The Moneychanger
Weekly Commentary
Friday, 18 January a.d. 2013 Browse the commentary archive
Here's the weekly scorecard:
  11-Jan-13 18-Jan-13 Change % Change
Silver, cents/oz. 3,036.70 3,190.20 153.50 5.1
Gold, dollars/oz. 1,660.00 1,686.60 26.60 1.6
Gold/silver ratio 54.665 52.868 -1.800 -3.3
Silver/gold ratio 0.0183 0.0189 0.0006 3.4
Dow in Gold Dollars (DIG$) 167.97 167.30 -0.67 -0.4
Dow in gold ounces 8.13 8.09 -0.03 -0.4
Dow in Silver ounces 444.18 427.86 -16.32 -3.7
Dow Industrials 13,488.43 13,649.70 161.27 1.2
S&P500 1,472.05 1,485.98 13.93 0.9
US dollar index 79.56 80.03 0.47 0.6
Platinum 1,629.30 1,672.10 42.80 2.6
Palladium 700.70 722.00 21.30 3.0

I know a trader who says, "The week never lies." That is, you can't argue with a scoreboard.

This week silver showed up on that scoreboard as the clear winner, up 5.1%. Gold gained 1.6%. Stocks, for all the jubilating & publicity, gained 1.2% (Dow) and 0.9% (S&P500). US Dollar index came back to life today, and platinum & palladium roared.

You won't understand what's going on unless you note that in spite of stocks' gains this week, the Dow in Gold & the Dow in Silver FELL.

US DOLLAR INDEX finally broke through 79.80 resistance & jumped to touch 80.187,although it has backed off now to 80.03, up 31.6 basis points (0.41%). 80 now becomes support.

I hate dealing with these old nasty currencies. It's like sorting cow pies, &, worse yet, they're driven by political central bank policies you can never discern from a chart.

They're all mixed up now. Dollar won't rally, & won't break down. Stuck Euro rallies, then changes its mind -- twice over. It closed down 0.43% today to $1.3316. Apparently the Keynesian lamebrains running the US government & Fed don't care that the Japanese have cheapened their currency by nearly 15% since September, by the mere swirling of paper gaining a competitive advantage over US manufacturers. But shucks, these & earlier lamebrains -- including ESPECIALLY the Republicans back to Reagan -- have already sent most US manufacturing overseas by currency & tariff manipulations. I don't know how an occupying army could have done the U.S. more damage. Whose side are they on? Not ours.

Yen lost another 0.27% to close at 111.03 cents/Y100. I hope y'all like flipping hamburgers for a living.

Stocks this week made a new high for the rally that begin in mid-November, and slightly bettered the high from October. Then today they added modestly to that. Dow gained 53.68 (0.39%) to 13,649.70 while the S&P500 gained 0.34% (5.04) to 1,485.98.

Question now becometh, Can they reach new highs higher than the October 2007 high (intraday 14,198.10)? Recalling that the Dow has traced a massive broadening top or megaphone Jaws of Death formation, it really won't matter. That would be the ideal ploy for a bear market to suck in more victims.

Never mind. Look at a 15 year chart of any stock index in the world & you'll see a massive head and shoulders formation that measure to a point so low it makes no sense. Right now the Dow is finishing the top of that right shoulder. Once it begins to fall, O, have mercy! Weeping, wailing, and gnashing of teeth will follow, without relief.

The Dow in Gold & Dow in Silver have been correcting these last 18 months or so after those metal highs in April 2011 and August 2012. Now they are re-awakening. Since the August 1999 top in Dow/Gold, stocks have lost about 85% of their value against gold, and about the same against silver. Before this metals bull market/stock bear market ends, stocks will lose ANOTHER 85% against metals, more against silver.

Knowing that ought to make y'all pull those IRAS out of stocks faster than you can say, "Call my stock broker!" Still, the sad nature of humanity is to linger too long on the cliff' edge.

Here's a little tip that even many silver & gold dealers don't understand. The most reliable indicator of silver's direction is an extreme in the premium on US 90% silver coins ("Premium" is the amount it sells for over or under its metal value.)

As recently as 4 October 2012 at the last peak, wholesalers were paying spot silver less 25 cents for US 90% and selling at 10 cents an ounce over spot. A month later, with silver about $3 lower, they were offering to buy at 5 cents under spot. By end of November they were paying spot. By the beginning of January they were paying 20c over spot, & today I can get 65 cents over spot. Most dealers are not offering 90% for sale, or offering it only at 4 week delays, even at 100c an ounce over spot.

The high 90% premium is one reason I have been so stubbornly expecting a silver bottom, and why I thought 4 January was a bottom.

Another footnote to this story: t'ain't nothing like as much US 90% silver coin in the world as everybody thinks. It has been melted since the late 1960s, zillions of bags. One day everybody's going to wake up and say, "How come those bags are carrying a 40% premium?" Easy: because they are the most useful form of silver investments, most divisible, and there aren't many left.

Silver gained 11.6 cents today to close Comex at 3190.2c. Gold lost $3.80 to close at $1,686.60, still above that early December low.

Gold's high came at $1,695, low at $1,684.70. Trying to remain sober, I note that gold has enjoyed 4 upweeks out of the last four. However, momentum indicators like the MACD & RSI, with plenty of room to rise. Then I think about gold punching at the top of its Bollinger Bands & cool a little. So maybe gold will take a breather next week, move sideways before it takes off again.

