The Moneychanger
Daily Commentary
Thursday, 4 April a.d. 2013 Browse the commentary archive

One last thing about that gold to silver swap. IRS considers it NOT a "like kind" exchange, so you have to pay capital gains tax on any gains you might have when you "sell" the gold for silver, at a 28% capital gains rate (special punishment for silver & gold investors).

Fellow wrote me from a state with income tax (we don't have it in Tennessee) wondering whether the gold silver swap would work if he has to pay that capital gain. He had bought gold at $835.

Now I know nothing about income tax, so don't take my advice, but I figured his gain and subtracted tax at the 28% rate on the gai, which worked out in his case to 12.9%, so he lost that much of the gold value in the swap. Then I figured out the 12.9% tax again on the swap back, even knowing it won't be that much.

Result was, he begins with 10 oz. of gold, swaps for silver less the tax, at a realized 55:1 ratio, then swaps back into silver at 32:1, and he ends with 4.32 more ounces than he started with.

I don't know -- that works for me, but some people might not like it. Don't take my advice under any circumstances, check with your Tax Daddy or Tax Mama first.

But you'd better check quickly, because the opportunity to swap doesn't last long. We are still doing them, with a two gold ounce minimum, no maximum. (888) 218-9226.

Currency markets went nuts today. New Bank of Japan surprised markets when the new governor Kuroda "committed the BOJ to open-ended asset buying & said the monetary base would nearly double to Y270 trillion by end of 2014," an injection of about $1.4 trillion. They will be buying Japanese government bonds, so the announcement sent bond yields toward zero. Why anyone would want to own bonds today promising to pay DEPRECIATED yen tomorrow lies beyond my puny ken.

The announcement, perhaps with a huge squeeze of euro short-sellers, drove the euro up 0.71% against the US dollar to $1.2933 and up 4.6% [sic] against the yen. Thousands of euro short-sellers are now puking in their wastebaskets.

Against the US dollar the yen fell 3.4% to 103.79. Meanwhile the US dollar index went mostly nowhere, rising 0.21 basis points to 82.732, up 0.03%. However, the EOD chart on Stock Charts shows a different story, down 0.06% with a close at 82.83. More, it shows the first half of a key reversal, a new high for the move with a lower close for the day. Lower close tomorrow constitutes a firm reversal.

US Stocks came back halfway today from yesterday's loss, so gave no clear cut sign of breaking down. Dow closed 14,606.11 (down 55.76 or 0.38%) while the S&P gained 6.29 (0.4%) to 1,559.98. Both are flirting with closing below their 20 day moving averages.

What about the Dow/Gold and Dow/Silver? Dow/gold backed off to 9.40 oz (G$194.31 gold dollars), down from 9.425 yesterday. Still have to brace for a 10 oz (G$206.72) possible high.

Dow/Silver closed higher today, at 544.70 ounces, trading in a very tight range. If it doesn't stop here, it's pointing as high as 600 oz.

(For some of you who don't read closely, look again at what I just said. I did NOT say the Dow/Silver certainly would reach 600 oz, only that it will be pointing toward that if it doesn't stop soon.)

The 10 year US treasury note yield has fallen back under support/resistance. Since bond prices rise when yields fall, that indicates lots of demand for bonds, & since US bonds are a proxy for US dollars, lots of demand for dollars. That hints that somewhere in the world, somebody is trying to buy safety.

Let me put this little bug in y'all's ear: the financial world and the goofs running it are like the Three Stooges hand carrying jugs of TNT across a tack-strewn minefield barefooted. The whole mess, probably beginning in Europe, could blow up any time. If you keep believing that somehow or the other Ben & Mario will muddle through to safety, you are simply lying to yourself.

What's interesting in silver & gold today is that their downward momentum screeched to a halt. Silver lost only 2.5 cents to 2674.8 while gold gave up $1.00 to $1,551.80.

Silver's low today hit 2666.8 cents. Over the last three days silver has scooped out a rounding bottom, like a bowl with the lip at 2700c. It must climb above 2700c to prove that's a real bowl. The line it must defend below is 2660 cents. Tomorrow will reveal which way it will jump.

