The Moneychanger
Daily Commentary
Monday, 13 May a.d. 2013 Browse the commentary archive

When two people disagree, chances are they can't both be right. Likewise, when markets that ought to agree and confirm each other don't, one of 'em is lying.

Dow & S&P500 couldn't agree today. Dow scraped off 26.81 (down 0.18%) to 15,091.68 while the S&P500 barely moved, but up 0.07 point at 1,633.77. Somebody's wrong. (Dow fell barely through its uptrend line.)

Dow in Gold fell minutely, .001 oz to 10.521 oz (G$217.49 gold dollars). Likewise the Dow in silver fell from 639.75 oz on Friday to 637.59 oz today, a 0.33% drop. No dramatic change here, but the downtrends remain in force, although Dow in gold is striving to turn up, maybe make a double top with the 11 oz (G$227.39 high).

US Dollar Index Friday broke out to the upside. Here's the chart (as of Friday). Today it went nowhere, backed off 1.4 basis points. target for this move is probably 86, maybe 89 before it's over. That's not good news for stocks or for silver & gold.

The international gangsters who run the central banks of the G7 nations met over the weekend, ate fat victuals & drank fine wine, smacked their lips and said, "Japan ain't done nothing wrong, and y'all remember this ain't a currency war."

Meditate on what allowing Japan to drop its currency exchange rate 25% against the dollar in 8 months & I don't know how much against the Euro & all the Asian currencies means to exporters. Great for Japan, not so great for Europe & Asia & the US -- but shucks, we haven't had a foreign or exchange rate policy run in our own interest since Grover Cleveland was president.

The euro dropped 0.17% to $1.2929, right at its 200 day moving average &, one guesses, headed for $1.2000 yet again. Yen sank under 100 cents to 98.01 cents /Y100, down 0.2%.

Silver & gold gainsaid each other today, too. Silver rose 3.8 cents to 2367c while gold fell $2.30 to $1,434.50.

Question occupying (what's left of) my mind is, Was the 12 & 15 April plunge a spike bottom signaling sellers' exhaustion, OR, did it only signal a half-way move? Does it make a difference? Well, if twas a half way move, gold will yet tumble another 13% or so to $1,250. On the other hand, if gold confirms that $1,321.50 bottom with an low at $1,400 or $1,375 that holds & reverses, it's time to take a chance & buy. That could happen this week. Having repeatedly read (but not confirmed) that 400 tonnes of paper gold was sold into the futures market on 12/15 April, I'm inclined to call that a Nice Government Men bear raid that probably can't be repeated again soon. (400 tonnes is 12.86 million oz, at $1,550 an ounce about $20 billion. Throwing that all onto the market at one or two licks is hardly the way a profit-maximizing seller behaves, at least in this universe.)

But my hesitation between these two answers, spike bottom or half-way, doesn't change the outlook, namely, fiat money will lose against silver & gold. That raid, too, smells a bit of central banker FEAR. I'm preparing a little comment on that underlying outlook for y'all, but it will have to wait until tomorrow.

Confusing things more (or clearing them up) was silver's closing higher -- although barely -- than Friday. Either silver or gold is pointing the wrong way. I reckon we'll find out which tomorrow.

On 13 May 1607 one hundred plus colonists disembarked from the Sara Constant, Godspeed, & Discovery at Jamestown, Virginia, North America's first permanent British settlement. Most of them refused to work. According to the captains, "Only 12 are laborers, ten or 12 are mechanics, while 48 are gentlemen, and there are no women." Solution for most of the gentlemen was to starve.

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
13-May-13 Price Change % Change
Gold, $/oz 1,434.50 -2.30 -0.16%
Silver, $/oz 23.67 0.04 0.16%
Gold/Silver Ratio 60.604 -0.195 -0.32%
Silver/Gold Ratio 0.0165 0.0001 0.32%
Platinum 1,484.50 -1.50 -0.10%
Palladium 717.95 13.35 1.89%
S&P 500 1,633.77 0.07 0.00%
Dow 15,091.68 -26.81 -0.18%
Dow in GOLD $s 217.48 -0.04 -0.02%
Dow in GOLD oz 10.52 -0.00 -0.02%
Dow in SILVER oz 637.59 -2.16 -0.34%
US Dollar Index 83.17 0.47 0.57%
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SPOT GOLD: 1,431.10      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,472.60 1,482.62 1,482.62
1/2 AE 0.50 732.93 756.69 1,513.39
1/4 AE 0.25 370.04 385.50 1,542.01
1/10 AE 0.10 156.60 164.58 1,645.77
Aust. 100 corona 0.98 1,395.75 1,409.75 1,438.23
British sovereign 0.24 338.90 348.90 1,482.17
French 20 franc 0.19 267.19 270.19 1,447.17
Krugerrand 1.00 1,459.72 1,474.72 1,474.72
Maple Leaf 1.00 1,441.10 1,456.10 1,456.10
1/2 Maple Leaf 0.50 822.88 751.33 1,502.66
1/4 Maple Leaf 0.25 364.93 382.82 1,531.28
1/10 Maple Leaf 0.10 151.70 155.99 1,559.90
Mexican 50 peso 1.21 1,716.71 1,732.71 1,437.10
.9999 bar 1.00 1,436.11 1,447.11 1,447.11
SPOT SILVER: 23.57      
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 18,350.48 18,850.48 26.36
US 40% silver 1/2s 0.30 6,582.93 6,952.93 23.57
100 oz .999 bar 100.00 2,356.50 2,441.50 24.42
10 oz .999 bar 10.00 240.65 245.65 24.57
1 oz .999 round 1.00 23.67 24.57 24.57
Am Eagle, 200 oz Min 1.00 24.82 27.57 27.57
SPOT PLATINUM: 1,484.50      
Plat. Platypus 1.00 1,509.50 1,549.50 1,549.50
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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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