The Moneychanger
Daily Commentary
Wednesday, 8 May a.d. 2013 Browse the commentary archive

What an impossible job, forecasting the winner in a race for high school homecoming king & queen! After all, it's not like the offices require any sort of skills or qualifications, it's just a question of whom the mob likes the most.

Trying to forecast currency exchange rates is a lot like that. None of them have any qualifications that will do anything but make the hair stand on end all over your scalp. None is particularly "better" than the other, so the exchange rate of numerous worthless items among each other is -- infinity? Zero? Whoever the mob likes most that day. And in the end, it makes about as much difference as who's elected homecoming king or queen.

That said, the US dollar index jumped back into its shell today, losing 33.4 basis points (0.43%) at 81.949. This is the umpteenth failure to break out of the egg-shell formation upward. Today was a stinger. Last Friday the dollar index has stopped at 81.90, then rose in a rounding top and slid right on down that dome today to break 81.90 and hit 81.70. It's a cloud no bigger than a man's hand, but a cloud, still. A dollar index below 81.80 looks gravity-bound, a dollar below 81.00 will break the 200 day moving average, which will attract short sellers like a cut on your leg attracts piranhas when you are swimming in the Amazon.

Today the Euro won the popularity contest, adding 0.58$ to $1.3154. Why? Apparently because ECB head gangste,r Mario Draghi, wants to depreciate the euro and ruin the European economy faster than the other central bank mobsters. Euro needs to close above $1.3243 to break out upside. I have little need of an opinion here, because I wouldn't buy the euro with your money.

With management perfection that resembles Six Sigma manufacturing, the yen went nowhere again today, closing unchanged at 101.03 cents/Y100. Those NNGM are accurate.

Amidst general jubilation stocks made -- yawn! -- new highs again today. Dow rose 0.32% (48.92) & closed at 15,105.12. The Schlaraffenland 500 -- whoa, make that the S&P500 -- gained 6.73 (0.41%) to 1,632.69.

Dow in gold gave back 0.14 oz (1.2%) to end at 10.25 oz (G$211.85 gold dollars). That also corralled it below the 20 DMA again (10.24) and unless gainsaid, reasserts the downtrend.

Dow in silver closed minutely higher, 0.32% at 631.30 oz. This barely lands on the upside of the downtrend, about a rounding error away. Trend remains firmly down.

Gold bounded up $24.90 today and closed $1,473.90. Silver rose 12.1 cents to end at 2389.2.

About 7:00 a.m. gold looked ready to sleep the day away beneath $1,455, but from 7:30 to 8:30 rose to $1,468, then boosted again after 2:00. Silver experienced a basically sidewise day between 2371.8 and 2402.7c. Range for both silver & gold was raised today, but not widened much.

Gold posted the first half of a key reversal (higher high and higher close) but must follow that tomorrow with another higher close. Today's rally-ette brought gold up to close at the uptrend line it fell through yesterday, but not above that uptrend line. This is lively, this is respectable, this encourageth, but this ain't a close above that line.

Silver & gold are like two drunks with really great voices singing just a little off key. They're out of synch. Silver yesterday did no more that fall to (not through) its downtrend line, and today closed just below its 20 dma (2095c). It remains in an uptrend, slow but up. It acts as if it wants to push gold higher.

Leery I have been & leery I remain, although I expect a strong rally later this year. Yet evidence still is wanting to prove that we have seen the low. I want to see a reaction test silver & gold's strength.

Still time to swap gold for silver, by the way.

TODAY'S QUOTATION: "A power in government in any form, to deal out wealth & poverty by law, overturns liberty universally; because it is a power by which a nation is infallibly corrupted." John Taylor of Caroline (1753 - 1824).

Brion McClanahan & Clyde Wilson quote Taylor in their new book, "Forgotten Conservatives in American History." Given the disgusting & unprincipled performance of so many who call themselves "conservatives" today, I haven't called myself by that name for years, although my devotion to ordered liberty, self-government, & tradition has never changed. This splendid little book introduces not only the Jeffersonian & conservative tradition in American thought North & South, but also the thinkers: Jackson, Calhoun, Cooper, Taylor, Raguet, Cleveland, Lindbergh, and others. You can get the book from Pelican Publishing, www.pelicanpub.com, or amazon.com.

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
8-May-13 Price Change % Change
Gold, $/oz 1,473.90 24.90 1.72%
Silver, $/oz 23.89 0.12 0.51%
Gold/Silver Ratio 61.690 0.733 1.20%
Silver/Gold Ratio 0.0162 -0.0002 -1.19%
Platinum 1,505.40 -26.50 -1.73%
Palladium 697.15 -16.50 -2.31%
S&P 500 1,632.69 6.73 0.41%
Dow 15,105.12 48.92 0.32%
Dow in GOLD $s 211.85 -2.94 -1.37%
Dow in GOLD oz 10.25 -0.14 -1.37%
Dow in SILVER oz 632.23 -1.16 -0.18%
US Dollar Index 81.95 -0.34 -0.41%
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: 1,472.30      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,519.41 1,525.30 1,525.30
1/2 AE 0.50 754.04 778.48 1,556.96
1/4 AE 0.25 380.70 396.60 1,586.40
1/10 AE 0.10 161.11 169.31 1,693.15
Aust. 100 corona 0.98 1,435.93 1,449.93 1,479.22
British sovereign 0.24 348.66 358.66 1,523.61
French 20 franc 0.19 274.88 277.88 1,488.37
Krugerrand 1.00 1,503.22 1,518.22 1,518.22
Maple Leaf 1.00 1,482.30 1,497.30 1,497.30
1/2 Maple Leaf 0.50 846.57 772.96 1,545.92
1/4 Maple Leaf 0.25 375.44 393.84 1,575.36
1/10 Maple Leaf 0.10 156.06 160.48 1,604.81
Mexican 50 peso 1.21 1,766.13 1,782.13 1,478.09
.9999 bar 1.00 1,477.45 1,488.45 1,488.45
SPOT SILVER: 23.87      
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 18,890.30 19,390.30 27.12
US 40% silver 1/2s 0.30 6,672.90 7,042.90 23.87
100 oz .999 bar 100.00 2,387.00 2,472.00 24.72
10 oz .999 bar 10.00 243.70 248.70 24.87
1 oz .999 round 1.00 23.97 25.07 25.07
Am Eagle, 200 oz Min 1.00 25.12 28.37 28.37
SPOT PLATINUM: 1,505.40      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,530.40 1,570.40 1,570.40
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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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