap with gold. Y'all remember that the platinum/gold spread went negative back in October 2011, & save for a few weeks it barely poked its head above even, stayed there. Looks like the opportunity to swap gold for platinum that I mentioned several times has just about passed. I would call a move of the platinum/ gold spread to be bullish for all metals.

Palladium has dropped as low at $667 on 8 January, but has climbed back nearly $40. I don't trade palladium because it's too quirky & herky-jerky for my taste, but a close above $728 (early 2012 high) would release palladium from its long imprisonment.

US DOLLAR INDEX has given up all the gains of its rally in 2013's early days, and fallen back -- not quite through -- the downtrend line it broke for that rally. That line stands about 79.40, so a close below that gainsays further rallying. A close below 79 sends the dollar searching for the bottom of the Marianas Trench. Clawed back 12.1 basis points today to close at 79.518.

While the dollar suffers the euro exhilarates. Last week rallied up through its 20 day moving average & gained from $1.3065 to $1.3381. Rose 0.29% today alone. Aiming for $1.3500, maybe $1.3600

Is there no bottom for the yen? Today it made a new low and closed at 111.70 cents/Y100, down another 0.39% today. Everybody in the known world & remote parts of Antarctica must be short the yen. And look -- the Japanese politicians and the Bank of Japan have accomplished their purpose -- running down the yen's exchange rate -- without moving anything but their jaws. Neat, huh?

US$1 =Y89.53=E0.7473=0.032 175 oz. silver= 0.000 599 oz. gold.

Just to catch y'all up, that breakout of the 10 year bond yield has now toughed back to the downtrend line. 'Tis wholly unclear as yet whether this marks the long-awaited bursting of the bond bubble.

STOCKS just keep on a-bubbling & a-bubbling, with ne'er a sign of any economic basis for the mania. Never mind, we live in the Age of Illusions where only appearances count (as opposed to an Age of Allusion, where only literary references count).

Dow today rose 18.89 (0.14%) to climb past the 13,500 milestone & rest at 13,507.32. S&P500 lost 1.37 to $1,470.68. I still expect that both of them will gain more yet, probably hitting or exceeding the old highs. This move will run out of steam by April Fools Day.

Do not miss this fact: the Dow measured either in gold or in silver has fallen in the last 6 trading days. No new highs in store there.

GOLD & SILVER felt pretty perky today. Silver tucked away 71.3 cents in its purse to close at 3108c. Gold added $8.90 to $1,668.9.

Silver & gold are a little out of synch. Today's gold show was welcome, pretty, etc., etc., but settled nothing. It did take gold over its 20 day moving average ($1,666.92) but not by much -- two bucks. To convince the doubters, gold must climb above the last high at $1,695.40, & before that the early December low at $1,684.10.

On the sunny side, gold has formed a large falling wedge, which generally breaks out to the upside. Also, the spike low to $1,626 on 4 January prompted a big rally, and that day closed $23 higher than that low.

Friday, I should not overlook, it appears the Nice Government Men or other crooks who run the rigged games in Washington & Wall Street, struck about 9:30 a.m. & slammed gold down on the heels of the rally that had taken it to a $1,677.30 close on Thursday. No matter, gold's sinew was proven by today's comeback. It was, however, stopped at $1,675, so twould be nice if gold would oblige us by closing above that mark tomorrow.

Silver is out of synch with gold, tugging at the leash & longing to run upward. The gold/silver ratio fell today to 53.697 from Friday's 54.665, down 1.8%.

There's more, too. Silver closed ABOVE 3100c. High came at 3114.1c, but silver held on to most of its gain. Needs to build on that gain tomorrow.

More witnesses are testifying that the lows on 4 January were the lows for the silver & gold corrections that began in October. But whether they are OR NOT, y'all need to get your heads straight about these corrections, fluctuations, & disappointments: they don't mean a hill of beans to us. All the loss there is IMAGINARY, just like every gain is imaginary until you in fact sell. If you bought silver at 880c in November 2008, you haven't lost a blessed thing in all these fluctuations, just the imaginary sting of marking to market.

