The Moneychanger
Weekly Commentary
Friday, 22 February a.d. 2013 Browse the commentary archive
Here's the weekly scorecard:
  15-Feb-13 22-Feb-13 Change % Change
Silver, cents/oz. 2,983.90 2,846.00 -137.90 -4.6
Gold, dollars/oz. 1,608.80 1,572.40 -36.40 -2.3
Gold/silver ratio 53.916 55.249 1.330 2.5
Silver/gold ratio 0.0185 0.0181 -0.0004 -2.4
Dow in Gold Dollars (DIG$) 178.98 184.06 5.08 2.8
Dow in gold ounces 8.66 8.90 0.25 2.8
Dow in Silver ounces 466.81 491.94 25.13 5.4
Dow Industrials 13,929.23 14,000.57 71.34 0.5
S&P500 1,519.64 1,515.60 -4.04 -0.3
US dollar index 80.51 80.47 -0.04 -0.0
Platinum 1,676.60 1,606.30 -70.30 -4.2
Palladium 752.75 735.30 -17.45 -2.3

Silver & gold have been beat with a barbed wire whip this week. Stocks moved sideway, as did the US dollar. Platinum & Palladium went to the woodshed, too. And to all of you folks who are sending me prophecies from Nostradamus, etc., about what silver & gold will do, I appreciate your efforts but I'll pass.

Stocks had a rough week, but strong day. At the very end of the day today it managed to reach 14,000 and climb over by half a point -- I'm not making this up. Dow closed at 14,000.57, up 119.95 (-.86). Not to be outdone, the S&P500 rose 13.18 (0.88%) to 1,515.60. Trend remains up and unbroken for stocks, but the down must not close below 13,835. Will most like reach a new all-time high very soon. Only thing in the way is 14,035.

No, I have not changed my mind about stocks. The top of this move will bring cheering & shouts, but that joy will turn to sharp sorrow. Look at stocks adjusted for inflation: the high came in 2000, and they remain in a primary down trend (bear market). Yes, I know that makes me sound dumber than a horned toad, but there it is.

Dow in Gold & Dow in Silver gapped up two days ago, gapped down yesterday, then rose a little today. Three days ago looked like a top, last two days they have blown hot and cold out of both sides of its mouth, like the man who killed his parents then threw himself on the mercy of the court because he was an orphan. Not sure what to make of it yet, but tain't normal, & 'twon't live long this way.

About this time yesterday the dollar index was trading at 81.475, and today is trading at 81.47. Dollar index is bumping up against 81.60, trying to break through to 82 - 82.50.

Every convincing lie contains some truth. That little bit of truth is what makes the counterfeit believable. Hence Ben the Bagman must occasionally manage the dollar upward to create the illusion of strength.

It's all a great illusion, the economy, the financial system, the banks, but as long as enough people believe the lie, the liar can get by with it. At times it takes so long that you begin to wonder if you ain't WORSE than a natural born fool for holding back, for not just going along to get along. Then you shake your head and say, "Shucks! I'd rather be a fool than a liar any day. A fool may be taken, but liars will be fryers." I ain't THAT big a fool.

The euro kept its head down & stayed flat today, closed at $1.3187, no change. Chart screams loudly that its rally is broken. Only needs to drop below $1.3150 to confirm that.

Yen continues to move sideways. Lost 0.32% today to close at 107.04. Euro/Yen cross rate rose a little today, but hit its high at 1 February & appears to have turned. Probably part of a deal made before the G20 met.

US$1=Y93.42=E0.7583=0.035137 oz Ag=0.000636 oz. Au.

On Comex gold lost $5.80 and plagued yesterday's trading with equivocation today. Silver lost 23.9 cents to 2846c. Both are up stoutly in the aftermarket, gold to $1,582 & silver to 2880c.

On a five day chart gold make a spike bottom about $1,558 Wednesday night, then climbed to a high at $1,586.93 today. That leg up looks impulsive, i.e., that's not merely a reaction to the previous fall, but the direction the market wants to go. Gold backed off most of the day, & the close at $1,572.40 nearly caught the low at $1,571.50. That low was about $10 higher than yesterday's. If gold intends to continue rising, it must not break today's low.

Longer term chart offers more encouragement still. Day before yesterday and yesterday gold punctured the lower Bollinger Band. Generally that marks the extremity of the move. Now it has traded up above the downtrend line form the 2011 high, and back within the lower B-band. RSI is strongly oversold and has been for a week. It's too early to judge, but all these point to a reversal soon.

Remember that at lows everybody is fearful, but at highs they bulge with bravery -- just the opposite of how they ought to feel. Therefore negative sentiment and pessimism -- especially our own -- often accurately pinpoints lows.

