The Moneychanger
Daily Commentary
Tuesday, 9 April a.d. 2013 Browse the commentary archive

Confirming their uptrend, silver & gold today pulled on their seven league boots and stepped on out. Stocks reversed, and the US dollar walked underneath a falling anvil.

Lest I forget, that gold/silver ratio dropped below 57 today to close at 56.922. If you are ever going to swap gold for silver, which I recommend right now, you don't have much time left to accomplish it. Ratio tends to top very sharply and fast.

Stock answered my bewilderment yesterday by rising through resistance. Probably headed for new highs still.

Dow gained 59.98 (0.41%) to 14,673.46. S&P500 wasn't far behind at 1,568.61, up 0.35% (5.54). Now comes the explanation, why I watch the Dow denominated in silver & gold:

Although stocks rose today, the Dow/Gold & Dow/Silver FELL, exactly what we would expect if silver & gold have bottomed. Vanishingly small doubt remains in my mind that the Dow in Silver has painted an Island Reversal on the chart, but y'all look for yourselves & decide. Closed at 525.93 oz, down a weighty 2% [sic].

Dow in Gold tells a similar story, although the gap falling off the island is a bit cattywampus to the gap climbing on. Whatever it is, it looks like a top to me, but a close above the high at 9.425 oz (G$194.83 gold dollars) would gainsay that. Closed today at 9.26 oz (G$191.42), down 1/3 of 1%. Chart's at

The Dow/Gold & Dow/Silver performance bolsters my confidence in silver & gold.

You'd have to recur to early 2009 to find a $/Yen exchange rate lower than it is today, 100.98 cents/Y100. If cheapening your currency is the Royal Road to Economic Prosperity, here's what I don't understand: Why aren't Bolivia, Argentina, Zimbabwe, & Serbia the most prosperous nations on earth? If a little inflation is good for the economy, a lot ought to be really rich, right? Y'all see why they'll never hire me for the Fed Reserve Board of Governors. I'm just too big a natural born durn fool to swallow their Keynesian hogwash. You got to be a SO-FISS-TEE-CATE-ED fool for that.

Euro shot up 0.5% today to $1.3082, while the US dollar index fell 38.1 basis points (also 0.5%) to 82.342. That sinks the dollar index way below its 20 day moving average (82.85) and explodes the uptrend line.

But somethin' don't add up. While the dollar is sinking like a drunk's popularity at a church social for little old ladies, the yield on the 10 year US treasury note is falling, that is, bond prices are rising. And bonds are nothing but a bundle of US dollars, promised to be paid tomorrow. Now theoretically, a falling dollar ought to send folks flying out of bonds, and send yields up, but that's not happening -- yet. This suggests that beneath what may be a NGM-engineered lower dollar exchange rate somebody, maybe somebody panicky, is running into dollars.

What keeps nagging me is the SUDDENNESS of the financial panic in 2008. I keep asking myself, am I missing harbingers of another panic? Europe has only been papered over, Japan is trying to float a debt 2.4 times its GDP on a sea of paper, & every fractional reserve bank on the globe, which is every last one of them, is bankrupt by definition. Leaves me glad I don't own any bonds or bank stock.

Silver & gold slapped back today. Silver gained 74.6 cents, challenged 2800c with a 2807c high, and closed at 2786.6. Gold scooped up $14.20 and closed $1,586.20, cutting through the next resistance at $1,575 like Alexander hacking the Gordian Knot.

Gold wouldn't be held back today, but paled a bit when it neared $1,591 resistance. High came at $1,589.97. Gold is fulfilling my strictest expectations, but needs to continue to confirm. By the end of the week I'd like to see gold over its 20 DMA ($1,591.70) and its 50 Dma ($1,609.25), and, while I'm asking, over $1,625 resistance.

Silver really painted the chart purple today, pounding on that 2800c gate. A close through 2800c takes silver through a downtrend line from back in March. It also is the top boundary of a falling wedge. Wouldn't a breakout above that be pretty?

Both silver & gold continue to confirm that Friday marked their bottoms and that they have reversed. Only closes below 2700c and $1,550 would gainsay that.

Readers keep asking me what I think about Bitcoin. I don't think about it at all. It's just fiat currency gone digital, backed by nothing but the feckless dreams of computer jockeys. Interesting that the Federal Government went out of its way to say that Bitcoin is legal. Maybe they like the pattern of a universal digital currency, who knows?

Worst of all, I looked at Bitcoin's chart. It's in a classic hyperbolic upside blowoff. Having been bitten and mauled by a couple of those, I know that spells death soon. I'd get out, no matter how many newsletters & internet gurus recommend it. This chart always ends the same.

On 9 April 1991 the parliament of Georgia (in the Caucasus) declared its independence from the USSR. I'm waiting for the parliament of OUR Georgia to declare its independence from the USSA. I'd almost leave Tennessee & move down there if they did.

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
9-Apr-13 Price Change % Change
Gold, $/oz 1,586.20 14.20 0.90%
Silver, $/oz 27.87 0.75 2.75%
Gold/Silver Ratio 56.922 -1.042 -1.80%
Silver/Gold Ratio 0.0176 0.0003 1.83%
Platinum 1,552.00 16.10 1.05%
Palladium 731.85 3.20 0.44%
S&P 500 1,568.61 5.54 0.35%
Dow 14,673.46 59.98 0.41%
Dow in GOLD $s 191.23 7.50 4.08%
Dow in GOLD oz 9.25 0.36 4.08%
Dow in SILVER oz 526.57 -12.27 -2.28%
US Dollar Index 82.34 -0.38 -0.46%
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SPOT GOLD: 1,585.90      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,628.72 1,639.03 1,639.03
1/2 AE 0.50 812.26 838.54 1,677.09
1/4 AE 0.25 410.09 427.20 1,708.81
1/10 AE 0.10 166.41 174.05 1,740.53
Aust. 100 corona 0.98 1,542.06 1,556.06 1,587.50
British sovereign 0.24 375.56 385.56 1,637.90
French 20 franc 0.19 296.09 299.09 1,601.97
Krugerrand 1.00 1,601.76 1,614.76 1,614.76
Maple Leaf 1.00 1,595.90 1,610.90 1,610.90
1/2 Maple Leaf 0.50 911.89 832.60 1,665.20
1/4 Maple Leaf 0.25 404.40 424.23 1,696.91
1/10 Maple Leaf 0.10 168.11 172.86 1,728.63
Mexican 50 peso 1.21 1,902.40 1,918.12 1,590.88
.9999 bar 1.00 1,591.45 1,602.45 1,602.45
SPOT SILVER: 27.91      
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 21,314.15 21,664.15 30.30
US 40% silver 1/2s 0.30 7,864.70 8,234.70 27.91
100 oz .999 bar 100.00 2,791.00 2,831.00 28.31
10 oz .999 bar 10.00 284.10 285.10 28.51
1 oz .999 round 1.00 28.01 28.46 28.46
Am Eagle, 200 oz Min 1.00 29.16 30.26 30.26
SPOT PLATINUM: 1,552.00      
Plat. Platypus 1.00 1,577.00 1,617.00 1,617.00
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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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