The Moneychanger
Weekly Commentary
Monday, 4 February a.d. 2013 Browse the commentary archive
Here's the weekly scorecard:
  25-Jan-13 4-Feb-13 Change % Change
Silver, cents/oz. 3,118.00 3,170.00 52.00 1.7
Gold, dollars/oz. 1,656.40 1,675.30 18.90 1.1
Gold/silver ratio 53.124 52.849 -0.280 -0.5
Silver/gold ratio 0.0188 0.0189 0.0001 0.5
Dow in Gold Dollars (DIG$) 173.11 171.27 -1.84 -1.1
Dow in gold ounces 8.37 8.29 -0.09 -1.1
Dow in Silver ounces 444.86 437.86 -7.00 -1.6
Dow Industrials 13,870.75 13,880.08 9.33 0.1
S&P500 1,500.67 1,495.71 -4.96 -0.3
US dollar index 79.75 79.55 -0.20 -0.2
Platinum 1,693.90 1,696.60 2.70 0.2
Palladium 740.25 757.40 17.15 2.3

Since I didn't send y'all a commentary on Friday, I'm sending the week's comparison today.

I brought my knife, fork, & napkin to work today, expecting to have to gag down some crow with meet humility & humiliation. After all, Thursday I said I expected stocks to move lower, & they obliged me by jumping up 149.21 (1.08%) to their first close since 2007 above 14,000 (14,009.79 -- S&P500 rose 1.01% to 1,513.17). "Whoa, there, put down that dinner plate & back away from that crow!" I thought when I saw that today the Dow LOST 129.71 (0.93%) to 13,880.08 while the S&P500 lost 117.46 (1.15%) to 1,495.71.

Markets are so goosey, so driven by the fad or news of the moment, that it's hard to forecast what they'll do next. Apparently on Friday, goofy as this sounds to those with an IQ greater than their refrigerator setting, the deal Congress agreed to suspend the debt ceiling until May drove that rise. Mmmm, let me think. They agreed to spend as much as they like, but in May to add that to the debt ceiling and again approve a debt ceiling. Yes, this is like raising yourself to the sky by pulling on your own bootstraps. Yes, this is unlimited spending, without even a fig leaf of illusory restraint. Yes, this is piled on top of the Federal Reserve's commitment to unlimited spending (QE du jour), along with the ECB & Bank of Japan. Yes, the yield on 10 year Treasuries is rising, which implies interest rates are rising, which economic headwind stocks must breast. Yet stocks rose, briskly.

Common sense is not operating here, but the mania & madness of crowds. However, Friday's close warns that before the madness ceases, probably by end-March, the Dow might reach 15,000 as the fever blows red hot. Wherefore, stand not in the way, but do use this opportunity to unload any stocks you have left & put the proceeds into silver & gold.

Unless Dow closes below $13,678 (the 20 DMA), stocks will add altitude.

Likewise Friday silver & gold rose, but for some reason opaque silver fell today while silver rose again. More below on that.

US dollar index Friday fell & stopped at 79 support (79.088) but rose today 27.1 basis points (0.36%) to 79.551. This might amount to no more than a bounce off that support before the dollar index sinks through toward the earth's core, or it might turn around & move sideways. What's that? Higher? I think not, but 'twas a droll suggestion.

Euro made a spike top at $1.3711 on Friday, yet gainsaid itself today by falling back below the resistance line. Was that its limit? Stay tuned, as it does qualify as a warning. Must follow thorough with closes below $1.3500 to confirm. Fell 0.9% today to $1.3518.

If you were a bookmaker & hadn't done anything savvier since September than fading bets the yen would rise, you'd be rolling in the dough. Friday yen made yet another low (107.56 intraday) but rose 0.51% today to close 108.34 cents/Y100. No logic, no rationale. It's market, it's crazy.

US$1 =Y92.03=E0.7398=0.031546 oz Ag=0.000597 oz Au.

