The Moneychanger
Weekly Commentary
Friday, 26 July a.d. 2013 Browse the commentary archive
Here's the weekly scorecard:
  19-Jul-13 26-Jul-13 Change % Change
Silver, cents/oz. 1,944.80 1,976.50 31.70 1.6
Gold, dollars/oz. 1,293.30 1,321.50 28.20 2.2
Gold/silver ratio 66.500 66.861 0.360 0.5
Silver/gold ratio 0.0150 0.0150 -0.0001 -0.5
Dow in Gold Dollars (DIG$) 248.45 243.38 -5.07 -2.0
Dow in gold ounces 12.02 11.77 -0.25 -2.0
Dow in Silver ounces 799.25 787.19 -12.06 -1.5
Dow Industrials 15,543.74 15,558.83 15.09 0.1
S&P500 1,692.09 1,691.65 -0.44 -0.0
US dollar index 82.62 81.63 -0.99 -1.2
Platinum 1,429.70 1,421.90 -7.80 -0.5
Palladium 748.65 723.10 -25.55 -3.4

Although gold & silver worked higher & gold broke through $1,300 resistance, the week disappointed a tad. But then, after the beating gold & silver took this spring, we ought to expect hardship getting through every resistance level.

Stocks (Dow but not the S&P500) hit a new high by a gnat's eyebrow, then eroded. Both just hung in the air, unable to rise or fall.

US dollar index had its worst week in quite a while. Platinum & Palladium gainsaid silver & gold.

That dollar index broke support at 82, so it will drop lower still. First target is the 200 day moving average at 81.47, second is support about 80.75. Apparently not everybody in the world believes yet that Bernanke can issue limitless amounts of new currency without eroding the dollar's value. What about interest rates? The 10 year treasury note yield had dropped from the first or July, but last week hit a low and this week began climbing again. Ended at 2.561%, above the 20 DMA. I suspect this rising interest rate (since May) is the first robin of the bond bubble's bursting.

For now I am expecting the dollar to turn around either at the 200 DMA or 81-ish support, thence to rally again. However, it if breaches 81.75, then trouble will erupt.

Euro went flat today at $1.3275, down 0.02%. However, it abideth in an uptrend since 9 July.

Yen at last made up its mind this week. Broke out upwards from an even-sided triangle, and jumped up 1.06% today to 101.81 cents/Y100. Headed higher, until the Japanese Nice Government Men smack it again. Why anybody in his right mind would buy or own yen when the whole strategy of the prime minister is to GUT the yen is a mystery too deep for my shallow ken.

We passed a great milestone this week: the Dow in gold & Dow in silver broke down, confirming their broadening top was indeed a top. This gains more significance because the Dow hit a new high on Tuesday, the S&P500 on Monday, while the Dow measured in metals fell.

Today the Dow spent most of its day underwater, but cosmetically climbed 3.22 points (0.22%) above yesterday's close right at day's end. S&P500 rose 1.4 (0.08%) to 1,691.65. 'Pears ready to correct next week.

Today the Dow in gold rose 0.6% to 11.774 oz (G$243.38 gold dollars). Dow in silver acted poorly, with a close back above the 780.17 oz. 20 DMA. That was 787.19 oz, up 2%. Only that Dow in Silver leaves me the least bit queasy.

Silver had a rough week. While gold 2.2%, silver only rose 1.6%. Silver was keeping pace with gold early in the week, but was smashed later. Silver ended today down 38.2 cents (1.9%0 at 1976.5c & gold down $7.30 (0.5%) at $1,321.50.

Gold popped up to $1,338.70 overnight & silver to 2029c, but were steadily attacked after midnight New York time, sliding down little by little. A little after 10:00 New York time, "somebody" smacked silver & gold with a baseball bat to the head. Silver dropped from 1995c down to 1975.1c, gold from $1,326 to $1,320.

Yet in the aftermarket gold has jumped up $12 to $1,333.20 and silver 30 cents to 2005c.

What's the real issue, the real hurdle? Gold must close over $1,350 to hint that the long correction since August 2011 has ended. Silver needs to climb above 2300c. In the short term, a fortnight and a month, both metals have upward momentum, but they must break through those barriers.

