The Moneychanger
Weekly Commentary
Friday, 12 July a.d. 2013 Browse the commentary archive
Here's the weekly scorecard:
  5-Jul-13 12-Jul-13 Change % Change
Silver, cents/oz. 1,872.60 1,977.90 105.30 5.6
Gold, dollars/oz. 1,212.90 1,277.80 64.90 5.4
Gold/silver ratio 64.771 64.604 -0.170 -0.3
Silver/gold ratio 0.0154 0.0155 0.0000 0.3
Dow in Gold Dollars (DIG$) 257.96 250.18 -7.79 -3.0
Dow in gold ounces 12.48 12.10 -0.38 -3.0
Dow in Silver ounces 808.28 781.85 -26.42 -3.3
Dow Industrials 15,135.84 15,464.30 328.46 2.2
S&P500 1,631.89 1,680.19 48.30 3.0
US dollar index 84.44 82.97 -1.47 -1.7
Platinum 1,324.90 1,409.60 84.70 6.4
Palladium 675.95 721.60 45.65 6.8

I already like July better than June. This week Silver gained 5.6% while gold added 5.4%. The Dow in Gold and Dow in Silver turned down about 3%, even though stocks gained 2.2% - 3%. And the US Dollar? Stomped in the mud. Down 1.7% (more than that from its midweek high) and closed hanging its scabby scalp in shame below 83.

Far's I can recollect, the Dow and S&P500 hit new closing highs today, Dow settled up 3.38 at 15,464.30 (up 0.82%) & the S&P500 rose 5.17 (0.31%) to 1680.19. But there were some odd events gainsaying those new highs. They came without new intraday highs, & they weren't crashing great advances to a new high, but eked out by point-lets.

Y'all know I'm not going to leave it at that, for yet another non-confirmation nagged at those new stock highs. Ah, yes, the Dow in Gold & Dow in Silver neither one made new highs. Lo, they closed not inconsequentially below their late highs. For example, the Dow in Gold today closed at 12.012 oz (up 0.2%, $250.18 gold dollars), a right smart below its June high at 12.56 oz. Dow in silver ended at 781.85 oz (up 6.6 oz or 0.9% on the day), 37-2/3 oz below its June 819.52 ounce high. And both are a-slidin' down in steep downtrends.

What do y'all reckon that means? It could mean that stocks have topped against silver & gold, and that might mean silver & gold have seen their price lows.

That ol' US dollar index had been riding high since mid-June, but today wasn't no more cheerful than a treed coon. It's dropped 1.67% since its 84.64 high on 9 July. Mercy, it hasn't just dropped, it has PLUNGED, as they say. Today's low at 82.89 scared the 20 Day Moving average (82.88) to death, not to mention the 50 DMA (82.87). Gap down yesterday makes it look sick as a poisoned dog. Aww, it'll probably keep goin' up, unless it falls through 80.50, and will probably turn around about 82.25, maybe 82. Whew! I wouldn't trade that nasty thang with y'all's money!

Yen & Euro are right pleased the dollar has dropped. Yen ended today down 0.27% at 100.77, starting out another little uptrend. Euro lost 0.21 to end at $1.3068, but it has popped up stronger than the yen. Irony of all this to the fastidious & rational mind is, wretched as the US dollar is, the euro and yen are worse.

Silver ended the week 5.6% high, gold 5.4% higher, best week they've had in some time. Today gold backed off $2.30 to $1,277.80 & silver 16.4 cents to 1977.9c. I think it's worth noticing that gold wound up 7 bucks higher in the aftermarket and silver ten cents. Mercy, don't that make those closes look like the NGM "painting the tape"?

Both silver & gold sort of stepped up this week. That is, they jumped through levels on Wednesday, straight clean up, to a higher level -- gold from $1,260 to $1,280 & silver from 1940c to 1980c (and a high of 2020c). 1980c & $1,277 now become support.

For the first time since May, the 12 day rate of change for silver & gold has turned positive, 1.8% for silver & 0.5% for gold today (that means silver is 1.8% higher today than 12 days ago, and its momentum is upward.)

Now we face another question: one more plunge down, or will silver & gold confirm these little rallies by clearing $1,325 & 2200c? These counter trend rallies can sometimes seem as strong as Granny's breath, then just give out, so they'll fool you. But my mind changed this week. Don't know how to explain it exactly, but the heaviness that has weighed me down since April has lifted off my spirit. Silver & gold are coming back, and O, my! They will be relentless. Y'all throw your minds back to 1976. After a fall from January 1974 through August 1976 of nearly 50%, gold came back to rise eight times in the next four years, silver 12.5 times.

Oh, and all that stuff the media is spewing about the Fed tapering and Bernanke's exit strategy? I was out working my bees today, and I have two hives in a pasture where we keep a Jersey bull, and there was lots of that same "Fed tapering" and "Bernanke's exit strategy" all over the ground.

Since last week marked the 150th anniversary of the Battle of Gettysburg, I ought to say something about it. Lots of would be smart folks take cheap shots at Robert E. Lee on account of Pickett's Charge into cannon, but I read a recent book wherein the author speculates that Lee's plan, with the battle already mostly won, was to send J.E.B. Stuart around the Union army and catch them from behind about the time Pickett charged 'em from in front. Since Stuart's mission was stopped by Union cavalry, he never appeared. Lee, ever willing to take all responsibility and the blame that went with it, never said anything about it. What an incomparable man!

Y'all enjoy your weekend!

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
12-Jul-13 Price Change % Change
Gold, $/oz 1,277.80 -2.30 -0.2
Silver, $/oz 19.78 -0.16 -0.8
Gold/Silver Ratio 64.604 -0.111 -0.2
Silver/Gold Ratio 0.0155 -0.0001 -0.8
Platinum 1,409.60 -11.50 -0.8
Palladium 721.60 4.70 0.7
S&P 500 1,680.19 5.17 0.3
Dow 15,464.30 3.38 0.0
Dow in GOLD $s 250.18 0.53 0.2
Dow in GOLD oz 12.10 0.03 0.2
Dow in SILVER oz 781.85 6.60 0.9
US Dollar Index 82.97 -0.05 -0.1
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GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,320.26 1,326.04 1,326.04
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British sovereign 0.24 304.14 316.14 1,342.98
French 20 franc 0.19 239.78 246.78 1,321.79
Krugerrand 1.00 1,301.00 1,313.00 1,313.00
Maple Leaf 1.00 1,299.30 1,314.30 1,314.30
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VG+ Peace dollar 0.77 24.00 27.00 35.29
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US 40% silver 1/2s 0.30 5,669.90 5,819.90 19.73
100 oz .999 bar 100.00 1,977.00 2,057.00 20.57
10 oz .999 bar 10.00 203.70 204.70 20.47
1 oz .999 round 1.00 19.97 20.77 20.77
Am Eagle, 200 oz Min 1.00 21.12 22.67 22.67
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Platinum Platypus 1.00 1,434.60 1,474.60 1,474.60
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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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