Silver's five day chart reveals double bottoms Wednesday at 2631c & Thursday at 2832c. Today a third low came in at 2836c. Clearly, silver will fall much further if it breaks 2830c. Up above it needs to clamber over the wall at 2890c.

On the four month chart silver never has fallen as far as the downtrend line from April 2011 high. It has clung regularly to a higher downtrend line, the bottom of its trading channel. In the last three days it visited that lower channel line, and broke through the bottom B-bands. Today it closed again inside the B-bands. Other indicators are also oversold.

I ruefully confess that the stubborn length of this correction has buffaloed me over & over, and stocks' strength. Then again, I don't claim to be a clairvoyant. When this happens I run back to my premises & check them out. They're still sound. Inflation continues, silver & gold will keep on rising. Cause continues, so will the effect.

Some sign will emerge, probably soon, that tells us it's time to load up on silver and gold. Meanwhile, the brave can buy.

On 22 February 1969 Barbara Jo Rubin became the first woman to win a US thoroughbred horse race. My source doesn't say what the other horses thought about having her out there on the track with them.

On 22 February 1889 President Grover Cleveland signed a bill to admit the Dakotas, divided into North Dakota ("The Rectangular State") and South Dakota ("The Other Rectangular State"), Montana ("The Almost Rectangular State") and Washington ("The Square State") into the Union. It was a great day for right angles.

On 22 February 1732 was born George Washington, so character was so consistent that not even modern day cynics can find anything to blacken him with. He was from Virginia.

On 22 February 1793 died Roger Sherman, b. 1721. He helped draft and signed the Declaration of Independence, member of the Continental Congress, and served in the constitutional convention (1787). It was Sherman who saw there an opportunity to shut and bar the door against paper money. Thus the new constitution did not allow the federal government to issue paper money, and provided that "No state shall . . . make any Thing but gold and silver Coin a Tender in Payment of Debts." Wonder is that though these words stand unchanged & unchallenged today, the safety they provide to all of us has been stolen. You want to see a judge wince and wallow and throw you in jail, next time you go to court for a traffic fine, etc., say to the judge, "Your honor, I want to pay this fine, but I understand that the constitution provides that no state shall make any thing but gold and silver coin a tender in payment of debt. Unless I give you gold and silver coin, I can't be sure I've paid the fine, but I have none. How can I pay the fine?"

It will change your life.

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
22-Feb-13 Price Change % Change
Gold, $/oz 1,572.40 -5.80 -0.4
Silver, $/oz 28.46 -0.24 -0.8
Gold/Silver Ratio 55.249 -0.199 -0.4
Silver/Gold Ratio 0.0181 -0.0002 -0.8
Platinum 1,606.30 -12.60 -0.8
Palladium 735.30 1.70 0.2
S&P 500 1,515.60 13.18 0.9
Dow 14,000.57 119.95 0.9
Dow in GOLD $s 184.06 2.27 1.2
Dow in GOLD oz 8.90 0.11 1.2
Dow in SILVER oz 491.94 8.28 1.7
US Dollar Index 81.47 -0.01 -0.0
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: 1,582.00      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,621.55 1,635.00 1,635.00
1/2 AE 0.50 806.31 833.32 1,666.64
1/4 AE 0.25 403.16 424.57 1,698.28
1/10 AE 0.10 166.01 173.23 1,732.29
Aust. 100 corona 0.98 1,542.92 1,556.92 1,588.37
British sovereign 0.24 374.64 384.64 1,633.97
French 20 franc 0.19 297.13 302.74 1,621.55
Krugerrand 1.00 1,607.31 1,622.31 1,622.31
Maple Leaf 1.00 1,592.00 1,607.00 1,607.00
1/2 Maple Leaf 0.50 909.65 830.55 1,661.10
1/4 Maple Leaf 0.25 403.41 423.19 1,692.74
1/10 Maple Leaf 0.10 167.69 172.44 1,724.38
Mexican 50 peso 1.21 1,897.72 1,914.72 1,588.06
.9999 bar 1.00 1,587.54 1,598.54 1,598.54
SPOT SILVER: 28.80      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 30.50 34.00 44.44
VG+ Peace dollar 0.77 29.00 33.00 43.14
90% silver coin bags 0.72 21,056.75 21,385.75 29.91
US 40% silver 1/2s 0.30 8,451.75 8,526.75 28.90
100 oz .999 bar 100.00 2,880.00 2,925.00 29.25
10 oz .999 bar 10.00 293.00 295.50 29.55
1 oz .999 round 1.00 28.90 29.35 29.35
Am Eagle, 200 oz Min 1.00 30.05 31.05 31.05
SPOT PLATINUM: 1,606.30      
Platinum Platypus 1.00 1,631.30 1,671.30 1,671.30
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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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