The Moneychanger
Weekly Commentary
Friday, 12 April a.d. 2013 Browse the commentary archive
Here's the weekly scorecard:
  5-Apr-13 12-Apr-13 Change % Change
Silver, cents/oz. 2,720.10 2,632.20 -87.90 -3.2
Gold, dollars/oz. 1,575.40 1,501.00 -74.40 -4.7
Gold/silver ratio 57.917 57.025 -0.890 -1.5
Silver/gold ratio 0.0173 0.0175 0.0003 1.6
Dow in Gold Dollars (DIG$) 191.12 204.72 13.60 7.1
Dow in gold ounces 9.25 9.90 0.66 7.1
Dow in Silver ounces 535.47 564.74 29.27 5.5
Dow Industrials 14,565.25 14,865.06 299.81 2.1
S&P500 1,553.28 1,588.85 35.57 2.3
US dollar index 82.49 82.12 -0.38 -0.5
Platinum 1,534.40 1,495.30 -39.10 -2.5
Palladium 722.75 707.95 -14.80 -2.0

What a week! The Friends of Paper Money had a hey-day, while silver & gold took a beating with a barbed wire scourge. My Galactic Hogwash Alarm started blaring its klaxon early this morning, & kept on ringing and blinking all day as all the Mighty pontificated. Meanwhile, I kept calm by puking in my wastebasket. I've been here before. That's why I have two wastebaskets.

Dow stalled today while the S&P500 fell a tad. Dow lost 0.08 to 14,865.06. S&P500 lost 4.52 (0.28%) to 1,588.85.

Dow/Gold and Dow/Silver contradicted all my expectations by jumping hugely. Dow/Gold closed up 5.4% at 10.04 oz (G$207.54 gold dollars). That gains back the entirety of the loss from July 2009 to the August 2011 low at 5.69 (G$117.62). However, the Dow in Gold would have to climb above 14 oz (G$289.40) to cross above the downtrend line from the 1999 high.

Dow/Silver also leapt up, closing 574.27, up 6.53%. That collects about 70% of the loss from the beginning of 2010 to the 247.38 oz low in August 2011. To recapture 100% of that loss Dow/Silver would have to climb to 676.46. Downtrend from the June 2001 high hits about 650 oz.

US got "tough", well, talked tough, to the Japanese today about competitive currency depreciation. Fed's line in the sand is probably 100 c/Y100. Dollar kept on rolling over today, losing 11.7 basis points (0.15%) to close 82.117, ever closer to 82, where the real morale-buster awaiteth.

Yen gained 1.01% to 101.31c/Y100 today, probably on the USG chatter. Euro was basically flat, down 0.3% at $1.3101.

Day started off bad for silver & gold, and then got worse. Gold was driven below the last low ($1,539) before 9:00, traded a short while sideways, then was bombed again down to $1,505. By Comex close it had lost $63.30 (4%) to $1,501, but it didn't stop there. In the aftermarket gold lost another $18.90 (to $1,482.10), for a total loss from yesterday of 5.25%. That's a huge loss by any measure, greatest percentage loss since 23 September 2011's 5.85%.

Silver followed gold's pattern, losing 136.3 cents (4.9%) by the time it closed Comex at 2632.2c. Late in the aftermarket silver had lost another 42.7c to trade at 25.895, a total loss for the day of 6.4%.

Real import of these losses lies in their breaking support which had held for two years. UNLESS silver & gold turn up Monday or Tuesday & close above today's breakdown points (2720c & $1,540), they will continue lower, possibly as low as 1950c and $1,430 - $1,300.

I saw a couple of people making a big deal out of gold dropping more than 20% from the $1,900 high in 2011. Mercy, call in the adults. Who wrote in stone that a 20% decline makes a bear market? (Anyway, they mean a bear phase, not a bear market as in "primary trend".) From the March 2008 high at $1,003.20 gold fell to a $685 intraday low in November, down 31.7%. It closed that day at 704.50, down 29.7%! That same year silver fell from a 2068.15c high to 880c, a 57.4% loss and a 105% loss of the foregoing rise. That fall of 2008 I had three wastebaskets in my office.

