The Moneychanger
Daily Commentary
Tuesday, 19 March a.d. 2013 Browse the commentary archive

Y'all ever been around a married couple & thought everything was just hunky-dory between 'em, when all of a SUDDEN the crockery started flying & they commenced flinging skillets at each other? You were surprised, but they weren't. You were surprised because you were judging the situation's tension -- the opposing forces -- from the outside. You didn't realize that all the smiles & nicey-nicey were hiding huge pressure.

I suspect that's what's happening here after this Cyprus bungle -- I say "bungle" because it's evident they are now trying to back away from it as fast as they can, without, of course, really backing away from it. We don't know who the real actors & what their real purposes were, but we can certainly imagine what's presently going on, namely, behind the scenes the Nice Government Men are manipulating heaven & earth & wearing out puppet strings trying to keep stock markets & currencies & bond markets from going wild. I wonder when the skillets are going to start a-flyin'.

Cyprus was a BIG mistake, a bridge too far. It could be Our Rulers pulled a trigger they didn't mean to pull. Then again, maybe not, but we'll know in the next few days.

Stock markets around the world have already evidenced their nervousness by dropping. The Potemkin Dow rose today 3.76 points to 14,455.82, but all the other indices fell with the S&P500, which lost 3.76 (yep, strangely the same number as the Dow gained) to close 1,548.34.

Dow in Gold took another step down today, losing 037% to 8.97 oz (G$185.43) and closing plumb on its 20 day moving average (8.97 oz). Go look at the chart to see what I mean, http://bit.ly/ZIhzCY

Dow in Silver has rolled over downward but not as dramatically as the Dow in Gold. Closed 500.72 oz, down a third of an ounce. 20 DMA, first confirmation of a top, stands at 493.26.

I hope the Nice Government Men around the world have laid in a big supply of Tums & Alka Selzer, 'cause they're gonna need it keeping the currency markets from going nuclear. US dollar index gained 28.8 basis points (0.37%) to close at 82.95, nearly back to the high last week at 83. And that 83, technically, ought to contain any upward move, but not if spooked money around the world is looking for a hidey-hole.

Euro lost 063% to close at $1.2873. It broke the $1.2900+ level that so far had held it, and now hath opened the way to $1.2600. Yen barely moved, up 0.2% to 105.10 cents/Y100.

Gold gained another $6.70 today and ended at $1,611.30, not much below the day's high at $1,614.43. Was never driven lower than $1,600.48, & that happened right after the open around 9:00 a.m. By 10:00 gold was already pushing & elbowing higher.

But I'm bewildered about tomorrow, with a double mind. I can see that gold has built support above $1,608.50, and it wouldn't take much to drive it over $1,625. On the other hand it's risen the last four days running, and is hitting its upper Bollinger Band. Oh, but other indicators are pointed strongly up. 50 DMA lies above at $1,632.90, a reasonable near term target.

As long as gold remains above $1,600, it will keep climbing.

Silver lost 3.1 cents to 2881c. You can chalk that up to the crisis sending people into gold, or you can chalk it up to more sinister forces. After all, if you wanted to manipulate the REALLY huge gold market, & you knew the much smaller silver market was tied to it, wouldn't it be easier to drive silver down than gold? What if you drove down platinum & palladium, too, even smaller markets, hit 'em really hard selling futures? That's what the Fed did in the stock market panic of 1987, sold platinum futures to keep gold down. I remember watching 'em do it, well, watching the trading.

But lets talk about silver on its own terms. Momentum indicators are pointing up, and silver has traded to the upper line of a triangle, bumping & pushing against that overhead resistance. It could always fall further, but around 2850c lurk some buyers with deep, deep pockets, & they stop every decline.

So watch out tomorrow for a little drop in silver & gold, & don't let that demoralize you. On the other hand, if gold climbs above $1,615 and silver above 2935 cents, they will fly.

Not to play coy, I believe the early March lows were the bottom of this move, and another rally has begun. May frustrate us with sideways moves for a little while, but it's established and point upwards.

I have to run. I have 16 cubic yards of mulch at home, waiting to be spread, & my wife has a shovel with my name on it. We call it a Scotch-Irish front end loader.

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
19-Mar-13 Price Change % Change
Gold, $/oz 1,611.30 6.70 0.42%
Silver, $/oz 28.81 -0.03 -0.11%
Gold/Silver Ratio 55.928 0.292 0.53%
Silver/Gold Ratio 0.0179 -0.0001 -0.52%
Platinum 1,554.40 -23.80 -1.51%
Palladium 733.40 -29.45 -3.86%
S&P 500 1,548.34 -3.76 -0.24%
Dow 14,455.82 3.76 0.03%
Dow in GOLD $s 185.46 7.50 4.21%
Dow in GOLD oz 8.97 0.36 4.21%
Dow in SILVER oz 501.76 0.67 0.13%
US Dollar Index 82.95 0.29 0.35%
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: 1,613.00      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,656.55 1,667.04 1,667.04
1/2 AE 0.50 826.15 852.87 1,705.75
1/4 AE 0.25 417.11 434.50 1,738.01
1/10 AE 0.10 169.26 177.03 1,770.27
Aust. 100 corona 0.98 1,578.06 1,584.06 1,616.06
British sovereign 0.24 381.98 391.98 1,665.16
French 20 franc 0.19 301.15 304.15 1,629.07
Krugerrand 1.00 1,636.00 1,646.00 1,646.00
Maple Leaf 1.00 1,623.00 1,638.00 1,638.00
1/2 Maple Leaf 0.50 927.48 846.83 1,693.65
1/4 Maple Leaf 0.25 411.32 431.48 1,725.91
1/10 Maple Leaf 0.10 170.98 175.82 1,758.17
Mexican 50 peso 1.21 1,934.91 1,950.79 1,617.98
.9999 bar 1.00 1,618.65 1,629.65 1,629.65
SPOT SILVER: 38.93      
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 28,728.70 29,264.70 40.93
US 40% silver 1/2s 0.30 11,115.60 11,485.60 38.93
100 oz .999 bar 100.00 3,893.00 3,933.00 39.33
10 oz .999 bar 10.00 394.30 395.30 39.53
1 oz .999 round 1.00 39.03 39.48 39.48
Am Eagle, 200 oz Min 1.00 40.18 41.28 41.28
SPOT PLATINUM: 1,554.40      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,579.40 1,619.40 1,619.40
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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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