The Moneychanger
Daily Commentary
Thursday, 17 January a.d. 2013 Browse the commentary archive

Nearly daily some fearful person writes me about "reporting issues" with silver & gold.   Y'all get this set in your minds: NOTHING need be reported when you buy, unless you buy for more than $10,000 in cash. REPEAT, no matter what anybody tells you, when you buy silver & gold, there is no requirement whatever that the purchase be reported to any government, as long as you don't pay cash. If you pay cash, it's the cash & not the gold or silver that's reported.

Most of that fear about government knowing that you have silver or gold is fomented by salesmen trying to sell you highly over-priced numismatic coins under the the myth they aren't "reportable" or "confiscatable" or sell you something else. Fear boosts sales.

This is not 1934. THEN, gold contributed a meaty part to the 35% required banking reserves. NOW, gold is no longer held in commercial banking reserves, & the reserve requirement is less than ¾ of 1%. Roosevelt had to steal the gold to make his inflation plan work, otherwise gold would have offered to the realizers an escape route out of the dollar.

All the 1934 reasons to confiscate gold have vanished in 2013. You are more likely to be abducted by aliens on your way home tonight than you are to have your gold confiscated by the federal government. Besides, you're not going to turn over your gold to a government agent any more than you'd turn over your assault rifle.

Unless you want your family to starve. (For me, these questions present no moral dilemma whatever.)

One last word: recently a bill has been introduced into the Illinois legislature called the "Illinois Precious Metal Purchasing Act." It provides that a person "who is in the business of purchasing precious metal shall obtain a proof of ownership, create a record of the sale, & verify the identity of the seller."

Some analysts have incorrectly interpreted this. It ONLY applies to people "in the business of purchasing precious metals," i.e., scrap buyers. Further proof is that they would be required to open their records to local law enforcement. Similar laws are already in effect all over the country, & were put in place during the last gold & silver run-up in 1980 to make it harder for burglars to fence their stolen goods. To see the bill, go to and prove it for yourself.

Now, take a deep breath & relax. Go home, kiss your wife or husband & children, enjoy a tasty supper, and thank God for peace & rest, at least for today.

TODAY something passing odd took place in silver & gold. PASSING odd. And stocks hit new highs. Here's how it looked:

About 8:30 - 9:00 the US dollar index was rising. Didn't bother silver or gold a bit, they were rising, too. So were stocks.

But the dollar index once again hit its face against 79.80 like a German shepherd chasing a parked car. Fell off and never recovered, losing 12.2 basis points (0.16%) to 79.685.

US$1=Y89.82=E0.7478=0.031460 oz Ag=0.000 592 oz Au.

Other markets -- stocks & metals -- rose all out of proportion to the dollar's drop. Stocks made new highs, higher than last fall. Last September the Dow's high close came 20 September at 13,596.93, but it made an intraday high early-October at 13,661.87, then fell like Jerry Lee Lewis' career after he married a 13 year old. S&P500 made a September high at 1,465.77 and same day an intraday high at 1,474.51.

Today the S&P touched 1,485.16 and at the close had gained 8.31 (0.56%) to 1,480.94 -- new intraday high and new high close.

Dow today reached 13,633.89 and gained 84.79 (0.63%) to end at 13,596.02.

Me, O, my. That bear is baiting his den with the hope of big, big things to come, but stay away from that cave. Once the bear fills it up, he will devour the foolhardy at leisure.

Do not overlook the Dow measured by gold or by silver. Dow in Gold remains below its downtrend line. Ditto Dow in silver. Momentum for both has turned down. Metals will beat stocks.

Now for those strange, strange doings in silver & gold.

Silver rose today 27.2 cents to close at 3178.6c, with a new intraday high and a new high for the move off the 4 January low. Screeched to a halt just a gnat's whisker off the 50 day moving average (3200c).

Gold burst through that early December low at $1,684.10 and added $7.70 to end at $1,690.4. High came at $1,695.56. Gold now stands above all its moving averages except the 50 day ($1,695.72). It has broken out of its downtrend line from the November high, and approacheth the downtrend line from the October high. RSI & MACD have all turned up. Volume is rising with price. Buddy, it don't get much better than this.