Several physical items are in backwardation, i.e., their prices are higher than the paper price. US 90% now costs $2.15 an ounce over spot, but I can't buy very much even at that price. Silver rounds jumped a nickel an ounce today, silver American Eagles 10 cents, & they're quoting two week or longer delays.

That does NOT point to lower silver prices.

Gold has carved a similar bowl on its three-day chart, with a bottom at today's $1,540.50 low and a rim at today's $1,556.25 high. If gold intends to reverse, it ought to do so tomorrow. Dropping away from the lip of the bowl means it really isn't a bowl after all.

On 4 April 1902 it was revealed that English adventurer Cecil Rhodes left $10 million in his will to provide scholarships for Americans to attend Oxford in England. That was part of Rhodes plan to impose "superior" Anglo-American culture on the world, or, at least, the rule of the Anglo-American elite. Or so it seems, as so many recipients of Rhodes Scholarships become significant tools of the Establishment, e.g., Bill Clinton. And that's what history professor & Clinton Mentor Carroll Quigley seemed to outline in his massive book, Tragedy & Hope. Rhodes himself was a crass adventurer who did all he could to start one war with the Boers in South Africa & a second one so he and his buddies could grab control of the gold mines there. A small glimpse into his ego may be seen in Rhodesia -- yes, he named a country for himself.

Large bequests cover a multitude of sins, I reckon.

Argentum et aurum comparanda sunt —
Silver and gold must be bought.

— Franklin Sanders, The Moneychanger

Your source for gold and silver. Read our latest reviews and testimonials.
Market Snapshot See more charts and market data
4-Apr-13 Price Change % Change
Gold, $/oz 1,551.80 -1.00 -0.06%
Silver, $/oz 26.75 -0.03 -0.09%
Gold/Silver Ratio 58.016 0.017 0.03%
Silver/Gold Ratio 0.0172 -0.0000 -0.03%
Platinum 1,516.70 -23.10 -1.50%
Palladium 724.20 -30.00 -3.98%
S&P 500 1,559.98 6.29 0.40%
Dow 14,606.11 55.76 0.38%
Dow in GOLD $s 194.57 7.50 4.01%
Dow in GOLD oz 9.41 0.36 4.01%
Dow in SILVER oz 546.06 2.59 0.48%
US Dollar Index 82.73 0.02 0.03%
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: 1,552.90      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,597.93 1,604.92 1,604.92
1/2 AE 0.50 795.35 821.10 1,642.19
1/4 AE 0.25 401.55 418.31 1,673.25
1/10 AE 0.10 162.95 170.43 1,704.31
Aust. 100 corona 0.98 1,509.98 1,523.98 1,554.76
British sovereign 0.24 367.75 377.75 1,604.70
French 20 franc 0.19 289.93 292.93 1,568.97
Krugerrand 1.00 1,569.98 1,583.98 1,583.98
Maple Leaf 1.00 1,562.90 1,577.90 1,577.90
1/2 Maple Leaf 0.50 892.92 815.27 1,630.55
1/4 Maple Leaf 0.25 395.99 415.40 1,661.60
1/10 Maple Leaf 0.10 164.61 169.27 1,692.66
Mexican 50 peso 1.21 1,862.82 1,878.33 1,557.88
.9999 bar 1.00 1,558.34 1,569.34 1,569.34
SPOT SILVER: 26.84      
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 20,295.28 20,620.28 28.84
US 40% silver 1/2s 0.30 7,547.58 7,917.58 26.84
100 oz .999 bar 100.00 2,683.50 2,723.50 27.24
10 oz .999 bar 10.00 273.35 274.35 27.44
1 oz .999 round 1.00 26.94 27.39 27.39
Am Eagle, 200 oz Min 1.00 28.09 29.19 29.19
SPOT PLATINUM: 1,516.70      
Plat. Platypus 1.00 1,541.70 1,581.70 1,581.70
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© 2015 Little Mountain Corporation, d.b.a. The Moneychanger. All rights reserved. May not be republished in any form, including electronically, without our express permission.

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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