The Moneychanger
Daily Commentary
Wednesday, 23 January a.d. 2013 Browse the commentary archive

An old poker rule says, "Never draw to an inside straight." That means, never bet that the smallest odds will turn out in your favor, or, always take the main chance.

Stocks, both the Dow & the S&P500, have reached a Relative Strength Index (RSI) over 70. In that territory, a market is very much overbought, and the next big move will be down. Trouble is, markets can stay overbought or oversold sometimes longer than people have money. But that and an MACD in the stratosphere, and trading at the top of the Bollinger Bands all prophesy some correction in stocks' future, soon.

Some indices rose today, some fell -- indecision? Exhaustion? Dow gained 67.12 (0.49%) to 13,779.33 but the S&P500 did no more than add 2.25 (0.15%) to 1,494.81.

Dow in Gold keeps flirting with a top, while the Dow in Silver has dead broken down, trading the last two days below its 200 day moving average. Not impossible, but hard to picture that stocks will advance much more against gold. I would still sell stocks and put the proceeds into gold.

Looky there! That US dollar index has itself a little-old uptrend going. 'Tain't much, but it is a series of higher lows. Course, there are lower highs, too, so it's moving into an even-sided triangle that will eventually break up or down.

Dollar index today gained 6.5 scanty points (0.08%) -- Hey! somebody hold a mirror under its nostrils to see if it fogs up! I think that thing may be dead -- to close at 79.937. Top of the trading range is 80.20, 20 day moving average at 79.91, so maybe twill head higher. Watching currencies is like watching a flea circus: most of what's happening is only your imagination.

After the politicians jawboned the yen down from 126.43 in November to 110.96 four days ago, the BOJ head has jawboned it back up to 112.75 cents/Y100 today, up 0.03%. That's probably as low as the yen will stoop this trip.

Euro closed unchanged today at $1.3319. Big roadblock above is $1.3400.

US$1=Y88.69=E0.7508=0.030 856 oz Ag=0.000 593 oz Au.

Question you have to keep asking yourself is, Why does silver keep on outperforming gold? Yes, indeed, why? I wish I knew. At least it confirms what I am seeing in the physical market, where 90% silver coin has soared.

Again today silver outran gold, adding 26.2 cents (0.82%) to 3240.9c while gold lost $6.50 (0.38%) to 1,686.30.

Once again, eye-catching, strange doings in gold & silver today, odd moves stirred by phantoms. World was rocking along just fine with gold knocking on $1,695, it's high. Eased off to $1,692 right at 10:00 then a safe fell from the sky on its head. In 15 minutes it had gapped down to $1,683, & traded sideways & punch drunk the rest of the day, dipping as low as $1,683.80.

Gold hit its 50 DMA at 1693.85, but no big reason that ought to have occasioned such a sudden drop. Today's fall took gold back to the uptrend line from its $1,626 low on 4 January, so no real damage was done. I expect it will rise again tomorrow, for another knock on that $1,695 door. Gold's doing fine as long as it doesn't close below $1,663.97, its 200 DMA and where the uptrend from the June '12 low now rests.

Silver improved yesterday's breach of the downtrend from the 3449c November high, but has risen for the last eight (8) days running. That performance is hard to maintain, & makes me sweat a little, wondering if silver doesn't need a few days moving sideways or lower to rest. High at 3243.5c nearly reached the 3250c resistance.

Whatever hit gold today hit silver as well, but silver only dropped 15c -- a gappy drop -- from 3235c to 3220c, the day's low. From there it easily recovered.

It may be nothing more than the natural born fool speaking, but silver just feels very strong. Tomorrow will solve the mystery or prove me once again a fool.

Even if silver & gold see a few days' correction here, the bottom was posted 4 January & there's not much risk in buying here.

That Hillary Clinton, she is something! I thought she had beat out the Wicked Witch of the East for good looks, but durned if she hasn't outdone herself lately. I reckon she's having her make up done at a School for Morticians somewhere -- a real money-saving deal. Mercy! If she ever got hold of your leg a-biting, you'd just have to saw it off at the knee to get shut of her. I don't want her mad at me -- she's liable to have Tennessee invaded!

Ever the frugal ones, the thrifty Scots on 23 January 1647 sold the captured Charles I (Stuart) to the English parliament. The English didn't know they probably could have held out & the Scots would have paid them to take him back.

On 23 January 1964 the 24th Amendment to the US constitution was ratified, eliminating the poll tax in federal elections. What I don't understand is why anybody was taking a Pole with 'em to vote, and why on earth they were taxing 'em.

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
23-Jan-13 Price Change % Change
Gold, $/oz 1,686.30 -6.50 -0.38%
Silver, $/oz 32.41 0.26 0.82%
Gold/Silver Ratio 52.032 -0.626 -1.19%
Silver/Gold Ratio 0.0192 0.0002 1.20%
Platinum 1,691.70 -6.70 -0.39%
Palladium 725.45 -3.70 -0.51%
S&P 500 1,494.81 2.25 0.15%
Dow 13,779.33 67.12 0.49%
Dow in GOLD $s 168.92 7.50 4.65%
Dow in GOLD oz 8.17 0.36 4.65%
Dow in SILVER oz 425.17 -1.38 -0.32%
US Dollar Index 79.88 -0.14 -0.18%
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: 1,685.80      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,732.16 1,742.27 1,742.27
1/2 AE 0.50 859.25 888.00 1,775.99
1/4 AE 0.25 429.62 452.43 1,809.71
1/10 AE 0.10 176.90 184.60 1,845.95
Aust. 100 corona 0.98 1,640.85 1,654.85 1,688.28
British sovereign 0.24 396.84 400.84 1,702.79
French 20 franc 0.19 314.74 318.74 1,707.22
Krugerrand 1.00 1,717.83 1,732.83 1,732.83
Maple Leaf 1.00 1,695.80 1,710.80 1,710.80
1/2 Maple Leaf 0.50 969.34 885.05 1,770.09
1/4 Maple Leaf 0.25 429.88 450.95 1,803.81
1/10 Maple Leaf 0.10 178.69 183.75 1,837.52
Mexican 50 peso 1.21 2,016.14 2,033.14 1,686.27
.9999 bar 1.00 1,691.70 1,702.70 1,702.70
SPOT SILVER: 32.30      
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 23,519.93 23,877.68 33.40
US 40% silver 1/2s 0.30 9,482.78 9,557.78 32.40
100 oz .999 bar 100.00 3,229.50 3,269.50 32.70
10 oz .999 bar 10.00 327.95 330.45 33.05
1 oz .999 round 1.00 32.40 32.85 32.85
Am Eagle, 200 oz Min 1.00 33.55 34.55 34.55
SPOT PLATINUM: 1,691.70      
Plat. Platypus 1.00 1,716.70 1,756.70 1,756.70
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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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