The Moneychanger
Daily Commentary
Monday, 15 April a.d. 2013 Browse the commentary archive

I'm writing Tuesday morning. In the 33 years I've been brokering silver & gold, there are five words I have never before yesterday heard from wholesalers: "We're not selling silver today." At least one major West coast retailer was not selling gold yesterday, and wholesalers were selling "as long as we can get it."

See how thin the physical silver & gold markets really are? By thin I mean that there is very little product in the pipeline. Wholesalers won't take any chances.

The market is backwardated, but the backwardation shows more in availability than in price. A "backwardation" occurs when the price of metals for immediate delivery climbs above the price for future delivery. Normally, the interest and storage cost of carrying metal for future delivery makes futures prices higher, so a backwardation reveals demand for immediate delivery greater than anyone can meet. In this case, you can't buy at ANY price.

It would be easy to draw the WRONG conclusion from the crash in silver & gold, namely, that the bull market has ended & Happy Money Pumping Days Are Here Again. Well, stop the band and think: if that were so, why did the Establishment need to crash silver & gold? Why make such a concerted effort -- SocGen & Deutsche Bank & Goldman Sachs downgrades & FOMC minutes leaked and all the rest -- to knock down silver & gold?

Because they're worried.

Ask yourself this question: if the US had the gold it claims, why did it tell the Germans, when they asked for their gold stored in the US, it would take seven years to return it?

Why? Bureaucratic maze? No airplanes to carry it? Why?

Why did the powers that be need to crash silver & gold? Why?

Go back to the touchstone of fundamentals, the reasons we began buying silver & gold in the first place. Ask if they have changed.

CENTRAL BANKING. Central banks & their fractional reserve banks create money out of thin air: INFLATION. Inflation makes money cheap, which causes bad investments & blows up bubbles, bubbles burst, panic ensues, they paper it over with more Liquidity & more Blarney, & they run the cycle again, stripping all you victims of your capital. Success begets excess.

Has the system changed? Has the monstrous, unimaginable debt burden been removed or written off? Or have they kept on papering it over with Quantitative Easing this & Stimulus that, blowing up another bubble in stocks?

MONETARY DEMAND, the demand for safety from this system, drives all silver & gold bull markets, & nothing else. Until the system changes -- and never mind the bloody raids the Establishment makes on silver & gold -- silver & gold will continue to rise.

THE BULL MARKET HAS NOT ENDED. SILVER & GOLD HAVE NOT TOPPED. The cause has not changed, the effect will not change.

I laugh at people worried about government confiscating their gold and silver. Why would they go to all the trouble to send out their thugs to collect it when all they have to do is manipulate the market down and people WILLINGLY turn in their silver & gold, at bargain prices. Why force them when you can trick them so easily?

The Establishment played this same trick in 1974-1976, driving gold down 47% immediately after ownership was "legalized." They did this in 2006, and I'm pretty sure they did it in 2008.

If the bull market has ended, why will no wholesalers sell silver? Why do retailers refuse to sell gold? Why does US 90% silver coin cost $3.50 over melt?

Yes, silver & gold have been wounded. Yes, it will take some time to recover, but ask yourself this: If you lived in Cyprus, would you rather have (a) electronic euros in a bank that you cannot withdraw, or (b) silver & gold in your hands, even though 20% lower than last week?

The Establishment's goal is to slowly pick your bones clean. Their chief means of bringing you into powerless serfdom is inflation & debt. Their system is breaking down, & silver & gold offer you a key to unlock your chains.

Do I understand the pain of market collapses? As keenly as every one of you, but I keep my eyes on the horizon. That's the only way you can prevent yourself being fooled, to your own destruction.

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
15-Apr-13 Price Change % Change
Gold, $/oz 1,360.60 -140.40 -9.4
Silver, $/oz 23.36 -2.97 -11.3
Gold/Silver Ratio 58.257 1.233 2.2
Silver/Gold Ratio 0.0172 -0.0004 -2.1
Platinum 1,424.20 -71.10 -4.8
Palladium 665.85 -42.10 -5.9
S&P 500 1,552.30 -36.49 -2.3
Dow 14,599.20 -265.86 -1.8
Dow in GOLD $s 221.81 7.50 3.5
Dow in GOLD oz 10.73 0.36 3.5
Dow in SILVER oz 625.10 60.36 10.7
US Dollar Index 82.37 0.10 0.1
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: 1,360.10      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,402.26 1,405.66 1,405.66
1/2 AE 0.50 696.54 719.15 1,438.31
1/4 AE 0.25 351.67 366.38 1,465.51
1/10 AE 0.10 142.71 149.27 1,492.71
Aust. 100 corona 0.98 1,328.17 1,342.17 1,369.28
British sovereign 0.24 322.09 332.09 1,410.74
French 20 franc 0.19 253.93 256.93 1,376.17
Krugerrand 1.00 1,379.14 1,394.14 1,394.14
Maple Leaf 1.00 1,370.10 1,385.10 1,385.10
1/2 Maple Leaf 0.50 782.06 714.05 1,428.11
1/4 Maple Leaf 0.25 346.83 363.83 1,455.31
1/10 Maple Leaf 0.10 144.17 148.25 1,482.51
Mexican 50 peso 1.21 1,629.90 1,645.90 1,365.10
.9999 bar 1.00 1,364.86 1,375.86 1,375.86
SPOT SILVER: 23.23      
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 18,611.45 19,147.45 26.78
US 40% silver 1/2s 0.30 6,484.10 6,854.10 23.23
100 oz .999 bar 100.00 2,323.00 2,363.00 23.63
10 oz .999 bar 10.00 237.30 238.30 23.83
1 oz .999 round 1.00 23.33 23.78 23.78
Am Eagle, 200 oz Min 1.00 24.48 25.58 25.58
SPOT PLATINUM: 1,424.20      
Plat. Platypus 1.00 1,449.20 1,489.20 1,489.20
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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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