But looky here: eye hath seldom seen, nor ear heard, trading like gold & silver did today. Come open about 8:30, silver gapped down from 3142 & fall clean to 3104.5c by 9:15. Turned around, gapped up a couple of short jumps (I'm looking at a 5 minute interval chart), then jumped clean from 3135 to 3165c in five minutes. Climbed a bit more to 3188.6c, then leveled off rest of the day to that 3178.6c close.

Behold the gold chart, bogus as they come. Early on selling knocked gold from $1,681 by a gap to $1,676. Gold was on the ropes, bumbling & tumbling to $1,666.59 by 9:00. Gold shook it's head, made a tiny gap up to $1,675 (5 minute interval chart, remember) then leapt from there clean to $1,686! And kept on climbing to the $1,695.56 high, & levelled off to close at $1,690.40.

Ladies and gentlemen, this ain't normal trading. Looks like some NGM smarties through they'd whack gold again today like they did last Friday, but gold turned around and whacked 'em back, breaking a couple of teeth in their jaw. Maybe I'm no more than a natural born fool from Tennessee, but when a market takes a body blow like that, then fights back to close higher -- through heavy resistance -- well, that old dog wants to hunt, and will. Count on it.

Final confirmation that silver & gold posted their lows on 4 January will come with a gold close over $1,725 and silver above 3250c. However, with all the other indicators pointing up, I'm buying the rest of what I intended to buy. Both metals may suffer and labor some more, but the lows are behind us, I believe.

On 18 January 1782 was born in New Hampshire Daniel Webster. In the US House of Representatives he represented New Hampshire from 1813 to 1817, then Massachusetts from 1823-1827, & Massachusetts in the US senate from 1845 to 1850. Officially touted as a great statesman by the mainstream American hagiography which passes for history, he was always an elitist and tool of the banks. Still extant are letters from him to the head of the Second Bank of the United States dunning him for his "retainer." How times change! Today we would call this retainer a "bribe," but what's in a name?

On 18 January 1893 a group of American businessmen & sugar planters revolted against Hawaii's legitimate monarch, Queen Liliuokalani, & forced her to abdicate. The US annexed Hawaii in 1898. Right then the US was hot to build an empire. All that "right to national self-determination" stuff came later.

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
17-Jan-13 Price Change % Change
Gold, $/oz 1,690.40 7.70 0.46%
Silver, $/oz 31.79 0.27 0.86%
Gold/Silver Ratio 53.181 -0.215 -0.40%
Silver/Gold Ratio 0.0188 0.0001 0.40%
Platinum 1,697.80 5.60 0.33%
Palladium 725.40 -0.30 -0.04%
S&P 500 1,480.94 8.31 0.56%
Dow 13,596.02 84.79 0.63%
Dow in GOLD $s 166.27 7.50 4.72%
Dow in GOLD oz 8.04 0.36 4.72%
Dow in SILVER oz 427.74 -1.00 -0.23%
US Dollar Index 79.69 -0.12 -0.15%
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: 1,686.40      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,735.31 1,742.89 1,742.89
1/2 AE 0.50 859.55 888.31 1,776.62
1/4 AE 0.25 429.78 452.59 1,810.35
1/10 AE 0.10 176.97 184.66 1,846.61
Aust. 100 corona 0.98 1,641.44 1,655.44 1,688.88
British sovereign 0.24 396.98 400.98 1,703.39
French 20 franc 0.19 314.85 318.85 1,707.82
Krugerrand 1.00 1,716.76 1,731.76 1,731.76
Maple Leaf 1.00 1,696.40 1,711.40 1,711.40
1/2 Maple Leaf 0.50 969.68 885.36 1,770.72
1/4 Maple Leaf 0.25 430.03 451.11 1,804.45
1/10 Maple Leaf 0.10 178.76 183.82 1,838.18
Mexican 50 peso 1.21 2,016.86 2,033.86 1,686.87
.9999 bar 1.00 1,692.30 1,703.30 1,703.30
SPOT SILVER: 31.71      
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 22,990.83 23,205.33 32.46
US 40% silver 1/2s 0.30 9,308.73 9,383.73 31.81
100 oz .999 bar 100.00 3,170.50 3,210.50 32.11
10 oz .999 bar 10.00 322.05 324.55 32.46
1 oz .999 round 1.00 31.81 32.26 32.26
Am Eagle, 200 oz Min 1.00 32.96 33.96 33.96
SPOT PLATINUM: 1,697.80      
Plat. Platypus 1.00 1,722.80 1,762.80 1,762.80
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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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