But many of the same contradictions to that weakness in 2008 appear today, like the climbing premiums on physical silver. I spent most of August, September, October, November, & December checking my presuppositions two or three times a day. Can silver & gold really be in a bull market and drop this badly?

At times like these, you better check out those presuppositions again, & cause and effect, straining out the camel of current events to find the gnat of cause and effect. When you make a right decision, it's admirable perseverance in the face of hardship. If it turns out wrong, why, then its stubborn stupidity. How do you tell the difference?

I always come back to this: Reality is your best friend. What I want how I'd like things to turn out, my biases & longings -- all that may run counter to reality and may fool you. Wishful thinking will wind you up in the ditch.

Cause hasn't changed, so the effect won't change. Since 2008 central banks & governments have proven time and again that when they fall into a crack, they will frantically print their way out. Right now, they're in the catbird seat, having floated the stock market on a sea of new money. They will keep on doing the same, because they have only two weapons against economic crisis, Blarney and Liquidity. Meanwhile, the economy just won't get started, unemployment just won't go away, Japan has had a flooded carburetor for 23 years, & Europe threatens to blow apart. None of the underlying causes has been addressed, nor has any authority even mentioned addressing them.

So the central banks may skate by for a month, or six months, or a year, but eventually all that money they've been printing, AND will keep on printing, will send silver & gold up again.

I can wait, just me and my wastebasket. I'll just sit here, reading history and reminding myself that it won't be "different this time."

I will be travelling with my wife to Charleston, South Carolina next week for a brief vacation. I will try to shoot off a few commentaries, especially on Monday.

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
12-Apr-13 Price Change % Change
Gold, $/oz 1,501.00 -63.30 -4.0
Silver, $/oz 26.32 -1.36 -4.9
Gold/Silver Ratio 57.025 -2.374 -4.0
Silver/Gold Ratio 0.0175 -0.0009 -4.9
Platinum 1,495.30 -39.90 -2.6
Palladium 707.95 -24.25 -3.3
S&P 500 1,588.85 -4.52 -0.3
Dow 14,865.06 -0.08 -0.0
Dow in GOLD $s 204.72 8.30 4.2
Dow in GOLD oz 9.90 0.40 4.2
Dow in SILVER oz 564.74 27.80 5.2
US Dollar Index 82.27 -0.23 -0.3
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: 1,482.10      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,523.60 1,531.75 1,531.75
1/2 AE 0.50 759.06 783.66 1,567.32
1/4 AE 0.25 383.23 399.24 1,596.96
1/10 AE 0.10 155.52 162.66 1,626.60
Aust. 100 corona 0.98 1,441.13 1,455.13 1,484.53
British sovereign 0.24 350.98 360.98 1,533.47
French 20 franc 0.19 276.71 279.71 1,498.17
Krugerrand 1.00 1,498.40 1,511.40 1,511.40
Maple Leaf 1.00 1,492.10 1,507.10 1,507.10
1/2 Maple Leaf 0.50 852.21 778.10 1,556.21
1/4 Maple Leaf 0.25 377.94 396.46 1,585.85
1/10 Maple Leaf 0.10 157.10 161.55 1,615.49
Mexican 50 peso 1.21 1,777.89 1,792.97 1,487.08
.9999 bar 1.00 1,487.29 1,498.29 1,498.29
SPOT SILVER: 25.90      
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 20,087.93 20,437.93 28.58
US 40% silver 1/2s 0.30 7,270.28 7,640.28 25.90
100 oz .999 bar 100.00 2,589.50 2,639.50 26.40
10 oz .999 bar 10.00 263.95 264.95 26.50
1 oz .999 round 1.00 26.00 26.65 26.65
Am Eagle, 200 oz Min 1.00 27.15 28.25 28.25
SPOT PLATINUM: 1,495.30      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Platinum Platypus 1.00 1,520.30 1,560.30 1,560.30
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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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