The Moneychanger
Daily Commentary
Thursday, 30 May a.d. 2013 Browse the commentary archive

My, my, something knocked the breath out of the dollar today, & that dollar drop ricocheted off every other market & sent ninepins scattering everywhere (that's three mismatched metaphors in a single sentence. Almost good enough to meet "USA Today" or US Government writing standards).

If I were a New York stockbroker, the 5 day Dow chart would be enough to make me puke on my pointy toed shoes. Today's lower close after Tuesday's attempt to rally, and after Wednesday a week ago's key reversal pretty much guarantees that gravity has taken charge.

Dow actually gained 21.73 today (0.14%) & the S&P500 augmented 6.05 (0.37%) to 1,654.41. Not inspiring. Appears that Wednesday a week ago marked the beginning of a down leg, and it's likely to get bloody right soon.

Ahhh, but look at the Dow in Gold & Dow in Silver. Zut alors! The Dow in Gold dropped 0.15 oz (1.4%) to 10.85 oz (G$224.43 gold dollars). Clearly the canoe has nosed over the edge of the waterfall. (20 DMA stands barely below at 10.74 oz).

Tain't quite as dramatic, but the Dow in silver has rolled over, too. Lost 6.11 oz (0.9%) to end the day at 675.86. 20 DMA, first confirmation of a reversal, stands at 659.32.

Here's my broken record again: reason these two indicators is crucial is because they are the most reliable forecasters of the direction of stocks and metals, & help us pinpoint or confirm reversals. You are watching that turnaround now, and will see stocks cheapening against silver & gold for a while. This supports the idea that silver & gold have already seen their price lows.

Somebody sucker punched the US dollar index today (the metaphor lobe of my brain is overactive today). Sank like your mother-in-law's opinion of you when you showed up drunk for her birthday party. Lost 60 basis points (0.77%) after losing 58 basis points yesterday, and landed on 83.025 -- well below the 83.28 twenty day moving average. A close below 82.96, the 50 DMA makes it hard to argue that the dollar has not turned down. Yield on 10 year Treasury rose, too. It appears to have broken out upside. Poor Ben!

The Euro bounded 0.8% higher to $1.3042. That takes it above all its moving averages, which were clustered between $1.2969 & $1.2998. Clean break out also above the downtrend line. If the scabrous euro can close above 1.3010, it should rally at least to $1.3243, maybe lots higher.

The Japanese yen rose 0.52% to 99.34 cents/Y100. Do y'all care? Is it possible the world is so ignorant it doesn't know what tears & pain this will end in?

US$1=Y100.66=E0.7668=0.044 103 oz Ag=0.000 708 oz. Au.

Gold burst higher like a basketball held underwater. Smashed through that $1,395 resistance and rose $20.20 (1.45%) to end at $1,411.50. Silver was more lethargic, rising only 23.5 cents (1.05%) to 2267.4c.

The five day gold chart shows a low at $1,373.70 on Tuesday, and a steady rise until today. About 1:00 a.m. New York time gold levitated straight up from $1,395 to $1,410. From that time till New York opened SOMEbody drove gold back down to $1,400, even a few bucks below, but at 9:30 gold gapped from $1,402 to $1,414 in a single bound, then never dipped below $1,410 again.

It was a clean breakout, and touched the 20 DMA at $1,416.05. Yet from here gold faces naught save labor and trouble -- lots of resistance from $1,425 to $1,495. Yet a hint of gold's strength is show in where it closed today: smack on the downtrend line from the April highs. That would lift the spirits of a fat frog in a deep well.

Don't y'all be surprised if a tussle breaks out in the gold market tomorrow and it falls back toward $1,400, but must not close below that. Really ought to close higher within two days if it wants to confirm this breakout.

Silver left a bottom behind on Tuesday, too, and confirmed it with another on Wednesday. Today it climbed above the downtrend line from the April highs and even touched its 20 DMA (2308c). It's a quite promising start, but needs to clear 2330c to prove its muscle & wind.

Great start today for silver & gold. What's the drawback? Just this: they might rally all the way up to their April breakdown points & fall one last time, and Mercy! We won't be able to tell until they close up above those breakdown points, way higher at $1,550 & 2750c. If we wait to then to "be sure," we'll be paying a lot more to buy.

On the balance in favor of buying now is a double bottom in both silver & gold.

No doubt exists about the more distant future. Silver & gold will regain all their lost ground & advance to prices you & I cannot now imagine. I interviewed James Turk of last week, and he expects gold to finish this year higher than it started.

On 30 May 1967 the Igbo state of Biafra proclaimed its independence from Nigeria. Col. Odumegwu Ojukwu led his country. Whether Nigeria committed genocide against the Igbo depends on which side you are on, but after two and a half years a great people's brave bid for independence & freedom was overpowered.

On 30 May 1539 Spanish explorer Hernando de Soto landed in Florida.

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
30-May-13 Price Change % Change
Gold, $/oz 1,411.50 20.20 1.45%
Silver, $/oz 22.67 0.24 1.05%
Gold/Silver Ratio 62.252 0.248 0.40%
Silver/Gold Ratio 0.0161 -0.0001 -0.40%
Platinum 1,481.50 29.70 2.05%
Palladium 758.00 10.20 1.36%
S&P 500 1,654.41 6.05 0.37%
Dow 15,324.53 21.73 0.14%
Dow in GOLD $s 224.43 -2.94 -1.29%
Dow in GOLD oz 10.86 -0.14 -1.29%
Dow in SILVER oz 675.86 -6.11 -0.90%
US Dollar Index 83.03 -0.60 -0.72%
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: 1,412.60      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,452.15 1,459.92 1,459.92
1/2 AE 0.50 723.45 746.91 1,493.82
1/4 AE 0.25 365.25 380.52 1,522.08
1/10 AE 0.10 148.22 155.03 1,550.33
Aust. 100 corona 0.98 1,376.32 1,390.32 1,418.41
British sovereign 0.24 334.52 344.52 1,463.56
French 20 franc 0.19 263.73 266.73 1,428.67
Krugerrand 1.00 1,435.20 1,448.20 1,448.20
Maple Leaf 1.00 1,427.60 1,442.60 1,442.60
1/2 Maple Leaf 0.50 812.25 741.62 1,483.23
1/4 Maple Leaf 0.25 360.21 377.87 1,511.48
1/10 Maple Leaf 0.10 149.74 153.97 1,539.73
Mexican 50 peso 1.21 1,694.52 1,709.17 1,417.58
.9999 bar 1.00 1,417.54 1,428.54 1,428.54
SPOT SILVER: 22.67      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 29.00 32.00 41.83
VG+ Peace dollar 0.77 26.00 29.00 37.91
90% silver coin bags 0.72 17,706.98 18,106.98 25.32
US 40% silver 1/2s 0.30 6,317.43 6,687.43 22.67
100 oz .999 bar 100.00 2,266.50 2,341.50 23.42
10 oz .999 bar 10.00 231.65 232.65 23.27
1 oz .999 round 1.00 22.77 23.67 23.67
Am Eagle, 200 oz Min 1.00 23.92 25.67 25.67
SPOT PLATINUM: 1,481.50      
Plat. Platypus 1.00 1,506.50 1,546.50 1,546.50
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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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