The Moneychanger
Daily Commentary
Thursday, 11 July a.d. 2013 Browse the commentary archive

We're going to have more fun today than we've had for a looong time.

Bernanke got at it again yesterday, roilin' markets with the same weapon Samson used so effectively against the Philistines. Durned if I can keep straight what "hawkish" and "dovish" means when they're referring to the Federal Reserve open market committee, other than they're all bird-brains. Whichsoever it may be, Bernanke made noises that the diviners & readers of sheep guts & tea leaves interpreted as meaning more money printing & less talk of "tapering."

That caught some markets -- like the dollar -- overextended to the upside and others -- silver & gold -- overextended to the downside. Stocks responded in their typically irrational fashion, rising on news that Bernanke will further devalue the dollar & make economic calculations virtually impossible because of inflation AND misdirect further billions to uneconomic investments. "Hoo-ray, Hoo-ray, it's Thursday, let's get drunk!"

The US dollar index fell from 84.64 on 9 July (intraday high at 84.96) to 83.022 today, crashing 1.91%. Huge move for a currency, but remember it was ready to fall because it had been rising straight up since mid-June.

Yen & the euro turned and went the other way. Yen rose today to 101.17 cents/Y100, up 0.92%. Euro rose 0.93% to $1.3108. ( July 9 marked the bottom for both.) Euro even gapped up today and closed right above its 20 day moving average (1.3100). For a while, at least, these other two scrofulous, despicable fiat currencies will gain at the expense of the scrofulous, despicable dollar. I say "despicable" because all are nothing more than wretched shills to rob honest folk with government approval.

Speaking of shills, let us now turn our jaundiced gaze on the stock market. Today had the media chortlers a-chortlin' & the chirpers a-chirpin'. 'Pears both the S&P & Dow are on their way to challenge their way to challenge their last highs. Ahh, we'll see.

Dow today added 1.11% (169.26) to 15,460.92 (last intraday high was 15,542.40). S&P500 gobbled up 22.4 (1.25%) to end at 1,675.02 (last intraday high was 1,687.18). The jubilatin' was jinral.

That interested me less (since stocks' rise remains purely a phenomenon caused by inflation and not economic performance) than stocks measured by silver & gold. These gauges are now talking, loud and clear. While stocks rose a strong 1.11%, the Dow in gold FELL 1.48% to 12.078 oz (G$249.67 gold dollars). Dow in silver fell even more, 2.91%, down 23.22 oz to 775.26 oz. Both indicators have established a sharp four-day downtrend. Y'all take this home: they are falling in the face of a strongly rising stock market.

Lest I forget, the breakout in interest rates has probably ended its rally for a while. The yield on the 10 year treasury note rose nearly to its 6 year downtrend line, though, before it stopped for breath. My guess is that rising interest rates gave the Nice Government Men the nervous fantods & severe digestive tract distress.

I knew something big was happening when gold in yesterday's aftermarket jumped from $1,247.40 to $1,280.20. Mercy!

Today gold rose $32.70 (2.62%) to close the crooked Comex at $1,280.10. Silver rose 4.14% (79.2 cents) to end Comex at 1994.3, but spent much of the day above 2000c. Silver's high today was 2022.3, gold's $1,296.67.

All this improves the outlook considerably. Not only did both metals close at their 20 day moving averages, gold also closed above the downtrend line from its April high. Silver hit that line, but didn't pierce it.

Hold on, remember what H.L Hunt said about never getting down when things are tough, and never too elated in victory. To confirm a rally gold needs to close not merely above $1,300, but also $1,350. Silver must see itself above 2100c. Yes, I am buying right along, but I still want proof.

One thing holding me back is that reactionary uplegs can seem strong as a garlic milkshake -- until they collapse.

Oh, one more tidbit: 12 day rate of change for gold stands right below zero, gold's is above zero at 2.3%. That means it's lightfooted, it's rising, momentum's up.

On 11 July 1804 Vice President Aaron Burr mortally wounded former Treasury secretary and inveterate statist Alexander Hamilton in a New Jersey pistol duel. In a match like that, you simply have no idea who to root for.

On 11 July 1864 Confederate Jubal early began a raid that carried him to the gates of Washington, DC. Unhappily, it didn't carry him clean through the gates.

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
11-Jul-13 Price Change % Change
Gold, $/oz 1,280.10 32.70 2.62%
Silver, $/oz 19.94 0.79 4.14%
Gold/Silver Ratio 64.188 -0.947 -1.45%
Silver/Gold Ratio 0.0156 0.0002 1.48%
Platinum 1,421.10 53.00 3.87%
Palladium 716.90 4.40 0.62%
S&P 500 1,675.02 22.40 1.36%
Dow 15,460.92 169.26 1.11%
Dow in GOLD $s 249.67 -3.74 -1.48%
Dow in GOLD oz 12.08 -0.18 -1.48%
Dow in SILVER oz 775.26 -23.22 -2.91%
US Dollar Index 83.02 -0.07 -0.08%
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SPOT GOLD: 1,286.65      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,322.68 1,328.47 1,328.47
1/2 AE 0.50 655.68 677.74 1,355.49
1/4 AE 0.25 327.84 345.30 1,381.22
1/10 AE 0.10 134.99 140.89 1,408.88
Aust. 100 corona 0.98 1,252.35 1,263.35 1,288.87
British sovereign 0.24 304.69 316.69 1,345.35
French 20 franc 0.19 240.22 247.22 1,324.14
Krugerrand 1.00 1,299.52 1,311.52 1,311.52
Maple Leaf 1.00 1,301.65 1,316.65 1,316.65
1/2 Maple Leaf 0.50 739.82 675.49 1,350.98
1/4 Maple Leaf 0.25 328.10 344.18 1,376.72
1/10 Maple Leaf 0.10 136.38 140.24 1,402.45
Mexican 50 peso 1.21 1,543.43 1,554.31 1,289.14
.9999 bar 1.00 1,291.15 1,302.15 1,302.15
SPOT SILVER: 20.20      
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 15,873.00 16,373.00 22.90
US 40% silver 1/2s 0.30 5,767.25 5,917.25 20.06
100 oz .999 bar 100.00 2,010.00 2,090.00 20.90
10 oz .999 bar 10.00 207.00 208.00 20.80
1 oz .999 round 1.00 20.30 21.10 21.10
Am Eagle, 200 oz Min 1.00 21.45 23.00 23.00
SPOT PLATINUM: 1,421.10      
Plat. Platypus 1.00 1,446.10 1,486.10 1,486.10
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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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