The Moneychanger
Daily Commentary
Wednesday, 1 May a.d. 2013 Browse the commentary archive

The Masters of the Universe at the Federal Open Market Committee spake today and said -- pretty close to nothing. Lunatic as it sounds, they said they might increase their purchases of assets, i.e., increase Quantitative Easing. Increase. Above $85 billion a month. Oh, & they kept the federal funds rate target between 0 and 0.25%, meaning they continue to suppress interest rates and so prevent that economic cleansing which alone can bring back economic activity. Never mind. They are the Masters of the Universe, and I only a natural born fool.

The stock market took the FOMC's announcement about like your prospective father-in-law when you told him that you thought everybody ought to snort cocaine daily.

Stock indices tumbled across the board. Dow fell 138.85 (0.94%) to a suspicious 14,700.95. S&P dwindled 14.87 (0.93%) to 1,582.70. Of yesterday's close I said that this would be good place for them to push higher, or a more likely place to fail, and fail they did.

Dow fell sharply, briefly touching its 20 day moving average (14,689.29) & closing not much above that. S&P closed near its low, but still a ways above that 20 DMA (now 1,572.60). Assuming stocks repeat today's performance & close lower tomorrow, they have topped for a while. Investors will begin to play "Rat Jump Off The Sinking Ship" when the Dow drops below 14,430 & the S&P500 below 1,536.

Stocks dropped today, and gold & silver dropped today, but gold & silver dropped more, lifting the Dow in Gold & Dow in Silver. Dow/Gold rose 1.11% to 10.17 oz (G$210.23 gold dollars). Dow/Silver rose 3.02% to 629.78 oz. Nevertheless. . .Notwithstanding. . . All the same, the downtrends in Dow/Gold & Dow/Silver remain in force.

Everything seems to be falling apart today. US dollar index lost another 7.6 basis points (0.1%). Since it 83.005 close on 23 April the dollar index has fallen 135.7 basis points or 1.6%. As much as a chart can say anything in a manipulated market like currencies, this chart is saying, "I am falling & I can't get up." Absolute bottom of support is the last low at 81.78, and now for two days running the Dollar Index has closed below that point. And way below its 20 & 50 DMAs. And other indicators point down. But trusting a currency to follow a chart is like taking a cold rattlesnake into your shirt to warm him up. Sooner or later, he'll bit you.

Euro clambered up another 0.15% today to close $1.3187, confirming its break out upside. Well, Almost. It really needs to close over $1.3200 as final proof.

Japanese yen remains in its Lilliputian uptrend, rising 0.11% today to 102.75 cents per Y100. 50 DMA stands at 104.34.

US$1=Y97.32=E0.7583=0.042909 oz. Ag=0.000691 oz Au.

Silver & gold both fulfilled yesterday's suspicions by dropping today. Gold slumped $25.90 to $1,446.30 while silver backslid 83.9 cents to 2330.5c.

Since we dwell not in Never-Never Land, we have to face what this means, and it's something good: the bottom is near, & drawing nearer. The decline that began on 12 April might carry to nearly the same lows, or lower lows. More likely is a lower low. Gold's bottom Bollinger Band, a possible target, now rests about $1,325, not far from the 15 April low at $1,321.50.

Seasonally, silver & gold lows sometimes occur in May, more often in June, so the seasonals have us set up for a bottom sometime fairly soon. Gold & silver sentiment has been eviscerated, reaching the necessary pessimistic extremes for us to grow optimistic and to turn around. Point is, both markets should soon reach a low risk buying point.

Be patient, be patient. Gold & Silver Bull Market is still intact, still pulsating with life. Just hang on, keep your eyes on the horizon

I have been dealing in physical silver & gold for 33 years this month, and it may shock y'all to hear this, but it's true: not every gold & silver dealer will give you sound advice. However, unless you are as gullible as Candide, reason might save you from deals against your best interest. I heard about one dealer offering to swap your silver and gold American Eagles for one ounce silver rounds or foreign gold coins, ounces for ounces. This he was pushing under some numbskull threat of government confiscation.

