The Moneychanger
Weekly Commentary
Friday, 3 May a.d. 2013 Browse the commentary archive
Here's the weekly scorecard:
  26-Apr-13 3-May-13 Change % Change
Silver, cents/oz. 2,375.80 2,397.50 21.70 0.9
Gold, dollars/oz. 1,453.60 1,464.30 10.70 0.7
Gold/silver ratio 61.184 61.076 -0.110 -0.2
Silver/gold ratio 0.0163 0.0164 0.0000 0.2
Dow in Gold Dollars (DIG$) 209.23 211.39 2.16 1.0
Dow in gold ounces 10.12 10.23 0.10 1.0
Dow in Silver ounces 619.27 624.57 5.30 0.9
Dow Industrials 14,712.55 14,973.96 261.41 1.8
S&P500 1,582.24 1,614.38 32.14 2.0
US dollar index 82.50 82.11 -0.40 -0.5
Platinum 1,475.20 1,501.70 26.50 1.8
Palladium 680.85 692.20 11.35 1.7

Stocks finished the week with a bag, up about 2%. US dollar index slumped, may have failed. Gold and silver held their own, even advanced a little.

After stalling earlier in the week, stocks surged today to new all time highs. Dow Industrials gobbled up 142.38 points (0.96%) to 14,973.96. S&P500 bounded over 1,600 and vaulted 16.79 (1.05%) to 1,614.38. I reckon the Jubilee has arrived, & the fried chickens will just fly right up to your mouth and wait to be eaten. Why, if Big Ben keeps on a-printing that money, we will finally become as prosperous as Zimbabwe. We already have a ruler almost as charismatic & clever as Robert Mugabe.

I believe I mentioned to y'all some time ago that the Dow might reach 15,000, but I didn't want to ride that nag because it would hurt too much when he drops dead underneath you.

The Dow in Gold & Dow in Silver pose riddles for us today. Both remain in downtrends from their tops on 15 April, but silver is trying to break down today & gold to break up. However, both remain above their 20 day moving averages (603.2 oz for silver & 10.11 oz for gold).

Dow/Gold skipped 1.19% to 10.23 oz (G$211.47 gold dollars). Dow/Silver lost 0.2% (0.15 oz) to wind up at 623.55 oz. When both close below those 20 DMAs, I'll have a lot more confidence that silver & gold have finished their slides.

If I had to trade currencies for a living, I believe I'd just write 'em a check for all my money, give it to 'em, & go buy me a tin bill and peck dirt with the chickens. It would wear a lot less on your nerves, & your soul.

Take the yen. It had a little uptrend going this week, but fell out of bed the last two days & closed today below its 20 DMA (101.46). Lost 1.06% today & closed at 100.98 cents/Y100. Those Japanese NGM are really determined to destroy their economy.

Then there is the euro, Geep of currencies. It dropped 0.92% yesterday & closed below its 20 DMA, thanks to Mario Dragnet announcing that the ECB might take interest rates below zero. Today somebody in the euro market was gobbling uppers, & it rose 0.44% to $1.3117.

Don't forget the US dollar index. It has made a rounded formation that wants to be a top one day, & a consolidation the next. Today it fell 9.8 basis points, 0.13%, to 82.106. This week it fell through support at 81.78, all the way to 81.37, yet still came back to close above 82 today. You'd have to be mad-skunk crazy to bet on that.

Dollar index is closing in on its 200 DMA (81.01). If it closes below that, case for a lower dollar will be pretty well clinched.

Silver & gold gainsaid one another today, silver up and gold down. Silver scratched out an 18.5 cent rise to close at 2397.5. That's unconvincing, but there's something convincing there, too, that I'll mention shortly. Gold gave back $3.40 to $1,464.30.

The convincing part came in silver's range today, knocking on the top with a 24.35 high. Gold made a new high today for the move from the $1,321.50 low, namely, $1,487.10.

Gold is blocked at the $1,485 level. Silver can't pass 2450c & stay there. Both have established uptrends off the 15 April lows. Still, most everybody in the universe is waiting to see whether they will make new lows confirming those made 15 April.

Who knows, maybe they're all wrong? You would know that if gold could close above L$1,550 and silver above $27.50, the prices where they broke down. Unless they do that, I am inclined to wait for that one last push down.

I will say it until y'all are sick of it, and apologize not: Silver & gold bull markets have NOT ended. What lies ahead will be better, stronger, flashier than anything that's happened so far.

On 3 May 1926 US Marines landed in Nicaragua & stayed until 1933. Well, actually they had been there since 1912, except for nine months beginning in 1925. Apparently this was to set up personalities and events for the later civil war in Nicaragua from 1972 - 1979.

I went to Nicaragua in 1989, but not with the Marines. I remember we had to change US$60 when we flew in, and got an inch high stack of 20 Córdoba notes overprinted "20,000", 1.2 million Córdobas. You could see the old bank notes blowing in the streets, too worthless for anybody to pick them up. When I asked our guide why so many houses had stacks of concrete blocks in the front yard, he said, "Nicaraguan savings account." In answer to my queries, he explained that those people eventually wanted to expand their homes, but didn't have enough money. So whenever they had a little extra, they bought more concrete blocks because the price was always rising. Best investment a homeowner could make. Even with beer at 25 cents US a bottle, I couldn't spent $60 in two weeks there, the country was so poor and ravaged by war. Good people, lousy government.

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
3-May-13 Price Change % Change
Gold, $/oz 1,464.30 -3.40 -0.2
Silver, $/oz 23.98 0.19 0.8
Gold/Silver Ratio 61.076 -0.147 -0.2
Silver/Gold Ratio 0.0164 0.0001 0.8
Platinum 1,501.70 1.00 0.1
Palladium 692.20 0.00 0.0
S&P 500 1,614.38 16.79 1.1
Dow 14,973.96 142.38 1.0
Dow in GOLD $s 211.39 2.52 1.2
Dow in GOLD oz 10.23 0.12 1.2
Dow in SILVER oz 624.57 1.13 0.2
US Dollar Index 82.11 -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: 1,464.70      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,511.57 1,517.43 1,517.43
1/2 AE 0.50 750.15 774.46 1,548.92
1/4 AE 0.25 378.73 394.55 1,578.21
1/10 AE 0.10 160.28 168.44 1,684.41
Aust. 100 corona 0.98 1,427.08 1,441.08 1,470.19
British sovereign 0.24 346.86 356.86 1,515.97
French 20 franc 0.19 273.46 276.46 1,480.77
Krugerrand 1.00 1,496.92 1,511.92 1,511.92
Maple Leaf 1.00 1,474.70 1,489.70 1,489.70
1/2 Maple Leaf 0.50 842.20 768.97 1,537.94
1/4 Maple Leaf 0.25 373.50 391.81 1,567.23
1/10 Maple Leaf 0.10 155.26 159.65 1,596.52
Mexican 50 peso 1.21 1,755.25 1,771.25 1,469.06
.9999 bar 1.00 1,469.83 1,480.83 1,480.83
SPOT SILVER: 23.95      
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 19,305.00 19,805.00 27.70
US 40% silver 1/2s 0.30 6,696.50 7,066.50 23.95
100 oz .999 bar 100.00 2,395.00 2,470.00 24.70
10 oz .999 bar 10.00 244.50 249.50 24.95
1 oz .999 round 1.00 24.05 24.95 24.95
Am Eagle, 200 oz Min 1.00 25.20 28.45 28.45
SPOT PLATINUM: 1,501.70      
Platinum Platypus 1.00 1,526.70 1,566.70 1,566.70
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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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