The Moneychanger
Daily Commentary
Thursday, 27 June a.d. 2013 Browse the commentary archive

A reader wrote and asked me, "What if they are trying to get everyone to sell their silver & gold by making prices so low people would sell in fear the price would drop more? What if that was the whole point?"

If I am asked that question, clearly I have expressed myself obscurely. I think that IS the point, to punish all those people who bought gold and silver & thereby quash (for a time) competition to the scabrous US dollar.

Now you can sneer at me as a natural born fool who believes in conspiracies, but I'm not talking conspiracy. I'm talking US statute (Gold Reserve Act of 1934 & Exchange Stabilization Fund), tons of proof of manipulation by GATA, and finally, self-interest. If YOU were charged with keeping the dollar afloat, would YOU try to gut the competition? Is a pig's little rear pork? Of course you would. And Ben Bernanke is at least as smart as you are.

I keep mentioning 1974 - August 1976 because the yankee government followed exactly the same gold & silver smashing policy then. Y'all aren't old enough to remember it, but I am. I'm older than dirt. I was there. The US Treasury held periodic "gold auctions" to wreck the gold market, and sent it down 48%. But listen: after that August low gold rose 8 times into January 1980, and silver over 12 times. This is what I mean when I say they can manipulate "at the margin" and "for a time," but they can't alter the primary trend. They can only bend it for a while.

I saw some headline chirping that the Dow was "back above 15,000," implying that all's right with the world. Do these people ever look at a chart?

Dow closed today at 15,024.49, up 114.35 or 0.77% while the S&P500 lagged a bit, up 9.94 (0.62%) to to 1,613.20. While this MIGHT (in view of their previous fall) indicate the indices are rallying, it only brings them up to their 20 & 50 day moving averages (which are about the same spot, oddly).

To make myself clear, unless some crash alters my outlook, I expect stocks to make yet one higher high, probably later this year, I just don't expect it now. And in corrections, these B-waves or corrective waves against the trend, can be so strong they appear to be the start of a new day. Then they melt just as suddenly.

Of course, it makes no never-mind to me either way, since I'm not buying stocks.

Dow in Gold & Dow in Silver rose again today, which sent me scurrying back to my long term charts to check how much they had corrected since their 2007 - 2011 fall. For the Dow in Silver, 802.08 oz represents a 61.8% correction. It closed today at 810.69 oz, up 8.51 oz or 1.06% from yesterday.

Of that same 2007 - 2011 fall, Dow in Gold has corrected about 40% at today's 12.403 oz close (G$256.38 in gold dollars. Could go to 50% at 13.43 oz.

Not spoken here but hovering around in my mind is that a frequently seen correction is 38.2% or 50%. More volatile silver routinely corrects 75%.

US dollar index changed little today, down 2.2 basis points to 82.923. Yen lost 0.58% to 101.68 but the euro, just to change things up, rose 0.19% to $1.3037. Trends remain up for the loathsome dollar and down for the scrofulous yen & euro.

(By the way, if you want a feeling for the coming demographic disaster in Japan, ponder that last year they sold more adult diapers there than infant diapers. Abortion, too, has its price. Unlike the US & Europe, Japan won't import foreign workers to make up for the population loss.)

Gold ended the day down $18.20 (1.48%) at $1,211.40 while silver held its loss to 5.4 cents (0.29%) & ended at 1853.3c.

'Twas one strange day for gold. Most of the forenoon it was flat, oscillating around $1,230. Then about noon New York time in one swoop it fell from $1,231 to $1,210, plump. In the aftermarket it lost another $12 to a low at $1,198.60. Rest of the day it flatlined.

Silver refused to let gold drag it down today, odd since silver is usually the more volatile member of the precious metals. Silver didn't undergo that big drop today and played calm most of the day, with a range of 1892c to 1845.7c.

This drop is so overdone it's becoming laughable. Bottom of the gold channel now is about $1,175. Silver is sitting on its bottom channel line already. Whether silver & gold have bottomed or will bottom around here, about now would be a perfect time for a surprise rally to gnaw off the shorts' greedy hands.

Rest easy, keep your eyes on the horizon. As the great entrepreneur H.L. Hunt used to say, "Never get really elated in victory; when times are tough, never get down."

The death on 27 June 363 of the Roman emperor Julian the Apostate brought to an end the pagan revival. His last words were alleged to have been, "Vicisti, Galilaee!"

On 27 June 1893 took place the Panic of 1893, which followed the Panic of 1873. Overbuilding railroads & failure of South American investments, notably in Argentina, along with declining agricultural prices, all contributed to the panic. However, it took place within the half century context of the deflation intentionally pursued by large bondholders who took every occasion to purchase legislation from congress which would shrink the US money supply and enhance the value of their bonds.

Plus ça change, plus c'est la même chose. The more things change, the more they stay the same.

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
27-Jun-13 Price Change % Change
Gold, $/oz 1,211.40 -18.20 -1.48%
Silver, $/oz 18.53 -0.05 -0.29%
Gold/Silver Ratio 65.364 -0.789 -1.19%
Silver/Gold Ratio 0.0153 0.0002 1.21%
Platinum 1,325.10 21.40 1.64%
Palladium 649.15 17.45 2.76%
S&P 500 1,613.20 9.94 0.62%
Dow 15,024.49 114.35 0.77%
Dow in GOLD $s 256.38 5.72 2.28%
Dow in GOLD oz 12.40 0.28 2.28%
Dow in SILVER oz 810.69 8.51 1.06%
US Dollar Index 82.92 0.02 0.03%
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SPOT GOLD: 1,199.60      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,230.79 1,238.59 1,238.59
1/2 AE 0.50 611.29 631.89 1,263.78
1/4 AE 0.25 305.64 321.94 1,287.77
1/10 AE 0.10 125.85 131.36 1,313.56
Aust. 100 corona 0.98 1,165.27 1,176.27 1,200.03
British sovereign 0.24 284.08 294.08 1,249.28
French 20 franc 0.19 223.97 230.97 1,237.09
Krugerrand 1.00 1,210.40 1,222.40 1,222.40
Maple Leaf 1.00 1,214.60 1,229.60 1,229.60
1/2 Maple Leaf 0.50 689.77 629.79 1,259.58
1/4 Maple Leaf 0.25 305.90 320.89 1,283.57
1/10 Maple Leaf 0.10 127.16 130.76 1,307.56
Mexican 50 peso 1.21 1,439.01 1,449.36 1,202.09
.9999 bar 1.00 1,203.80 1,214.80 1,214.80
SPOT SILVER: 18.42      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 26.00 29.00 37.91
VG+ Peace dollar 0.77 24.00 27.00 35.29
90% silver coin bags 0.72 14,671.80 15,121.80 21.15
US 40% silver 1/2s 0.30 5,065.15 5,435.15 18.42
100 oz .999 bar 100.00 1,832.00 1,912.00 19.12
10 oz .999 bar 10.00 189.20 190.20 19.02
1 oz .999 round 1.00 18.52 19.32 19.32
Am Eagle, 200 oz Min 1.00 19.67 21.22 21.22
SPOT PLATINUM: 1,325.10      
Plat. Platypus 1.00 1,350.10 1,390.10 1,390.10
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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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