The Moneychanger
Daily Commentary
Monday, 10 June a.d. 2013 Browse the commentary archive

I hope y'all know that the central banks have steered your world into historically uncharted waters. These vast inflations, creating enormous new money to bail out economies, are, outside emergencies, simply unheard of. What catches your eye is that the US Fed, where for generations (sorry as it was) adults were in charge, is now run by teenagers who have been given car keys & the keys to Dad's liquor cabinet. They're out to prove that driving the wrong way down the expressway at 95 mph while plastered really is a good idea.

But the inflation does raise those stock market prices.

Speaking of stocks, Friday's Three Little Bears reaction to the unemployment numbers fizzled today. May have been "just right" on Friday, but it was disremembered today. Dow abated 25.69 (0.17%) to 15,222.43. S&P500 regressed 2.25 (0.14%) to 1,641.13.

From today's perspective Friday's rally only succeeded in lifting those indices to their 20 day moving averages & their downtrend lines, cracked the lines barely, but wasn't able to push them on through. In the teeth of all the media jubilating, stocks' short term trend remains down. However, that might change at any time. It's a mania.

Dow in gold dipped 0.4% to 10.981 oz (G$227.01 gold dollars). Downtrend remains intact (lower lows & lower highs).

After making a marginal new high Friday, the Dow in silver fell back 7.06 oz. (1%) to 694 oz. Silver is so volatile -- it loves to fool you by doing things other markets never permit. It made a new high after a long roll-over, so does that mean that it will proceed higher? Might, but don't bet your fillings on it. Just as likely to drop like your car keys down a storm drain.

US dollar index is wallowing like a rusty freighter in high seas, & getting lower all the while. Shucked another 22.2 basis points (0.3%) today to 81.663. Friday & Thursday last week the US dollar touched its 200 DMA. One would expect the dollar to rally a few days after last week's shameful skinning, but if it tumbles through the 200 DMA (81.07) panic will set in. Interest rate on the 10 year US note continues to rise.

Bank of Japan meets tomorrow to decide what new wrecking measures it will take. Maybe that uncertainty accounts for the yen's 1.11% drop today to 101.37. Then again, Friday the yen posted a key reversal by breaking into new high territory but closing the day lower. Today it followed that move down, confirming it. Yen ought to move lower, but I suspect the criminal conspiracy that is international central banking may have put the stop to Japanese exchange rate depreciation.

Dollar's cascade last week goosed the euro sharply, to an intraday high at $1.3306. Friday it backed off, but today picked up 0.36% to $1.3255. The silliness of manipulated exchange rates is easily seen here. European economy and banks are in even worse shape than the US.

Silver & gold didn't follow through with another large break today, a sign of some strength, but also didn't recover enough to inspire anybody. Gold added $3.20 (0.23%) to $1,386.20. Silver gained 18.4 cents to 2192.1c, up 0.85%.

Trying to gainsay the price action are the sentiment and commitments of traders reports. These are as bullish as they've been in the whole course of this bull market. That argues that a big rally is brewing in silver & gold, but has yet to affect prices, and what's a rally without higher prices? A flat or fall.

Silver made a lower low today (2141c) than Friday's. It has bounced off the downtrend line from the April high, but needs to show way more strength to indicate a turnaround. How about closing above the 20 DMA (now 2251c) for starters?

Gold bounced the same way, but with even less enthusiasm. 20 DMA here is $1,393.

Friday's break argues silver & gold will see lower prices. That suggests waiting before we buy. Get this part clear: gold & silver remain in a bull market. Spectacularly higher prices lie before us. Just be patient. Bottom of this move ought to come before June ends.

On 10 June 1864 in Lee County, Mississippi was fought the Battle of Brice's Crossroads. Confederate General Nathan Bedford Forrest led 4,800 Confederate soldiers against 8,100 union soldiers led by General Samuel Sturgis.

To protect his supply lines in Middle Tennessee from Forrest, Sherman sent Sturgis across North Mississippi. It was a near perfect battle for Forrest. He divined where Sturgis was going, found a perfect place to slow down his cavalry, and knew that if he cold stop them long enough, the double-timing infantry would arrive exhausted. It all worked as he had planned, including his bluffs. The entire Union force collapsed in headlong retreat.

It was a perfect battle, but a strategic disaster, since Forrest time would have been much better spent tearing up Sherman's rear and disrupting his attack on Georgia.

On 10 June 1935 Alcoholics Anonymous was founded by Bill W.

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
10-Jun-13 Price Change % Change
Gold, $/oz 1,386.20 3.20 0.23%
Silver, $/oz 21.92 0.18 0.85%
Gold/Silver Ratio 63.236 -0.388 -0.61%
Silver/Gold Ratio 0.0158 0.0001 0.61%
Platinum 1,505.70 4.30 0.29%
Palladium 767.65 8.20 1.08%
S&P 500 1,641.13 -2.25 -0.14%
Dow 15,222.43 -25.69 -0.17%
Dow in GOLD $s 227.01 -0.91 -0.40%
Dow in GOLD oz 10.98 -0.04 -0.40%
Dow in SILVER oz 694.42 -7.06 -1.01%
US Dollar Index 81,663.00 -0.22 -0.00%
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: 1,386.80      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,428.40 1,433.26 1,433.26
1/2 AE 0.50 710.22 733.27 1,466.54
1/4 AE 0.25 358.58 373.57 1,494.28
1/10 AE 0.10 145.51 152.20 1,522.01
Aust. 100 corona 0.98 1,349.83 1,363.83 1,391.38
British sovereign 0.24 328.41 338.41 1,437.60
French 20 franc 0.19 258.92 261.92 1,402.87
Krugerrand 1.00 1,404.83 1,417.83 1,417.83
Maple Leaf 1.00 1,401.80 1,416.80 1,416.80
1/2 Maple Leaf 0.50 797.41 728.07 1,456.14
1/4 Maple Leaf 0.25 353.63 370.97 1,483.88
1/10 Maple Leaf 0.10 147.00 151.16 1,511.61
Mexican 50 peso 1.21 1,663.57 1,678.06 1,391.78
.9999 bar 1.00 1,391.65 1,402.65 1,402.65
SPOT SILVER: 21.98      
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 16,680.95 17,320.95 24.23
US 40% silver 1/2s 0.30 6,115.35 6,485.35 21.98
100 oz .999 bar 100.00 2,198.00 2,273.00 22.73
10 oz .999 bar 10.00 224.80 225.80 22.58
1 oz .999 round 1.00 22.08 22.83 22.83
Am Eagle, 200 oz Min 1.00 23.23 24.63 24.63
SPOT PLATINUM: 1,505.70      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,530.70 1,570.70 1,570.70
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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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