The Moneychanger
Daily Commentary
Tuesday, 14 May a.d. 2013 Browse the commentary archive

Here's my speculation I promised y'all yesterday. Speculation, remember, not a prophecy.

The bankers can have only be one endgame for this inflationary blowoff: return to some gold-plated standard, to restore confidence & retain banker control. This will be accompanied by crisis & by self-righteous posturing galore about "sound money," and a "generous" write-down of debt, but no real reform or loss of power to the banks.

Similar strategy played out after the War for Southern Independence. Since the financial elite then were net bond holders -- bonds they had bought with depreciated greenbacks at 50 cents on the dollar of gold -- they pursued a deflationary policy the rest of the century, which made their bonds & the interest rise in value. Having ridden that horse into the ground, they reversed course into inflation with the Federal Reserve (no big government or big wars without a central bank).

Now they've ridden the inflation horse nearly into the ground, so it will soon be time to reverse course again. Oh, not yet. Things aren't bad enough yet, but when they get bad enough our Masters will again pose as our Benefactors and fight the good fight for sound money against those inflationary dogs & swine.

But not yet. Not yet. The inflation must get much worse first, it must evaporate more debt, the public pain and clamor must grow until the poor tortured people will accept any remedy put forth just to end the agony.

THIS is why you should buy gold and silver, so that across even the deepest abyss of financial catastrophe you will be able to carry your capital, and re-build on the other side. I'll bet that's what the Elite are already doing. [End of speculation]

STOCKS today made new all-time intraday highs & high closes. Dow waxed fatly, 123.57, up 0.82% to 15,215.25. S&P500 waxed even fatlier, up 1.01% (16.57) to 1,650.34.

Oh, my, I've been here before. In gold & silver in 1980, for example, or stocks in 2000. S&P500 back in January threw over the channel line across the 2011 and 2012 tops, and now has thrown over the upper trend line based in January 2013. S&P500 is wildly overbought by the witness of its MACD, 12% above its 200 DMA. Both have formed rising wedges. Yet who can say when a flock of birds in flight or a school of fish or a market in a mania will turn? Markets like this feed on themselves, with headlines like this one today, "Market rises for the 18th straight Tuesday!" You can almost hear the breathlessness. This can continue yet a while, but the end is certain.

I've kept waiting for the Dow in Gold & Dow in Silver to turn down and follow through with the downtrend they had begun, but can no longer gainsay that they are both moving up, leaving that downtrend behind, so they haven't turned down yet. Dow in gold closed today at 10.680 oz (G$220.77 gold dollars) up 0.159 oz (G$3.29) or 1.5%.

On a 7 year Dow in gold chart, the drop from 21.06 oz in 2007 to 5.69 oz. in 2011 would reach a 38.2% correction at 11.57 oz (G$239.17). High so far has been 11.00 oz, so maybe the Dow/Gold will make a higher high. Looking out further, a 50% correction of that 2007-2011 drop would take Dow/Gold to 13.38 oz. (Same 50% in silver would carry it to 696.16 oz).

Dow in silver today rose 13.89 oz (2.2% to end at 651.48 oz. Last high (15 April) was 656.15

Y'all may be scratching your noggins wondering why I spend so much time maundering about the Dow in Gold or in Silver. Easy: those are the best indicators I know to signal when metals are about to turn up. Often the Dow/metals spread turns down before the price highs in stocks, but even when they don't, once they turn, they can be trusted to stay turned.

They haven't turned down yet.

Today like some lumpy rattlesnake digesting a rabbit, the US dollar index, having digested Monday's gains, went after another rabbit. Gobbled down 34.5 basis points (0.44%) to 83.571. It nearly matched today the 83.66 April high & promises to slither speedily toward 84.10. Unless it stops there, dollar should reach for 86 first, then possibly 89.