BOTTOM LINE: Silver & gold bull markets remain intact, but it's too early to call the June price lows THE bottom. Looks now as if they were, but that must be confirmed by higher prices. Future for silver & gold is huge and higher, but for the US economy rotten. Bernanke has blown a bond bubble & the US government is in the first stages of a sovereign debt crisis. That will all drag down the economy and the dollar drastically. Y'all don't want to be under them when they fall.

Y'all don't want to be under them when they fall.

On 26 July 1529 Francisco Pizarro received a royal warrant from Spanish King Charles I to discover & conquer Peru.

On 26 July 1947 the Department of "Defense" was formed, an Orwellian replacement for the Department of War.

In a rare burst of truthfulness for the world we live in, Former IMF chief Dominique Strauss-Kahn will face trial on pimping charges over an alleged prostitution ring in the French city of Lille. I reckon all those things we keep thinking about central bankers aren't really metaphorical after all -- they're literal.

To prove that the world is not full of evil dolts, listen to what happened to me. As we were getting ready to fly out of Reno last week, I discovered I had lost my driver's license. Never mind the humiliation of the full pat down treatment I had to suffer to catch my plane. I came home and tried to order a replacement, but after the Tennessee Dept. of Safety website thwarted me and I held for 20 minutes waiting on the "Help" line, I gave up. My tolerance for government "efficiency" is, to put it minimally, right low.

Then today I got a letter from the Lost & Found at the Las Vegas Airport, through which we had flown on our way out to Reno. Within was found -- that's right -- my driver's license. Some kind & good-hearted person had picked up my license and turned it in to Lost & Found at the Las Vegas Airport. They, acting out of outstanding courtesy, mailed it to me. That kindness made my week.

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
26-Jul-13 Price Change % Change
Gold, $/oz 1,321.50 -7.30 -0.5
Silver, $/oz 19.77 -0.38 -1.9
Gold/Silver Ratio 66.861 -0.356 -0.5
Silver/Gold Ratio 0.0150 -0.0003 -1.9
Platinum 1,421.90 -25.10 -1.7
Palladium 723.10 -16.75 -2.3
S&P 500 1,691.65 4.31 0.3
Dow 15,558.83 13.37 0.1
Dow in GOLD $s 243.38 1.57 0.6
Dow in GOLD oz 11.77 0.08 0.6
Dow in SILVER oz 787.19 15.59 2.0
US Dollar Index 81.63 0.14 0.2
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: 1,333.20      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,365.20 1,376.53 1,376.53
1/2 AE 0.50 679.42 702.26 1,404.53
1/4 AE 0.25 339.71 357.80 1,431.19
1/10 AE 0.10 139.88 145.99 1,459.85
Aust. 100 corona 0.98 1,300.27 1,311.27 1,337.76
British sovereign 0.24 315.72 327.72 1,392.18
French 20 franc 0.19 248.91 255.91 1,370.69
Krugerrand 1.00 1,350.53 1,362.53 1,362.53
Maple Leaf 1.00 1,348.20 1,363.20 1,363.20
1/2 Maple Leaf 0.50 766.59 699.93 1,399.86
1/4 Maple Leaf 0.25 339.97 356.63 1,426.52
1/10 Maple Leaf 0.10 141.32 145.32 1,453.19
Mexican 50 peso 1.21 1,599.27 1,610.44 1,335.69
.9999 bar 1.00 1,337.87 1,348.87 1,348.87
SPOT SILVER: 20.05      
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 16,123.25 16,623.25 23.25
US 40% silver 1/2s 0.30 5,723.00 5,873.00 19.91
100 oz .999 bar 100.00 1,995.00 2,075.00 20.75
10 oz .999 bar 10.00 205.50 206.50 20.65
1 oz .999 round 1.00 20.15 20.95 20.95
Am Eagle, 200 oz Min 1.00 21.30 22.85 22.85
SPOT PLATINUM: 1,421.90      
Platinum Platypus 1.00 1,446.90 1,486.90 1,486.90
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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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