What's the point? That we are NOT following a day-trading strategy, so it isn't fit to focus on daily changes. We are following a PRIMARY TREND STRATEGY, which means we climb on to that bull and ride him until he falls over. We don't blow a lot of money by trading in and out, we just hold on to the bull and ride that rascal.

And that also means that about now is the time to buy more. Or you can wait till silver climbs over 3200c and gold above $1,705 and you have more confirmation in hand.

Susan & I were in Chattanooga on Thursday and got to eat with restaurant entrepreneur Lawton Haygood & his wife Karen at his Boathouse restaurant perched alongside the Tennessee River. Most restaurants, even the chi-chi pricey ones, are a disappointment. Food all tastes the same, because the chefs are all cribbing out of the same magazines. But the Boathouse has flavors you won't find anyplace else. One reason is that Lawton invented a wood fired cookstove that allows cooking over a red oak fire -- directly. And wood smoke does something to seafood that carries it smack up to heaven. If y'all EVER get within 200 miles of Chattanooga, don't miss the Boathouse. But if they're too crowded, visit Lawton's other restaurant, Sugar's Ribs, and order the "Romaine is burning" -- half a head of romaine flash cooked over a wood fire, then garnished with pumpkin & sunflower seeds. My, O, my! We ate there, too.

Y'all enjoy your weekend.

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
14-Jan-13 Price Change % Change
Gold, $/oz 1,668.90 8.90 0.5
Silver, $/oz 31.08 0.71 2.3
Gold/Silver Ratio 53.697 0.274 0.5
Silver/Gold Ratio 0.0186 0.0004 2.3
Platinum 1,656.30 27.00 1.7
Palladium 702.05 1.85 0.3
S&P 500 1,470.68 -1.37 -0.1
Dow 13,507.32 18.89 0.1
Dow in GOLD $s 167.31 -0.64 -0.4
Dow in GOLD oz 8.09 -0.03 -0.4
Dow in SILVER oz 434.60 -9.58 -2.2
US Dollar Index 79.52 0.12 0.2
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: 1,667.40      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,717.42 1,723.26 1,723.26
1/2 AE 0.50 849.86 878.30 1,756.61
1/4 AE 0.25 424.93 447.49 1,789.95
1/10 AE 0.10 174.97 182.58 1,825.80
Aust. 100 corona 0.98 1,622.94 1,636.94 1,670.01
British sovereign 0.24 392.51 396.51 1,684.39
French 20 franc 0.19 311.30 315.30 1,688.82
Krugerrand 1.00 1,699.08 1,714.08 1,714.08
Maple Leaf 1.00 1,677.40 1,692.40 1,692.40
1/2 Maple Leaf 0.50 958.76 875.39 1,750.77
1/4 Maple Leaf 0.25 425.19 446.03 1,784.12
1/10 Maple Leaf 0.10 176.74 181.75 1,817.47
Mexican 50 peso 1.21 1,994.14 2,011.14 1,668.02
.9999 bar 1.00 1,673.24 1,684.24 1,684.24
SPOT SILVER: 31.04      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 30.50 34.00 0.04
VG+ Peace dollar 0.77 29.00 33.00 0.04
90% silver coin bags 0.72 22,515.35 22,729.85 31.79
US 40% silver 1/2s 0.30 9,112.55 9,187.55 31.14
100 oz .999 bar 100.00 3,104.00 3,144.00 31.44
10 oz .999 bar 10.00 315.40 317.90 31.79
1 oz .999 round 1.00 31.14 31.59 31.59
Am Eagle, 200 oz Min 1.00 32.29 33.29 33.29
SPOT PLATINUM: 1,656.30      
Platinum Platypus 1.00 1,681.30 1,721.30 1,721.30
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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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