The Moneychanger
Weekly Commentary
Thursday, 28 February a.d. 2013 Browse the commentary archive
Here's the weekly scorecard:
  22-Feb-13 28-Feb-13 Change % Change
Silver, cents/oz. 2,846.00 2,839.50 -6.50 -0.2
Gold, dollars/oz. 1,572.40 1,577.70 5.30 0.3
Gold/silver ratio 55.249 55.563 0.310 0.6
Silver/gold ratio 0.0181 0.0180 -0.0001 -0.6
Dow in Gold Dollars (DIG$) 184.06 184.98 0.92 0.5
Dow in gold ounces 8.90 8.95 0.04 0.5
Dow in Silver ounces 491.94 497.20 5.26 1.1
Dow Industrials 14,000.57 14,117.88 117.31 0.8
S&P500 1,515.60 1,522.15 6.55 0.4
US dollar index 80.47 81.91 1.44 1.8
Platinum 1,606.30 1,582.40 -23.90 -1.5
Palladium 735.30 732.60 -2.70 -0.4

R.L. Dabney wrote that the Scotch-Irish people, when they are right, are the most inflexible & stubborn people on earth, but when they are wrong are the most mulish and pig-headed. My people are Scotch-Irish so far back that memory runneth not to the contrary, bred to fight for 1,000 years.

When the Y2K threat passed all the neophytes who had bought gold & silver expecting the world to end called up wanting to sell their metals. Knowing that the stock bull market was drawing to a close and suspecting/watching the Dow in Gold roll over, anticipating a new metals bull market, I pleaded with them not to sell (what the lawyers call "an admission against interest"). Some listened, some didn't. How that turned out for people who had bought silver & gold at $5 and $250 - $300 and didn't sell, y'all can judge.

I tell y'all that story to point out that I have been here, under this same artillery fire before. And in 2008 when all & sundry were diving into dollars, I kept telling them to stick with their silver & gold & buy more.

Now pundits are punditting that the dollar will was strong & well-muscled for decades to come, & a new bull market in stocks is about to begin. Right, after they've been in a bear market only 13 years.

Sorry, I'm fixing to become the most mulish & pig-headed Scotch-Irishman (or inflexible and stubborn) you ever met. I don't buy any of the government hogwash about the recovering economy, recovering banks, or the Fed being wiser than God having more money, or stocks launching a new bull market. I don't buy that the piddling 500% - 600% rise in silver & gold over a mere 12 years fulfills a bull market. I don't buy that Europe will somehow muddle though, and that the Japanese with 250% of their GDP in debt will make itself rich by depreciating the yen.

The causes haven't changed, so the effects will not change.

As that great Scotch-Irishman Outlaw Josey Wales said, "When things look bad & it looks like you're not gonna make it, then you gotta get mean. I mean plumb, mad-dog mean. Cause if you lose your head & you give up, then you neither live nor win. That's just the way it is."

A reader wrote to ask me what events would make me sell silver & gold. Here they are, in order: (1) The US government abolishes the Federal Reserve system and returns to a constitutional gold & silver coin standard. (2) The US government ceases to intervene in the economy. (3) Gold drops below $1,000. (4) Frogs grow wings so they won't bump their little bottoms when they jump.

Y'all just put yourself in the place of the government managers like Bernanke. Every once in a while you have to engineer a BIG scare to keep your victims in the dollar and out of gold. One thing that reveals the dollar's true condition is a rising gold price, so he just has to fight that.

Today I have to leave early to attend a funeral in Memphis tomorrow, so the prices below are closes for silver & gold only, not everything else. But they'll be close. And I won't publish a commentary tomorrow.

Stocks reached a new high for the move at 14,149.15 but are trading now at 14,117.88, up 42.51 (0.3%). S&P500 stands at 1,522.15, up 6.16 or 0.41%. Dow punched through the upper jaw of that broadening top, but that often happens as the megaphone mouth widens out. I have been telling y'all to expect a new all time NOMINAL high in stocks, so this shouldn't surprise even a TSA agent or central bank president.

Dollar spurted today, up 33.7 basis points (0.43%) to 81.907. Surely has 82 targeted, maybe 83. Deflation scare/strong dollar scare time.

Euro sank back again today, losing 0.56% to $1.3058. Yen also sank 0.46% to 107.90 cents/Y100. Remains, however, above the 107.51 twenty day moving average.

