The Moneychanger
Daily Commentary
Wednesday, 31 July a.d. 2013 Browse the commentary archive

Y'all know what an Amazon Prime subscription ($90 a year) buys you? Free video streaming of over 14,000 films nobody wants to see. Whoops -- you have to RENT the ones you actually WANT to see.

My wife does this stuff behind my back, because I won't use Amazon if I can avoid it. Otherwise one of these days they'll gobble up even Wal-Mart. They'll be the only people on the planet selling anything.

Speaking of movies, the most prophetic movie I have ever seen about where America is headed is Idiocracy. It's crude, it's obscene, it's scatological, it's stupid, and it's right where America is headed. In the world of the future, the American president is a professional wrestler. It's hilarious, but don't watch it with your kids. You may even want to ask your wife to leave the room. Shoot, you may want to leave the room yourself.

And, speaking of Idiocracy, the Federal Reserve Open Market Committee issued a statement today. As I expected, in the teeth of all the Wise & Mighty Pundits of the Media, they said nothing about tapering & asserted again their right & intention to keep right on buying bonds till they bust. Markets weren't sure whether to like that or not. Bonds rose a little, stocks fell a little, gold was faked with a cosmetic Comex close but rose in the aftermarket, and pork bellies are still bacon.

It's funny, but the chart for the Dow, the S&P500, & the euro all look the same: sharp uptrend, break in the uptrend by trading sideways through the line, but no downside follow-through. Looks highly unstable, floating there, just waiting to drop. But what do I know? Shoot, I'm crazy as a Betsy bug, even believe that a country can't inflate its way to prosperity and that gravity still works.

Onward to markets. Dow lost 21.05 (0.14%) to 15,499.54. Tried to rise early in the day, plopped down sharply, tried to rise again, but just had no juice or conviction. S&P lost 0.23 (0.1%) to 1,685.73. Other indices rose, so there's confusion in stocks. I reckon those buyers get their feelings hurt when stocks don't make new highs day after day.

Price I report to y'all for the Dow in Gold & Dow in Silver is the Dow close divided by the Comex close. On days when the metals aftermarket is much higher or lower, dividing by the aftermarket rather than the Comex close yields different results. So today if you took those end of the day prices, the Dow in metals would be lower. But let's take the usual method.

Dow in Gold rose 0.75% to 11.81 oz (G$244.14 gold dollars) while the Dow in Silver rose a smidgen, 0.11%, to 790.11 oz. Both have broken down out of triangles & turned down, unless they rise above existing trends.

US Dollar index rose early in the day above 82, anticipating good news from the FOMC Idiocrats, but it was disappointed in the outcome. After the announcement it sank to 81.407, but has since managed to climb back over crucial 81.50 support (& the 200 DMA. If the dollar index closes below that, it will drop to 80.75.

Euro dropped sharply earlier in the day then rose 0.29% from yesterday to end at $1.3302. Days of its rally are numbered. Yen rose 0.17% to 102.17 cents/Y100, trending up.

The paper markets for silver & gold, especially Comex, are so bogus. Silver & gold traded down today before the FOMC, but never with any conviction. Nonetheless the Comex closed gold down $11.60 to $1,312.40 and silver down 4.9 cents to 1961.7 cents.

Why do I say they're bogus? Because now gold is trading at $1,326.75, up from close $2.00 & silver is trading 1993c, up nearly 30 cents from yesterday.

Both metals have their faces pushed up against the downtrend line, and for all silver's lukewarm performance of the last few days, I suspect gold may yet climb this week. It oughtn't surprise anybody but a central banker that after the beaten gold has taken since April that it needs more than one try to punch through stout resistance like $1,325. This is the second try. Maybe this time.

Personally, until gainsaid by the price, I am presuming that the 27 June low was THE low. May be a lot of frustrating backing & filling before us, but the worst lies behind.

On 31 July 1703 Daniel Defoe was confined to the pillory three days on a charge of "seditious libel." Instead of throwing the customary rotten vegetables at him, bystanders pelted him with flowers. In his satirical pamphlet, "Proposals for the Establishment of the Church," he argued (tongue in cheek) that the best course would be to exterminate them. Seditious libel was the charge used by the Crown to stifle dissent, and it only aggravated the offense if what was written was true. Defoe found out the hard way that people in government have their sense of humor surgically removed before taking office. By the way, reading Defoe's Robinson Crusoe in the full original discovers a touching, tender, and movingly pious work.

On 31 July 1901 Abraham Kuyper became premier of the Netherlands. As a Reformed theologian he laid out a concept of sphere sovereignty contrary to the centralizing principle of the age, and was profoundly import in European Christian Democrat politics.

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
31-Jul-13 Price Change % Change
Gold, $/oz 1,312.40 -11.60 -0.88%
Silver, $/oz 19.62 -0.05 -0.25%
Gold/Silver Ratio 66.901 -0.423 -0.63%
Silver/Gold Ratio 0.0149 0.0001 0.63%
Platinum 1,428.40 -8.20 -0.57%
Palladium 725.45 -2.30 -0.32%
S&P 500 1,685.73 -0.23 -0.01%
Dow 15,499.54 -21.05 -0.14%
Dow in GOLD $s 244.14 1.81 0.75%
Dow in GOLD oz 11.81 0.09 0.75%
Dow in SILVER oz 790.11 0.90 0.11%
US Dollar Index 81.66 -0.19 -0.23%
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SPOT GOLD: 1,321.20      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,354.23 1,364.14 1,364.14
1/2 AE 0.50 673.30 695.94 1,391.88
1/4 AE 0.25 336.65 354.58 1,418.31
1/10 AE 0.10 138.62 144.67 1,446.71
Aust. 100 corona 0.98 1,288.57 1,299.57 1,325.82
British sovereign 0.24 312.88 324.88 1,380.10
French 20 franc 0.19 246.67 253.67 1,358.69
Krugerrand 1.00 1,338.38 1,350.38 1,350.38
Maple Leaf 1.00 1,336.20 1,351.20 1,351.20
1/2 Maple Leaf 0.50 759.69 693.63 1,387.26
1/4 Maple Leaf 0.25 336.91 353.42 1,413.68
1/10 Maple Leaf 0.10 140.05 144.01 1,440.11
Mexican 50 peso 1.21 1,584.87 1,595.97 1,323.69
.9999 bar 1.00 1,325.82 1,336.82 1,336.82
SPOT SILVER: 19.77      
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 15,887.30 16,287.30 22.78
US 40% silver 1/2s 0.30 5,640.40 5,790.40 19.63
100 oz .999 bar 100.00 1,987.00 2,052.00 20.52
10 oz .999 bar 10.00 198.70 205.20 20.52
1 oz .999 round 1.00 19.87 20.62 20.62
Am Eagle, 200 oz Min 1.00 21.02 22.77 22.77
SPOT PLATINUM: 1,428.40      
Plat. Platypus 1.00 1,438.40 1,468.40 1,468.40
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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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