The mark for gold to beat has become $1,705. A close over that will attract lots of buyers, a close over $1,730 flocks of 'em.

Silver is in the same position as gold, strong momentum indicators & above all its moving averages except the 50 day. Looks ready to rise.

Any gold close above $1,705 will carry gold immediately higher. A close below $1,685 sets the stage for a modest fall, maybe to $1,660.

I believe the bottom for the correction from the October highs came on 4 January. Buy silver or gold, period, but especially on any price retreat. The party has kicked off again.

CONFISCATION? After I denounced the government gold confiscation myth yesterday, a bewildered subscriber wrote, "Haven't you always been saying the NGM would confiscate gold?" Here's my reply:

1. I have never in the past 15 years written that "today's NGM want to pull off the same dirty trick" of confiscation.  You must have misinterpreted what I wrote.

2.  Yes, gold offers a safe haven from hyperinflation, but the central banks and governments have spent the last 80 years driving gold out of the system & proclaiming it is not money.  Confiscating it will prove otherwise.

3. The spoils don't justify the game. People who buy gold or silver by and large do not trust the financial system or the government/Fed. Imagine porcupines in a liverish mood, & you'll have a good picture how sweetly they would cooperate with confiscation. The loot confiscated won't repay the NGM's grief suffered in the confiscating.

4.  The LONG TERM game is for the Insiders to get as much gold possible as cheaply as possible (probably the main purpose of the gold price suppression 1996 - 2005), to run the inflation game as long as possible, and THEN to reverse their field & again base the monetary system on gold.  That will only happen after they have bled the rest of us dry & the whole system has gone hooves up.  That's a long time off.

5. 2013 is not 1934.  Circumstances today, as well as the law, have all changed.

Again, you are more likely to be abducted by aliens from the planet Zambodia tonight than you are to suffer the government confiscating your gold.

On 18 January 1861 Georgia joined South Carolina, Florida, Mississippi, and Alabama in seceding from their former union. A year later the Confederate Territory of Arizona was formed. As usual, we were ahead of our time.

On 18 January 1871 Chancellor Otto von Bismarck & Kaiser Wilhelm I proclaimed the Second German Empire. The Prussians got what they wanted, a united German empire under themselves, while the wonderful diversity of Germany was shoehorned into the Prussian model. But then, those were the days of empire-building, when the social trend was toward ever greater centralization, & had been since the mid 1600s. Today that trend has turned round and we are entering a 300+ year period when power will flow AWAY from the center toward localities. Witness the breakup of the British, French, Dutch, Austrian, Russian, and even Soviet empires. That the US empire now reigns alone supreme does not disprove my statement, it proves it. That's a peak, not a continuation. The US empire is the only one that hasn't broken apart yet.

On 18 January 1788 the first elements of the first fleet carrying 736 convicts from England to Australia arrived at Botany Bay to set up a penal colony. After a while, all those folks England had been willing to throw away turned around and formed their own country, and a pretty tough one, 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
18-Jan-13 Price Change % Change
Gold, $/oz 1,686.60 -3.80 -0.2
Silver, $/oz 31.90 0.12 0.4
Gold/Silver Ratio 52.868 -0.121 -0.2
Silver/Gold Ratio 0.0189 0.0001 0.4
Platinum 1,672.10 -25.70 -1.5
Palladium 722.00 -3.40 -0.5
S&P 500 1,485.98 5.04 0.3
Dow 13,649.70 53.80 0.4
Dow in GOLD $s 167.30 1.05 0.6
Dow in GOLD oz 8.09 0.05 0.6
Dow in SILVER oz 427.86 0.13 0.0
US Dollar Index 80.03 0.32 0.4
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: 1,685.50      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,731.85 1,741.96 1,741.96
1/2 AE 0.50 859.10 887.84 1,775.67
1/4 AE 0.25 429.55 452.35 1,809.38
1/10 AE 0.10 176.87 184.56 1,845.62
Aust. 100 corona 0.98 1,640.56 1,654.56 1,687.98
British sovereign 0.24 396.77 400.77 1,702.49
French 20 franc 0.19 314.68 318.68 1,706.92
Krugerrand 1.00 1,715.84 1,730.84 1,730.84
Maple Leaf 1.00 1,695.50 1,710.50 1,710.50
1/2 Maple Leaf 0.50 969.16 884.89 1,769.78
1/4 Maple Leaf 0.25 429.80 450.87 1,803.49
1/10 Maple Leaf 0.10 178.66 183.72 1,837.20
Mexican 50 peso 1.21 2,015.78 2,032.78 1,685.98
.9999 bar 1.00 1,691.40 1,702.40 1,702.40
SPOT SILVER: 31.84      
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 23,230.35 23,480.60 32.84
US 40% silver 1/2s 0.30 9,348.55 9,423.55 31.94
100 oz .999 bar 100.00 3,184.00 3,224.00 32.24
10 oz .999 bar 10.00 323.40 325.90 32.59
1 oz .999 round 1.00 31.94 32.39 32.39
Am Eagle, 200 oz Min 1.00 33.09 34.09 34.09
SPOT PLATINUM: 1,672.10      
Platinum Platypus 1.00 1,697.10 1,737.10 1,737.10
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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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