The Moneychanger
Daily Commentary
Monday, 25 February a.d. 2013 Browse the commentary archive

I reckon if you live by politics, you'll die by politics, too. Pears all the optimists are now all terrified that "sequestration" (which last week they couldn't spell) will cut off the tide of gummint money, & strangle the whole economy. Over in Europe the Establishment technocrat Monti (as in "3-Card") didn't win, so the euro went down in flames since nobody knows whether Italy's even gonna open up tomorrow, let alone have an economy.

As the rats left the euro-boat they jumped ship to the yen. Rats, as y'all probably know, ain't got a lick of sense. The euro fell 1.02% to $1.3058, breaking the uptrend sure enough. No more doubt on that account. The Yen jumped up like an old lady winning the lottery. It rose 1.73% to 108.95c/Y100. Us Dollar index hardly moved, up from Friday's trading about this time by about 28 basis points or 0.3%.

All those optimist rats that had climbed aboard the SS Stockmarket came flying off today, too. Dow lost a choking 216.4 points or 1.55% and closed waaaay down there below 13,850 support at 13,784.17. S&P500 looked worse, down 1.83% (27.75 point) at 1,487.85.

That's not the worst. The Dow made a new high for the move today at 14,081.58, but then closed much lower for the day: first half of a key reversal. A lower close tomorrow (assuming the Nice Government Men can't manipulate it higher, and they ain't God, after all) puts a fatal nail in stocks' coffin.

Hush, I'm not through. I've been telling y'all about those Jaws of Death broadening top pattern forming since the Dow broke out of that rising wedge back in January. Today it ran plumb up to the top of that megaphone, then sliced down through the 20 DMA (13,947.783) and closed BELOW that megaphone's bottom side.

Shucks, when you're the gummint & you can just dummy up enough money to do about anything, including buying stock futures to raise the market & print loads of new money, you can jerk markets around right smart. Your trouble is, as I said, you ain't God, so sooner or later you'll flatten your face up against reality.

Be quiet, I'm not through YET. I opened up the Dow in Gold & Dow in Silver charts, & looky there! That close last Wednesday WAS an island reversal, or some kind of reversal, I reckon. That Dow in gold sank from 8.864 oz on Friday to 8.66 oz today, down 4.36%. Dow in silver plunged from 491 to 475.50, 3.34%.

Don't anybody chortle too loudly or smugly just yet, but those stocks are in trouble.

Silver gained 52.7 cents (+1.85%) today to close Comex at 2898.7 cents. Gold added $13.80 (+0.88%) to close $1,586.20. This is good, this is welcome, this is promising, but it ain't cleared the woods by no means.

By the way, I've heard more drivel lately about the so called "Death Cross" of gold's 50 Day Moving Average dropping below its 200 DMA than I heard since Obama ran for president the first time, so I'm gonna hawk that bone out of my throat first. Since 2000, gold has made the so-called death cross five (5) times. In 2000, it lost 4.5% from May to November, but that was BEFORE the bull market began. In 2004, it crossed in June & stayed under till 10 August, with a disastrous fall from a high of $384.50 at the cross to a low of $383.60 at the low (yes, a 90 cent loss). In 2006 the October death cross (they need a new name for that thing) took gold from $593 on the 20th to its low on the 21st at $579.70, a 2.2% drop. Only near-about bad result was in 2008, when gold fell 12.2% from the September cross to its November low at $704.50, losing 12.25. And remember that was amidships of a 200-year financial panic. Average death cross loss has been 4%. Let's worry about something else now.

Meanwhile market sentiment has grown so negative on silver & gold that a rebound, whether the final turnaround or not, is virtually assured. No pendulum swings the same direction forever, unless the clock is clean broke.

Gold made progress today in climbing above the lower channel line that has held it in since last November. This is positive, but not dispositive. Gold's first task is to climb over $1,605. From there I expect it to march very quickly toward $1,640. If it doesn't, then the falling hasn't ended.

Silver bounced up off its lower channel line, but up above the 200 day moving average is at 3064c. Not coincidentally, resistance/support lurks about the same spot. Silver needs to clear 3050c, then 3100c quickly.

Yes, it's too soon to say for sure, but with the trouble in stocks and the euro today, it appears that silver & gold have found their feet. But be on guard: they need to confirm.

I picked up one of our phones today & it was so hot it nearly burned my hand. LOADS of folks have been waiting for just such an occasion as this to buy silver & gold. I confess, I bought some myself today. Not all I intend to buy, but some.

On this black day, 25 February 1862, Abraham Lincoln, not content to pursue an aggressive war of destruction against the South and the Constitution, signed the First Legal Tender Act authorizing the issuance of United States notes ("Greenbacks") as a legal tender. Not only did he fight a war to destroy the Constitution, he financed it with unconstitutional fiat money.

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
25-Feb-13 Price Change % Change
Gold, $/oz 1,586.20 13.80 0.88%
Silver, $/oz 28.99 0.53 1.85%
Gold/Silver Ratio 54.721 -0.528 -0.96%
Silver/Gold Ratio 0.0183 0.0002 0.97%
Platinum 1,619.60 13.30 0.83%
Palladium 749.05 13.75 1.87%
S&P 500 1,487.85 -27.75 -1.83%
Dow 13,784.17 -216.40 -1.55%
Dow in GOLD $s 179.64 7.50 4.36%
Dow in GOLD oz 8.69 0.36 4.36%
Dow in SILVER oz 475.53 -16.41 -3.34%
US Dollar Index 81.75 0.28 0.34%
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: 1,595.70      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,638.78 1,649.16 1,649.16
1/2 AE 0.50 813.30 840.53 1,681.07
1/4 AE 0.25 406.65 428.25 1,712.98
1/10 AE 0.10 167.44 174.73 1,747.29
Aust. 100 corona 0.98 1,556.28 1,570.28 1,602.00
British sovereign 0.24 377.88 387.88 1,647.76
French 20 franc 0.19 299.70 305.37 1,635.59
Krugerrand 1.00 1,621.23 1,636.23 1,636.23
Maple Leaf 1.00 1,605.70 1,620.70 1,620.70
1/2 Maple Leaf 0.50 917.53 837.74 1,675.49
1/4 Maple Leaf 0.25 406.90 426.85 1,707.40
1/10 Maple Leaf 0.10 169.14 173.93 1,739.31
Mexican 50 peso 1.21 1,914.16 1,931.16 1,601.69
.9999 bar 1.00 1,601.28 1,612.28 1,612.28
SPOT SILVER: 29.07      
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 21,353.48 21,682.48 30.33
US 40% silver 1/2s 0.30 8,529.93 8,604.93 29.17
100 oz .999 bar 100.00 2,906.50 2,951.50 29.52
10 oz .999 bar 10.00 295.65 298.15 29.82
1 oz .999 round 1.00 29.17 29.62 29.62
Am Eagle, 200 oz Min 1.00 30.32 31.32 31.32
SPOT PLATINUM: 1,619.60      
Plat. Platypus 1.00 1,644.60 1,684.60 1,684.60
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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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