The Moneychanger
Daily Commentary
Monday, 12 August a.d. 2013 Browse the commentary archive

Years ago I read a book called conceptual blockbusting. People think in conceptual pigeonholes that blind them to ideas for which they have no pigeonholes. Worse yet, self-deception kicks in if the idea threatens the whole framework of pigeonholes.

That's one reason the mainstream investment community & Wall Street hate gold and silver. The rational for investing in them begins with confessing that the financial & monetary system is unstable, an idea so inconceivable, so threatening to their livelihood & way of life that they suppress it -- simply refuse to face it as a possibility.

Hence, they don't get it. And you can't explain it to them. Lots of folks are that way -- NO WAY the dollar might ever lose its reserve status, much less evaporate. Only if you suppress all the facts, specifically the chronic insolvency of the yankee government & its suicide pack with too-big-to-fail banks and corporations, can you keep on believing that.

Anyhow, they're about to miss it again, as silver & gold's long correction appears to have ended. (Remember, everything I say is always conditioned on NOT being gainsaid by later price movements.) Large & small speculators have large short positions, commercial interests small ones -- dumb money short, smart money long. About the time gold crosses above, oh, $1,350 the short covering panic will start, & really kick into high gear about $1,425. Nothing drives a rally like a short covering panic, because panicked shorts will buy at any price to cover their position & stop the bleeding.

But mercy! What do I know, me, no more'n a natural born fool from Tennessee? Why, I still believe in gravity. Honesty, even.

Silver today pole-vaulted 93.4 cents (4.5%) to close Comex at 2133.3c. Whew! Gold leapt $21.80 (1.7%) to $1,334.70. I mentioned Friday gold was liable to pop fast once it got through $1,325, but it didn't even need that. It gapped up today. Low was $1,324.81 against Friday's $1,313.10 high. I also noted that silver could zip like a roadrunner, and zip it did.

Get your bearings. Silver gapped up today ABOVE the 50 DMA (2029c), ABOVE the May downtrend line. right at 2133 resistance. Rallies start this way. More: strong rallies start with silver leading the way. Whoa. I forgot to mention silver also cleared its July high.

Gold today broke clean above the 50 & 20 DMAs (1312.51 & 1311.95) and above the May downtrend line. Only tiny cloud on this horizon is that gold has not yet cleared the $1,350 resistance. Once it does that, 'twill jump $75 right fast.

Stocks eroded sideways to lower. Dow lost 5.83 to 15,419.68 & S&P500 lost 1.95 to 1,689.47.

Yea, but look at the Dow measured in silver & gold, O, behold! Only thing worse than having to listen to somebody say "I told you so" is having to listen to me saying, "I told y'all so." Resist I cannot.

Dow in gold dropped 1.67% to 11.553 (G$238.82 gold dollars), below the 20 & the 50 DMA (11.84 & 11.65oz).

The Dow in silver plumb pulled the plug today. Closed down 4.41%, 33.38 oz. lower at 722.81 oz. Sliced through the 50 DMA at 755. 12 day rate of change at -6.26% is reaching for a new low. The rout waxeth general.

US dollar index rose 9.9 basis points (0.13%) to 81.343. In danger of falling to 79.5. Only thing that looks puking sicker today is the euro, down 0.31%, gapped down indeed, leaving what might be an island reversal behind. Bowing to gravity at $1.3302. Yen lost 0.61% to 103.3 cents/Y100. Rallying probably, but I wouldn't buy that nasty thing. It'll bite ya.

On 12 August 1863 Confederate guerrilla William Quantrill's Raiders attacked & sacked Lawrence, Kansas revenging hundreds of raids and murders by unionist Redlegs into Southern sympathizing Missouri. One of the best movies made about the War and certainly the fairest about the war in Missouri is Ang Lee's movie Ride with the Devil. Six counties in Missouri under the wartime unionist governor were subject to the first ethnic cleansing in America (after the Indians).

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-Aug-13 Price Change % Change
Gold, $/oz 1,334.70 21.80 1.66%
Silver, $/oz 21.33 0.93 4.58%
Gold/Silver Ratio 62.565 -1.796 -2.79%
Silver/Gold Ratio 0.0160 0.0004 2.87%
Platinum 1,499.70 -1.90 -0.13%
Palladium 740.10 -3.40 -0.46%
S&P 500 1,689.47 -1.95 -0.12%
Dow 15,419.68 -5.85 -0.04%
Dow in GOLD $s 238.82 -4.06 -1.67%
Dow in GOLD oz 11.55 -0.20 -1.67%
Dow in SILVER oz 722.81 -33.38 -4.41%
US Dollar Index 81.34 0.10 0.12%
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: 1,335.80      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,366.52 1,379.21 1,379.21
1/2 AE 0.50 680.75 703.63 1,407.27
1/4 AE 0.25 340.37 358.50 1,433.98
1/10 AE 0.10 140.15 146.27 1,462.70
Aust. 100 corona 0.98 1,302.80 1,313.80 1,340.34
British sovereign 0.24 316.33 328.33 1,394.79
French 20 franc 0.19 249.39 256.39 1,373.29
Krugerrand 1.00 1,353.17 1,365.17 1,365.17
Maple Leaf 1.00 1,350.80 1,365.80 1,365.80
1/2 Maple Leaf 0.50 768.09 701.30 1,402.59
1/4 Maple Leaf 0.25 340.63 357.33 1,429.31
1/10 Maple Leaf 0.10 141.59 145.60 1,456.02
Mexican 50 peso 1.21 1,599.17 1,613.57 1,338.29
.9999 bar 1.00 1,340.48 1,351.48 1,351.48
SPOT SILVER: 21.38      
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 16,963.38 17,313.38 24.21
US 40% silver 1/2s 0.30 6,113.88 6,263.88 21.23
100 oz .999 bar 100.00 2,147.50 2,212.50 22.13
10 oz .999 bar 10.00 214.75 221.25 22.13
1 oz .999 round 1.00 21.48 22.23 22.23
Am Eagle, 200 oz Min 1.00 22.63 24.38 24.38
SPOT PLATINUM: 1,499.70      
Plat. Platypus 1.00 1,509.70 1,539.70 1,539.70
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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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