Y'all are tired of silver & gold falling, & so am I, but it only SEEMS that they've been falling forever. Gold hit a low last Friday at $1,554.30, made a key reversal, & climbed 4 days. Today & yesterday it backed off. Might back off more, but declines yesterday & today were mere normal trading. Gold actually rose $5.30 for the week, and silver lost only 6.5 cents.

Gold fell $17.50 today to $1,577.70. Silver lost 54.8 cents to close 2839.5c.

I'd be grateful if gold would move no lower than today's intraday low at $1,574.90. That would keep it inside its old lower channel line. But that's not as critical for gold as holding above $1,554.30. And y'all will hardly credit this, but it appears the MACD indicator has turned up.

Silver's chart looks like gold, a little correction after four day's rise. MACD hasn't as obviously turned up, but is curving. Total risk is down to 2610c to 2610c at most, the support line so long established.

Y'all don't realize that the Establishment is harvesting you. When Goldman- Sachs puts out a report that gold will drop to $1,200, you think they're doing that out of the goodness of their tiny, leaden hearts which when hot are a touch below absolute zero? They are mere hatchetmen & bagmen for the government, floating propaganda to scare you ought of silver & gold. Of course, so is Ben Bernanke.

I'm telling y'all, it's time to get mean: plumb, mad-dog mean, if you expect to live and to win.

On 28 February 1638 at Greyfriars in Edinburgh the Scots, who are nearly as stubborn as the Scotch-Irish, signed the National Covenant to defend the Reformed religion. Over the next 50 years many of them sealed that Covenant with their blood.

On 28 February a gun battle erupted at a "compound" of the Branch Davidians in Waco, Texas when Bureau of Alcohol, Tobacco, & Firearms Agents attacked. Two days before some of those same agents had been shooting together at a firing range with David Koresh, head of the Davidians. A 51 day standoff began, and finally the government had to attack the compound with armored personnel carriers and gasoline -- or was it napalm? -- to "save the children." Well, torch the children, save the children, it's an easy mistake to make if you're a US attorney general. Few Davidians survived.

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
28-Feb-13 Price Change % Change
Gold, $/oz 1,577.70 -17.50 -1.1
Silver, $/oz 28.40 -0.55 -1.9
Gold/Silver Ratio 55.563 -0.605 -1.1
Silver/Gold Ratio 0.0180 -0.0003 -1.9
Platinum 1,532.40 -16.60 -1.1
Palladium 32.60 -10.55 -24.4
S&P 500 1,522.15 6.16 0.4
Dow 14,117.98 42.51 0.3
Dow in GOLD $s 184.98 2.60 1.4
Dow in GOLD oz 8.95 0.13 1.4
Dow in SILVER oz 497.20 10.88 2.2
US Dollar Index 81.91 0.34 0.4
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: 1,575.90      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,621.60 1,628.69 1,628.69
1/2 AE 0.50 803.20 830.11 1,660.21
1/4 AE 0.25 401.60 422.93 1,691.73
1/10 AE 0.10 165.36 172.56 1,725.61
Aust. 100 corona 0.98 1,536.97 1,550.97 1,582.30
British sovereign 0.24 373.19 383.19 1,627.84
French 20 franc 0.19 295.99 301.58 1,615.30
Krugerrand 1.00 1,599.54 1,614.54 1,614.54
Maple Leaf 1.00 1,585.90 1,600.90 1,600.90
1/2 Maple Leaf 0.50 906.14 827.35 1,654.70
1/4 Maple Leaf 0.25 401.85 421.55 1,686.21
1/10 Maple Leaf 0.10 167.05 171.77 1,717.73
Mexican 50 peso 1.21 1,890.41 1,907.41 1,581.99
.9999 bar 1.00 1,581.42 1,592.42 1,592.42
SPOT SILVER: 28.39      
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 21,013.85 21,342.85 29.85
US 40% silver 1/2s 0.30 8,330.80 8,405.80 28.49
100 oz .999 bar 100.00 2,839.00 2,884.00 28.84
10 oz .999 bar 10.00 288.90 291.40 29.14
1 oz .999 round 1.00 28.49 28.94 28.94
Am Eagle, 200 oz Min 1.00 29.64 30.64 30.64
SPOT PLATINUM: 1,532.40      
Platinum Platypus 1.00 1,557.40 1,597.40 1,597.40
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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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