Listen, hear me, bore this into your brains: you are more likely to be meet aliens from the Planet Zambodia in a pizza parlor, more likely to grow a long, furry prehensile tail overnight, than you are for the government to confiscate your silver or gold. It's a scare story designed to frighten you into doing something against your own interest. Besides, from what I know of y'all, if the yankee government said, "Turn in your gold & silver" y'all would say, "Molon labe!"

Anyhow, it is possible at time to swap from one form of silver or gold to another and turn a temporary premium into ounces. We do that for our customers whenever possible, but trading gold or silver Eagles now for other coins with low premiums at even ounces merely takes money out of your pocket and stuffs it into the dealer's. Why would you ever swap from silver to silver or gold to gold unless it put more ounces in your pocket? You wouldn't, so don't fall for it.

On 1 May 1776 Adam Weishaupt founded the secret society of the Illuminati. Wait. Did I write that? No, no, I didn't write that. Forget I wrote that. And I didn't say anything about John Robison's 1798 book, Proofs of a Conspiracy, either.

On 1 May 1863 began yankee General Joseph Hooker's advance against CS General Robert E. Lee, planning to encircle Lee front and back. Didn't quite turn out that way. It was Lee's perfect battle, with the perfect subaltern, Stonewall Jackson. In the face of Hookers vastly superior numbers (over 2 to 1), Lee split his Army of Northern Virginia. On 2 May he sent Jackson on a flanking march. Stonewall caught a corps of the yankee army waving in the breeze, and rolled 'em up, routing the entire corps. By the morning of 6 May, Hooker had withdrawn.

On 2 May 1863 occurred one of the chief events that may have lost the South the war: Stonewall Jackson was wounded, tragically by his own troops. He lost an arm and seemed to rally, but succumbed to pneumonia on 10 May 1863. All that is in the providence of God, but it's hard not to guess that if Jackson had been at Gettysburg instead of Longstreet, Meade would have been demolished and we'd have our own country.

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
1-May-13 Price Change % Change
Gold, $/oz 1,446.30 -25.90 -1.76%
Silver, $/oz 23.31 -0.84 -3.47%
Gold/Silver Ratio 62.060 1.084 1.78%
Silver/Gold Ratio 0.0161 -0.0003 -1.75%
Platinum 1,475.70 -36.70 -2.43%
Palladium 683.65 -3.05 -0.44%
S&P 500 1,582.70 -14.87 -0.93%
Dow 14,700.95 -138.85 -0.94%
Dow in GOLD $s 210.12 7.50 3.70%
Dow in GOLD oz 10.16 0.36 3.70%
Dow in SILVER oz 630.81 16.17 2.63%
US Dollar Index 81.65 -0.08 -0.09%
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: 1,455.30      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,501.87 1,507.69 1,507.69
1/2 AE 0.50 745.33 769.49 1,538.98
1/4 AE 0.25 376.30 392.02 1,568.09
1/10 AE 0.10 159.25 167.36 1,673.60
Aust. 100 corona 0.98 1,417.93 1,431.93 1,460.85
British sovereign 0.24 344.63 354.63 1,506.51
French 20 franc 0.19 271.70 274.70 1,471.37
Krugerrand 1.00 1,485.86 1,500.86 1,500.86
Maple Leaf 1.00 1,465.30 1,480.30 1,480.30
1/2 Maple Leaf 0.50 836.80 764.03 1,528.07
1/4 Maple Leaf 0.25 371.10 389.29 1,557.17
1/10 Maple Leaf 0.10 154.26 158.63 1,586.28
Mexican 50 peso 1.21 1,743.98 1,759.98 1,459.72
.9999 bar 1.00 1,460.39 1,471.39 1,471.39
SPOT SILVER: 23.71      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 28.50 32.00 41.83
VG+ Peace dollar 0.77 25.50 29.00 37.91
90% silver coin bags 0.72 19,129.83 19,629.83 27.45
US 40% silver 1/2s 0.30 6,624.23 6,994.23 23.71
100 oz .999 bar 100.00 2,370.50 2,445.50 24.46
10 oz .999 bar 10.00 242.05 247.05 24.71
1 oz .999 round 1.00 23.81 24.71 24.71
Am Eagle, 200 oz Min 1.00 24.96 28.21 28.21
SPOT PLATINUM: 1,475.70      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,500.70 1,540.70 1,540.70
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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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