The Moneychanger
Daily Commentary
Wednesday, 6 February a.d. 2013 Browse the commentary archive

Years ago I used to write for a very clever man who taught me always to ask one question about politics & government policies & legislation: Cui bono? Who benefits? Follow the money.

Want to know whose behind ending logging on public lands in the Northwest? Follow the money. Whose pocket will the action fill?

Likewise, look at the present government & Federal Reserve acts: who benefits?

Which reminds me of something nearby. On National Proletarian Radio this morning they were droning about the danger of economic collapse in Greece or Puerto Rico. Suddenly I realized they are suckering us with that language. Think about Greece & Europe's "sovereign debt crisis." It's not the economy that's in danger of collapsing, but governments who can't pay their debts & banks who loaned to them. Get rid of those tapeworms, & the economy will hum along like a top. Let 'em collapse, I say.

As I've been repeating, it's as dangerous trying to forecast a mania market like stocks right now as it is to take pity on a half-frozen rattlesnake & snuggle him in your bosom under your tee shirt to warm him up. He'll bite you every time. Yet I ain't no more'n a natural born fool from Tennessee, so here I'll try again. Don't bite me if I'm wrong!

Dow has formed a diamond over the last seven days, a pattern that often marks a top. Sometimes they take a maddeningly long while to resolve, too, trans- mogrifying into a broadening top. Point is, stocks can't stop here, or they'll fall down. Mania feeds on itself, or dies.

Dow today rose a tee-tiny 7.22 (0.05%) to 13,986.52. S&P500 rose an even tee-tinier 0.83 (also 0.05%) to 1,512.12. I may be a fool, but I ain't fool enough to ride that boat all the way over Niagara Falls.

I'm still worrying at the Dow in Gold & Dow in Silver charts like a feist dog over a big rat. Dow in Gold has painted an Island Reversal top, between 8.28 & 8.42 oz, isolated by a clean gap beneath. Must close above 8.42 oz to gainsay that interpretation.

Dow in Silver also has a cluster of trading days isolated by gaps, but I'm not brave enough to call it anything. Looks like one of those paper targets after you hit it with double ought buckshot. Doesn't look like any continuation pattern, though.

I've been through this before, watching & vexing myself with the Dow in Gold chart in 1999. I watched it day by day, sweating it out, after it topped on 25 August 1999. After that the Dow hit its nominal high in January 2000 at 11,722, but the Dow in God was lower, strongly confirming that the trend had indeed changed. But I watched anxiously for months & months, toting up each succeeding confirmation. All this is my way of saying these spreads are very reliable, but call for mountainous patience.

Looks like Japan staged a Pearl Harbor in the currency wars back in November. Closed today up 0.13% at 106.91 cents/Y100, down 17.5% since September. When it snaps back & catches all the shorts, don't be standing in the way.

Euro eased off today 0.47% to $1.3519, reflecting the US dollar index' 21.8 basis point (0.27%) rise to 79.758. The dollar tried to pierce its 20 DMA (79.71) & was soundly slapped for its trouble. Euro may have topped with its $1.3711 high last Friday.

Silver lost 2/10 cent today to 3186.1c. Gold gained $5.30 to $1,677.70. This is tiresome, but underneath pressure is building. Both are pushing up against their downtrend lines, and must either break through toward the sky or plunge earthward again.

Silver slung one leg over that 50 DMA (3171c) & that was progress. That 50 DMA has held silver prisoner too long. Left me uneasy that today's range (3186c - 3158c) was narrower & lower than yesterday's.

Gold could quite reach its 50 DMA ($1,681.40) with a $1,678.89 high, but did close toward the top of the day's range. And it's above its 20 DMA.

Mercy, we've gone from riches to rags here, eking out these measly days with no range & no direction. Hush, be patient, time's a coming when silver & gold will roar again. Won't be long.

Just look out for one thing: all this nicey-nicey feeling & puffed up good news changes nothing: banks are still filled with rotten assets, governments are back-breaking overindebted, inflation is ruing currencies & economies. This is no more than a January thaw, with hard freeze aplenty coming.

