The Moneychanger
Daily Commentary
Tuesday, 5 March a.d. 2013 Browse the commentary archive

Experts in police state interrogation -- which is pretty much the US already -- employ the "Good Cop/Bad Cop" technique. One interrogator pretends he is the victim's buddy, and wants to help him if he will only co-operate. The other shouts and spits in his face & threatens. They tag-team the victim, who eventually is so worn out that he gives in, only to find out that BOTH were bad cops. Too late.

So it is with the Federal Reserve's Inflation Hawk/ Inflation Dove game, essential to managing inflation expectations to keep the victims (that's y'all) in the dollar. Couple of weeks ago the FOMC minutes, almost as reliable as a Chinese Government Crop Report, were released that showed that "some" members of the Committee were becoming Inflation Hawks, i.e., were fretting about the inflationary effects of creating $85 billion (with a B) dollars a month. To round out the picture, news this morning tag-teamed the Inflation Hawks with the Inflation Doves (or stool pigeons, I'm not sure which, I don't know my birds very well) Ben the Beneficent and Janet Yellen (where DO they get these people with these names?) Ben was droning on about how they ought to keep on creating the money, and Yellen, widely suspected to be the leading candidate to fill Ben's brogans when he exits, was just a-frothing in the mouth for more inflation clean past the time when unemployment runs back to 1% (Okay, I exaggerate, but not much).

Folks, it's the Good Cop/Bad Cop technique.

And here's MORE propaganda in the war on stocks -- or should I call it the War to Harvest the Rubes (that's y'all again, Victims). The ever trustworthy staff at Goldman Sachs, between pulling the wings off flies & wrecking the finances of nation-states, had a spot of time to release its MONTHLY Chartbook. Right, y'all know that any investor with the time-perspective of a fruit-fly changes his positions every month. Anyhow, it showed how various stock market sectors had performed since 1 Jan 2013, and looky-looky, surprise, surprise, gold was the worst actor on the chart. Shucks, why would Goldman Sachs say that? Why, they don't have any interest in talking down gold, do they? Let me brush these turnip seeds off my shoulders. I just rode into town on the turnip truck.

Y'all don't need me to tell you that the Dow Jones Industrial Average today gained 125.95 points (0.89%) to close at a new all time high of 14,253.77. That number's so charming that I want to turn it around and gaze on it. Why, look at that! It equals an inflation adjusted 10,658.76 in 2000, when the real all-time high hit at 11,722 in January.

And I am such a natural born fool from Tennessee that I actually keep records. I went shuffling through my files and found -- LO & BEHOLD! -- after the Dow's last nominal high of 14,164.53 on 9 October 2007, it dropped & dropped & dropped for 519 days (17 months) until by 9 March 2009 it stood at 6,547.05, losing a modest 53.8% of that 2007 peak.

Mean-spirited is what I am, meaner'n a junk yard dog. After that bottom the Dow needed another, well, four days shy of four years to reach today's 14,000 +. Way I cipher, that means the Dow needed Five years, 5 months to reach the 14,168 level again. Tell me how much money folks holding stocks made in those 5 years, 5 months?

I'm telling y'all, and will keep telling y'all until they carry me out of here feet first in two parts, , IT'S A TRAP.

The Dow today broke above the upper jaw of the Jaws of Death (Todeskiefer, in German), which comes as no surprise. In this blow-off spasm the Dow could rise straight staring up to 15,000, but it will only mark the top and the end, not the start of a new bull market. The bear reigneth still, count on it.

S&P500 rose 14.59 (0.96%) to 1,539.79, right shy of its 2007 high at 1,565.15. Unlike the Dow, it remains within the Jaws of Death, but it might break out briefly, too.

It's a little odd that the Dow in Gold & the Dow in Silver have not broken out to startling new highs. Rather, they have stopped where they already have been stopped. Certainly they could rise further, the Dow in gold to 9.12 ounces and the Dow in silver as high as 550 oz. But it catches my eye that resistance has blocked them so far.

I mentioned the non-confirming Nasdaq 100 index that had not matched its September low. It broke out over the down trend line from the September to February high, but remains within the megaphone.

US dollar index is stalled. Lost another 10 basis points today (0.13%) to wind up at 82.057, still above the morale-busting 82 support. WHOA. Dollar is MONSTROUSLY overbought, over the top on the RSI & not far behind on the MACD. 50 DMA is about to cross above the 200 DMA, which whispers it may rise further still.

Euro closed at $1.3051, up a meaningless 0.2%. Uptrend is broken, gravity has the upper hand.

Yen ended up 0.22% at 107.19 cents/Y100. Flirting with the 20 DMA at 107.30. Stay away.

What can I say about silver & gold? Lots, actually. Somebody turned over my talk box tonight.

