The Moneychanger
Daily Commentary
Thursday, 25 July a.d. 2013 Browse the commentary archive

Thinking like everybody else can take you over a high cliff onto hard rocks below. It's not that the crowd is ALWAYS wrong, just wrong at the crucial turns. For the past few years under Bloviating Ben's zero interest rate policy people have flooded in to bonds -- "What else can you do?" Ben's goosing the money supply with a new $1 trillion bucks has lifted the Dow & S&P500 24% and 25% respectively since 15 November 2012. "What else can you do?"

Problem is that money that panics into a market also panics out of a market. What looks brilliant today looks stupidly lame tomorrow. When investors figure out that nothing economic is driving stocks, only inflation, they're liable to panic out of stocks as fast as they crowded in -- and to panic into silver & gold.

When you're dealing with human beings, logic does not play a big part.

US dollar index got hit upside the head with a brickbat. Crashed through support just beneath 82 and lost 58.1 basis points (0.75%) and came to rest at 81.715. Breaching support at 82.00 aims the dollar index at least for its 200 day moving average (81.46), but more likely next support at 80.75 - 81.00.

Euro took advantage of the dollar's headaches to rise 0.67% to $1.3288. Yen took an even bigger jump & closed above downtrend line -- and upside breakout. Jumped 1.18% to 100.97 cents per Y100.

Stocks spent most of the day underwater before they rose enough to save face. Dow rose 13.37 (0.09%) to 15,555.61. S&P500 inched up 4.31 or 02.6% to 1,690.25. Both pierced their rising trend lines yesterday. Even with today's little rise, S&P500 closed below that uptrend line. Any follow-through downward tomorrow will clinch a downward reversal.

Against the precious metals stocks slipped today 0.61% -- yes, against both gold and silver. Gold ended at 11.707 oz (G$242.00 in gold dollars). Silver dropped 4.46 oz to 772.11 ounces. Once again, both broke down on Monday out of triangles, and now have spent 4 days below those triangles. Implies that stocks are about to become much cheaper in terms of silver & gold.

Silver & gold bounced back today, but not until after dropping lower & fending off that attack. Silver gained 13.3 cents (0.7%) to close 2014.7 cents. Gold gained 0.7%, too, or $9.30 to end at $1,328.80. But before coming back silver was driven as low at 1983.7c about 6:00 a.m. New York time. Gold was driven to $,309.35. Both those lows were lower than yesterday's, but the metals ended higher. That would be the first half of a key reversal, with a break to a new low intraday followed by a higher close than the previous day. To complete the key reversal, both metals need to close higher tomorrow.

Silver & gold remain broken out above their short term downtrend lines. Still, it ain't a rally unless it keeps on climbing, so they must gain again tomorrow. Be patient, be patient.

On 25 July 1868 congress created the Wyoming Territory. Just imagine a state with 97,814 square miles but only 576,412 people, one person per 5.85 square miles. That's some room.

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
25-Jul-13 Price Change % Change
Gold, $/oz 1,328.80 9.30 0.70%
Silver, $/oz 20.15 0.13 0.66%
Gold/Silver Ratio 65.955 0.026 0.04%
Silver/Gold Ratio 0.0152 -0.0000 -0.04%
Platinum 1,447.00 -8.20 -0.56%
Palladium 739.85 -4.55 -0.61%
S&P 500 1,690.25 4.31 0.26%
Dow 15,555.61 13.37 0.09%
Dow in GOLD $s 242.00 -1.50 -0.61%
Dow in GOLD oz 11.71 -0.07 -0.61%
Dow in SILVER oz 772.11 -4.46 -0.57%
US Dollar Index 81.72 0.58 0.72%
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: 1,328.80      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,363.35 1,371.99 1,371.99
1/2 AE 0.50 677.18 699.95 1,399.89
1/4 AE 0.25 338.59 356.62 1,426.47
1/10 AE 0.10 139.42 145.50 1,455.04
Aust. 100 corona 0.98 1,295.98 1,306.98 1,333.38
British sovereign 0.24 314.68 326.68 1,387.75
French 20 franc 0.19 248.09 255.09 1,366.29
Krugerrand 1.00 1,346.07 1,358.07 1,358.07
Maple Leaf 1.00 1,343.80 1,358.80 1,358.80
1/2 Maple Leaf 0.50 764.06 697.62 1,395.24
1/4 Maple Leaf 0.25 338.84 355.45 1,421.82
1/10 Maple Leaf 0.10 140.85 144.84 1,448.39
Mexican 50 peso 1.21 1,593.99 1,605.13 1,331.29
.9999 bar 1.00 1,333.45 1,344.45 1,344.45
SPOT SILVER: 20.18      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 25.50 28.00 36.60
VG+ Peace dollar 0.77 21.50 25.00 32.68
90% silver coin bags 0.72 16,069.63 16,569.63 23.17
US 40% silver 1/2s 0.30 5,759.88 5,909.88 20.03
100 oz .999 bar 100.00 2,007.50 2,087.50 20.88
10 oz .999 bar 10.00 206.75 207.75 20.78
1 oz .999 round 1.00 20.28 21.08 21.08
Am Eagle, 200 oz Min 1.00 21.43 22.98 22.98
SPOT PLATINUM: 1,447.00      
Plat. Platypus 1.00 1,472.00 1,512.00 1,512.00
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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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