Today is Waitangi Day in New Zealand. On 6 February 1840 British settlers signed a treaty with the native Maori.

On 5 February 1862 Union General Ulysses Grant captured Fort Henry near the Kentucky border in Tennessee. It was the first act in a series of tragic mistakes and Confederate senior officer malfeasance that ended in the needless surrender of an heroic army at Fort Donelson, after the Confederates had beaten the yankees and had a wide open road to retreat. Confusion over who had command led to the surrender. Arguably it was the Confederacy's worst retreat, opening up Nashville & 2/3 of Tennessee to Union occupation, giving them a base and salient for further advances.

A secret Justice Department memo leaked out day before yesterday. Yankee government claims right to kill (assassinate) US citizens even if no intelligence shows they are planning to attack the United States & the victim presents no threat, is not on a battlefield, & has not been convicted of a crime. The yankee government argues that the "authority to kill American citizen has no geographic limit." So, if any of y'all see a drone circling your house, do NOT walk outside. If they will do it in Pakistan, they will do it in Tennessee.

My friend Dr. Edwin Vieira, Jr., who wrote the definitive legal and constitutional history of money in the US, Pieces of Eight, has written a new book, The Sword & Sovereignty: The Constitutional Principles of "the Militia of the Several States". Available on CD ROM or Kindle. As always, Edwin is exhaustively thorough, & you will learn everything there is to know about constitutional homeland security in this book. Order at

Remember that Patrick Henry opposed the 1789 constitution constitution (yes, the one in force today) because he "smelt a rat." Henry maintained that there were only two essential government powers, the power of the purse & the power of the sword. This study demonstrates how the power of the sword is built into the American constitution.

TO MEMORIZE TODAY: "There are some things worse than hanging and extermination. We reckon giving up the right of self-government one of those things." -- Jefferson Davis, first president of the Confederate States of America.

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
6-Feb-13 Price Change % Change
Gold, $/oz 1,677.70 5.30 0.32%
Silver, $/oz 31.86 -0.00 -0.01%
Gold/Silver Ratio 52.657 0.170 0.32%
Silver/Gold Ratio 0.0190 -0.0001 -0.32%
Platinum 1,736.50 30.80 1.81%
Palladium 764.40 -0.65 -0.08%
S&P 500 1,512.12 0.83 0.05%
Dow 13,986.52 7.22 0.05%
Dow in GOLD $s 172.34 7.50 4.55%
Dow in GOLD oz 8.34 0.36 4.55%
Dow in SILVER oz 438.99 0.25 0.06%
US Dollar Index 79.76 0.22 0.27%
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: 1,677.10      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,724.06 1,733.28 1,733.28
1/2 AE 0.50 854.81 883.41 1,766.82
1/4 AE 0.25 427.41 450.09 1,800.37
1/10 AE 0.10 175.99 183.64 1,836.42
Aust. 100 corona 0.98 1,635.67 1,649.67 1,683.00
British sovereign 0.24 394.79 398.79 1,694.09
French 20 franc 0.19 313.11 317.11 1,698.52
Krugerrand 1.00 1,703.93 1,718.93 1,718.93
Maple Leaf 1.00 1,687.10 1,702.10 1,702.10
1/2 Maple Leaf 0.50 964.33 880.48 1,760.96
1/4 Maple Leaf 0.25 427.66 448.62 1,794.50
1/10 Maple Leaf 0.10 177.77 182.80 1,828.04
Mexican 50 peso 1.21 2,011.80 2,028.80 1,682.68
.9999 bar 1.00 1,682.97 1,693.97 1,693.97
SPOT SILVER: 31.83      
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 23,115.95 23,440.95 32.78
US 40% silver 1/2s 0.30 9,345.60 9,420.60 31.93
100 oz .999 bar 100.00 3,183.00 3,223.00 32.23
10 oz .999 bar 10.00 323.30 325.80 32.58
1 oz .999 round 1.00 31.93 32.38 32.38
Am Eagle, 200 oz Min 1.00 33.08 34.08 34.08
SPOT PLATINUM: 1,736.50      
Plat. Platypus 1.00 1,761.50 1,801.50 1,801.50
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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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