Gold gained $2.50 to $1,574.60 on a $12 range from $1,572.3 to $1,584.2. What's that I hear from you? Is that SNORING? Pay attention here. Gold has traded sideways since COB Thursday, between $1,563 and $1,585. Wherefore, any close in that range is just noise, & nothing will happen until it rises above or falls below that range. Boring as shelling purple hull peas, but not as hard on your thumbs.

And yet, and yet, gold holds on to its embryonic Uptrend. Yes -- didn't expect to hear that, did you Goldman Sachs?

And were I a betting man, I would call this the bottom of the first leg down of this move, the bottom of the 2-wave and therefore the perfect place to buy. Of course, you're gambling because it hasn't confirmed yet that it has turned around. Whoops, it won't, either, until it clears $1,619.70, the last high.

That's the tough part of taking chances: they involve risk.

Silver has traded sideways since Friday, but higher than Friday. Range has been 2849 - 2902 cents,. Silver gained 10.6 cents today (Be still, my beating heart!) to 2856.3c.

Silver made a lower low on Friday, but looked right smart coming up off that. Oh, but it needs to clear that 2900 hurdle, and might do that tomorrow. No confirmation of an upmove comes until silver betters 2944c, the last high. Really, I want to see 3050c to be thoroughly convinced. But I can't help myself, I'm buying here.

Sorry, this will be my last commentary this week, but I've given y'all boundaries to watch for. Susan & I will be travelling up to Charlottesville, Virginia to the Abbeville Institute's Conference, Music & the Southern Tradition. You can read about it at

An interview on National Proletarian Radio this morning caught my ear. Dale J. Stephens wrote a book, Hacking Your Education, in which he talks about preparing yourself for the real world by NOT going to college, not ending up with an average $27,000 in student debt, not being one of the 25% of college graduates who are unemployed or the 23% who work but at a job that requires no college. He was home schooled from age 12, and quit college after a year. The interviewer was practically puffing with disbelief as he demolished every reason for going to college. In final exasperation she spluttered, "But what about the EXPERIENCE of going to college, of broadening your horizons?"

At that, I blew coffee all over myself & nearly ran off the road. The experience? Of soaking your brain in beer and chasing girls/boys? Of having your horizons broadened by professors who think a presidential inauguration or SuperBowl is a high cultural event? Every one of my seven children went to college, & like to wore me out with complaining. Last one I sent to college, all right: Nashville Auto Diesel College, and he has no problem getting a job. And he can change a tire -- in LATIN.

You can get Hacking Your Education at

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
5-Mar-13 Price Change % Change
Gold, $/oz 1,574.60 2.50 0.16%
Silver, $/oz 28.56 0.11 0.37%
Gold/Silver Ratio 55.127 -0.117 -0.21%
Silver/Gold Ratio 0.0181 0.0000 0.21%
Platinum 1,583.70 19.50 1.25%
Palladium 732.60 20.10 2.82%
S&P 500 1,539.79 14.59 0.96%
Dow 14,253.77 125.95 0.89%
Dow in GOLD $s 187.13 7.50 4.18%
Dow in GOLD oz 9.05 0.36 4.18%
Dow in SILVER oz 499.03 2.57 0.52%
US Dollar Index 82.06 -0.10 -0.12%
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: 1,575.00      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,617.53 1,627.76 1,627.76
1/2 AE 0.50 806.68 832.78 1,665.56
1/4 AE 0.25 407.27 424.27 1,697.06
1/10 AE 0.10 165.27 172.86 1,728.56
Aust. 100 corona 0.98 1,540.82 1,546.82 1,578.06
British sovereign 0.24 372.98 382.98 1,626.93
French 20 franc 0.19 294.05 297.05 1,591.07
Krugerrand 1.00 1,598.00 1,608.00 1,608.00
Maple Leaf 1.00 1,585.00 1,600.00 1,600.00
1/2 Maple Leaf 0.50 905.63 826.88 1,653.75
1/4 Maple Leaf 0.25 401.63 421.31 1,685.25
1/10 Maple Leaf 0.10 166.95 171.68 1,716.75
Mexican 50 peso 1.21 1,889.33 1,904.98 1,579.98
.9999 bar 1.00 1,580.51 1,591.51 1,591.51
SPOT SILVER: 28.66      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 30.50 34.00 44.44
VG+ Peace dollar 0.77 28.00 31.00 40.52
90% silver coin bags 0.72 21,171.15 21,421.15 29.96
US 40% silver 1/2s 0.30 8,085.95 8,455.95 28.66
100 oz .999 bar 100.00 2,866.00 2,906.00 29.06
10 oz .999 bar 10.00 291.60 292.60 29.26
1 oz .999 round 1.00 28.76 29.21 29.21
Am Eagle, 200 oz Min 1.00 29.91 31.01 31.01
SPOT PLATINUM: 1,583.70      
Plat. Platypus 1.00 1,608.70 1,648.70 1,648.70
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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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