The Moneychanger
Daily Commentary
Tuesday, 23 July a.d. 2013 Browse the commentary archive

Y'all will recall that the European sovereign debt crisis began with interest rates edging up on debt of Greece, Portugal, Spain, and Italy. Just a little at first, then a stampede. That was the lowest rated debt out there.

Chewing on that I see that municipal bonds, not exactly junk bonds, but at the lower end of the credit- worthiness scale, fell the fourth day in a row. Apparently rising rates and Detroit's biggest-in-history municipal bankruptcy ($18 billion) has investors nervous.

Y'all, when the bond bubble bursts, it will make the real estate bubble look like bubble gum.

Non-confirmation abounded in today's stock market. The Dow hit a new high, but the S&P500 didn't, yea, & the Nasdaq, Nasdaq-100, and Russell 2000 all fell, too. Folks, rapid-fire strings of new highs is NOT the recipe for longevity in a market. Rather, it warns of a red hot market topping.

Dow rose 22.19 (0.14%) to 15,567.74 but the S&P500 backed off 3.14 (0.19%) to 1,692.39. As I said yesterday, stocks look awfully double-toppy.

Dow in gold rose 0.24% to 11.66 oz (G$241.04) while Dow in silver added 10.54 oz (1.39%) to close 768.93 oz. This doesn't mend yesterday's breakdown, or reverse the firmly gravity-ward momentum.

US dollar fell plumb to 82 today. Low at 81.926 even broke 82. Trading right now at 82.053, down 16.3 basis points on the day. Euro jumped 0.3% to $1.3225, still trending up. Yen can't quite make up its mind to rise again. Closed 100.55c/Y100, up 0.166.

Here's how loony the world is. In Japan the electorate gave control of the upper house back to Abe's party. That's right -- to the party of the man who has promised to gut their currency. "Hit me again, Shinzo -- it feels so good!"

After yesterday's big leaps silver & gold backed off for a breather today -- well, at the cosmetic Comex close, but not in the aftermarket. It was surprisingly peppy after Comex closed.

Gold lost $1.30 to end at $1,335.10 and silver gave back 25.2 cents to 2024.6c.

But after the Comex closed, silver shot up as high at 2051 and gold up to $1,348. They've since settled back a little, but this tugging at higher prices in the aftermarket feels like a very strong market. Gold remains above its 50 DMA ($1,333.40) and 20 DMA, and can only be expected to rise for a while. Same holds true for silver. Whether they can make good this breakouts to found a lasting rally, or whether they fail higher, gold has the potential to run to $1,550 from here, silver to 2300c -- fast, once gold beats $1,350.

Whether the ultimate price low for silver & gold has been posted yet or not, the gold and silver markets are turning. Panic & defeat are behind us, rebuilding taking place. Be patient, keep buying.

On 23 July 1894 Japanese agents assassinated the Korean Empress Myeongseong. In 1910 Korea, already occupied by the Japanese military, was annexed to the Japanese empire. Korea was not freed of brutal Japanese domination until the end of World War II, then was subjected to the devastation of the Korean War (1950-53) in which more than a million people died. I don't know how true to historical fact it is, but you can get a taste of Korean patriotism in the movie War of the Arrows, although that deals with much earlier Chinese domination.

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
23-Jul-13 Price Change % Change
Gold, $/oz 1,335.10 -1.30 -0.10%
Silver, $/oz 20.25 -0.25 -1.23%
Gold/Silver Ratio 65.944 0.747 1.15%
Silver/Gold Ratio 0.0152 -0.0002 -1.13%
Platinum 1,442.10 -4.90 -0.34%
Palladium 738.55 -11.00 -1.47%
S&P 500 1,692.39 -3.14 -0.19%
Dow 15,567.74 22.19 0.14%
Dow in GOLD $s 241.04 0.58 0.24%
Dow in GOLD oz 11.66 0.03 0.24%
Dow in SILVER oz 768.93 10.54 1.39%
US Dollar Index 82.05 -0.16 -0.20%
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: 1,343.40      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,378.33 1,387.06 1,387.06
1/2 AE 0.50 684.62 707.64 1,415.27
1/4 AE 0.25 342.31 360.53 1,442.14
1/10 AE 0.10 140.95 147.10 1,471.02
Aust. 100 corona 0.98 1,310.22 1,321.22 1,347.91
British sovereign 0.24 318.13 330.13 1,402.44
French 20 franc 0.19 250.81 257.81 1,380.89
Krugerrand 1.00 1,362.21 1,374.21 1,374.21
Maple Leaf 1.00 1,358.40 1,373.40 1,373.40
1/2 Maple Leaf 0.50 772.46 705.29 1,410.57
1/4 Maple Leaf 0.25 342.57 359.36 1,437.44
1/10 Maple Leaf 0.10 142.40 146.43 1,464.31
Mexican 50 peso 1.21 1,611.51 1,622.74 1,345.89
.9999 bar 1.00 1,348.10 1,359.10 1,359.10
SPOT SILVER: 20.41      
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 16,344.90 16,844.90 23.56
US 40% silver 1/2s 0.30 5,829.20 5,979.20 20.27
100 oz .999 bar 100.00 2,031.00 2,111.00 21.11
10 oz .999 bar 10.00 209.10 210.10 21.01
1 oz .999 round 1.00 20.51 21.31 21.31
Am Eagle, 200 oz Min 1.00 21.66 23.21 23.21
SPOT PLATINUM: 1,442.10      
Plat. Platypus 1.00 1,467.10 1,507.10 1,507.10
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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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