The Moneychanger
Daily Commentary
Thursday, 22 August a.d. 2013 Browse the commentary archive

It was a scene out of Atlas Shrugged. Nasdaq exchange computers were shut down for nearly three hours. Didn't work. Closed. A $48 billion a day market, shut down, after similar problems with Goldman Sachs options orders flooding the market on Tuesday.

Maybe nobody is in charge. Maybe it's too big to work any longer. Maybe nobody knows what needs to be done. Ahh, you can't run civilizations this way, at least, not for long.

Notwithstanding Nasdaq's problems, stock indices climbed today. Dow roused itself to step up 66.19 (0.44%) to 14,963.74 while the S&P500 added 14.16 (0.86%) to close at 1,656.96. As Queen Victoria might quip, "We are not impressed." S&P500 did manage to touch, but not close above, its 50 DMA (1,658.87). Looks healthy & fit as a leper colony.

Dow in gold rose a smidge today, 0.4%, altogether nothing on the scales, to 10.913 oz (G$225.59). Dow in silver rose 0.13% (0.85 oz) to close 649.75 oz. No sign of turning up.

US dollar index rose 10.1 basis points (0.13%) to 81.478, trying to edge toward the 200 day moving average above at 81.63. MIGHT have turned around.

Meanwhile the euro narrowly missed the second half of a key reversal by closing today at $1.3356, versus yesterday's $1.3354. Still stinks. Yen tumbled & stumbled, down 1.08% at 101.27 cents/Y100. About to break down out of its major trading channel.

CANARY IN THE MINE: US 10 year treasury yield rose again today, now at 2.901, highest level in two years and determined to go higher. Bernanke's strategy, if a sane person can call it that, pivots on that Zero Interest Rate Policy, which now blows in tatters. Market is re-asserting its control over interest rates, & it's saying, "I don't like dollars unless they pay me more interest." Poor Ben. You could feel sorry for him if he weren't a central banker and cosmically disqualified from pity.

Gold rose 60 cents to $1,371.20 and silver climbed 7.2 cents to 2303c. Higher prices in the aftermarket, $1,376.50 and 2313.5c argue this was not the whole story. Gold is the laggard here. It needs to push through $1,380 and march on.

'Tis comforting at least that both metals show resilience when they dip, and spring right back. As long as gold remains above $1,360 and silver above 2250c they'll be fine and keep on rising.

On 22 August 1642 Civil war began in England when Charles I ("the Not-So-Bright") raised his standard at Nottingham against Parliament. Charles was a man profoundly out of touch with the temper of his time. He paid for it with his head.

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
22-Aug-13 Price Change % Change
Gold, $/oz 1,371.20 0.60 0.04%
Silver, $/oz 23.03 0.07 0.31%
Gold/Silver Ratio 59.540 -0.161 -0.27%
Silver/Gold Ratio 0.0168 0.0000 0.27%
Platinum 1,539.20 21.00 1.38%
Palladium 754.35 8.35 1.12%
S&P 500 1,656.96 14.16 0.86%
Dow 14,963.74 66.19 0.44%
Dow in GOLD $s 225.59 0.90 0.40%
Dow in GOLD oz 10.91 0.04 0.40%
Dow in SILVER oz 649.75 0.85 0.13%
US Dollar Index 81.48 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: 1,376.50      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,409.54 1,421.24 1,421.24
1/2 AE 0.50 701.51 725.07 1,450.14
1/4 AE 0.25 350.75 369.42 1,477.67
1/10 AE 0.10 144.43 150.73 1,507.27
Aust. 100 corona 0.98 1,342.50 1,353.50 1,380.84
British sovereign 0.24 325.97 337.97 1,435.74
French 20 franc 0.19 256.99 263.99 1,413.99
Krugerrand 1.00 1,391.64 1,403.64 1,403.64
Maple Leaf 1.00 1,391.50 1,406.50 1,406.50
1/2 Maple Leaf 0.50 791.49 722.66 1,445.33
1/4 Maple Leaf 0.25 351.01 368.21 1,472.86
1/10 Maple Leaf 0.10 145.91 150.04 1,500.39
Mexican 50 peso 1.21 1,644.57 1,657.57 1,374.78
.9999 bar 1.00 1,381.32 1,392.32 1,392.32
SPOT SILVER: 23.14      
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 17,721.28 18,071.28 25.27
US 40% silver 1/2s 0.30 6,633.08 6,783.08 22.99
100 oz .999 bar 100.00 2,323.50 2,388.50 23.89
10 oz .999 bar 10.00 232.35 238.85 23.89
1 oz .999 round 1.00 23.24 23.99 23.99
Am Eagle, 200 oz Min 1.00 24.39 26.14 26.14
SPOT PLATINUM: 1,539.20      
Plat. Platypus 1.00 1,549.20 1,579.20 1,579.20
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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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