Now we know that currency exchange rates are manipulated, or, to use the churched up word, "co-ordinated." But that leaves us with a quizzical riddle: could Bouncing Ben Bernanke actually have agreed to let the Japanese AND the Europeans depreciate their currencies against the dollar, and so feed their exporters at the expense of US exporters? Why, the question is no more asked than answered! Y'all remember Bretton Woods, that set American manufacturers at a perpetual disadvantage because they were paid in depreciating paper dollars but foreigners importing into the US got paid in dollars exchangeable into gold. US exports became more expensive for foreigners, while their imports into the US were effectively subsidized. (For the details, see J.N. Tlaga's articles, "We've been had!" Parts 1 & 2 at

Long & short is that it appears Bernanke following tradition, bailing out foreign economies to American hurt. Yeah, Buddy! This here globalism is somethin' wonderful, & it ain't new!

But whether my suspicions jibe with reality or not, both the yen & euro fell -- again -- today. Yen dipped 0.51% to 97.77 cents/Y100 while the Euro dropped 0.27% to $1.2940. Euro acts like it wants to make another trip below $1.2600.

Neither silver nor gold did anything to brag about today. Silver slumped 31.5 cents (1.3%) to 2335.5c and gold tumbled $9.80 (0.68%) to $1,424.70.

That brings gold to "fish or cut bait" time. Support lies from $1,418.50 to $1,424. A fall here takes gold back to $1,400, and might give us that final fall and bottom-confirmation we've been waiting for.

Silver has broken down out of an uptrending channel & a triangle within that channel, & now sits firmly below its 20 DMA. If support at 2300 cents doesn't hold, then it will re-visit 2200c or move toward it. Nightmare takes it to 2000c or even 1950c. Don't shoot me, I only report the charts, I don't manufacture them.

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On 14 May 1913 (same year the Federal Reserve was founded) John D. Rockefeller founded the Rockefeller Foundation with a gift of $100,000,000. According to inflation calculators that use understated US government figures, that would equal $2.35 billion today. However, in 1913 $100 million equaled 4,837,500 oz. of gold. At $1,425/ounce, that would be worth today $6.893 billion.

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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
14-May-13 Price Change % Change
Gold, $/oz 1,424.70 -9.80 -0.68%
Silver, $/oz 23.36 -0.32 -1.33%
Gold/Silver Ratio 61.002 0.398 0.66%
Silver/Gold Ratio 0.0164 -0.0001 -0.65%
Platinum 1,501.90 17.40 1.17%
Palladium 726.40 8.45 1.18%
S&P 500 1,650.34 16.57 1.01%
Dow 15,215.25 123.57 0.82%
Dow in GOLD $s 220.77 3.29 1.51%
Dow in GOLD oz 10.68 0.16 1.51%
Dow in SILVER oz 651.48 13.89 2.18%
US Dollar Index 83.57 0.35 0.42%
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: 1,424.70      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,466.02 1,475.99 1,475.99
1/2 AE 0.50 729.65 753.31 1,506.62
1/4 AE 0.25 368.38 383.78 1,535.11
1/10 AE 0.10 155.90 163.84 1,638.41
Aust. 100 corona 0.98 1,389.51 1,403.51 1,431.86
British sovereign 0.24 337.39 347.39 1,475.73
French 20 franc 0.19 265.99 268.99 1,440.77
Krugerrand 1.00 1,451.77 1,466.77 1,466.77
Maple Leaf 1.00 1,434.70 1,449.70 1,449.70
1/2 Maple Leaf 0.50 819.20 747.97 1,495.94
1/4 Maple Leaf 0.25 363.30 381.11 1,524.43
1/10 Maple Leaf 0.10 151.02 155.29 1,552.92
Mexican 50 peso 1.21 1,709.03 1,725.03 1,430.73
.9999 bar 1.00 1,429.69 1,440.69 1,440.69
SPOT SILVER: 23.33      
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 18,218.20 18,718.20 26.18
US 40% silver 1/2s 0.30 6,513.60 6,883.60 23.33
100 oz .999 bar 100.00 2,333.00 2,418.00 24.18
10 oz .999 bar 10.00 238.30 243.30 24.33
1 oz .999 round 1.00 23.43 24.33 24.33
Am Eagle, 200 oz Min 1.00 24.58 27.33 27.33
SPOT PLATINUM: 1,501.90      
Plat. Platypus 1.00 1,526.90 1,566.90 1,566.90
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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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