Gold rose again today, adding $5.90 to Friday's close to end the day at $1,675.30. Silver, however, after rising 60.7 cents on Friday, lost 24.2c today & closed at 3170c.

This only underscores their conflicting performance, although it's been silver outrunning gold most of the time. Gold closed January lower than it ended December ($1,669.40 against $1,674.50) -- not much, but never a good sign. Silver, though, closed January a buck & six bits higher, 3017.3c against 3194.2c. Arguing with each other, but silver will win.

'Tis eye-catching that although gold rose today while silver fell, the Gold/silver ratio (gold divided by silver) actually fell from 52.982 to 52.849. So silver didn't fall enough, or gold didn't rise enough, to keep the ratio from falling, and a falling ratio always whispers good things into the bull's ear.

Lines for silver & gold are plainly drawn. Both, bear in mind, are building even-sided triangles, and both I expect will break out upside. Gold must jump over $1,705 to break free of gravity, while silver needs a close above 3200c, followed quickly by a close over 3250c.

Fifty day moving average has been keeping gold captive, & now stands at $1,684.40. Ditto for silver with a 3180c 50 DMA.

Silver & gold grow more and more attractive day by day. Yes, the investing media blackens them, yes, they are struggling, yes, investor opinion is low. Precisely a good time to buy. But if you don't think so, wait for a couple of confirmations and buy some at higher prices.

Bernard O'Bama is certainly putting on the full court press for more gun control. After all, you can't have a police state when 300 million firearms are out there in hands unknown. His masters must be in a hurry.

On 4 February 1861 in convention in Montgomery, Alabama met delegates from Alabama, Georgia, Florida, Louisiana, Mississippi, & South Carolina and adopted a constitution for the Confederate States of America. Jefferson Davis of Mississippi was elected its first president.

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
4-Feb-13 Price Change % Change
Gold, $/oz 1,675.30 5.90 0.4
Silver, $/oz 31.70 -0.24 -0.8
Gold/Silver Ratio 52.849 0.190 0.4
Silver/Gold Ratio 0.0189 -0.0001 -0.8
Platinum 1,696.60 10.40 0.6
Palladium 757.40 1.40 0.2
S&P 500 1,495.71 17.46 1.2
Dow 13,880.08 -129.71 -0.9
Dow in GOLD $s 171.27 -2.19 -1.3
Dow in GOLD oz 8.29 -0.11 -1.3
Dow in SILVER oz 437.86 -0.74 -0.2
US Dollar Index 79.55 0.27 0.3
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: 1,674.20      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,719.40 1,730.29 1,730.29
1/2 AE 0.50 853.33 881.88 1,763.77
1/4 AE 0.25 426.67 449.31 1,797.25
1/10 AE 0.10 175.69 183.32 1,833.25
Aust. 100 corona 0.98 1,632.85 1,646.85 1,680.11
British sovereign 0.24 394.11 398.11 1,691.19
French 20 franc 0.19 312.57 316.57 1,695.62
Krugerrand 1.00 1,706.01 1,721.01 1,721.01
Maple Leaf 1.00 1,684.20 1,699.20 1,699.20
1/2 Maple Leaf 0.50 962.67 878.96 1,757.91
1/4 Maple Leaf 0.25 426.92 447.85 1,791.39
1/10 Maple Leaf 0.10 177.47 182.49 1,824.88
Mexican 50 peso 1.21 2,008.32 2,025.32 1,679.79
.9999 bar 1.00 1,680.06 1,691.06 1,691.06
SPOT SILVER: 31.74      
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 23,012.28 23,334.03 32.64
US 40% silver 1/2s 0.30 9,317.58 9,392.58 31.84
100 oz .999 bar 100.00 3,173.50 3,213.50 32.14
10 oz .999 bar 10.00 322.35 324.85 32.49
1 oz .999 round 1.00 31.84 32.29 32.29
Am Eagle, 200 oz Min 1.00 32.99 33.99 33.99
SPOT PLATINUM: 1,696.60      
Platinum Platypus 1.00 1,721.60 1,761.60 1,761.60
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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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