The Moneychanger
Daily Commentary
Monday, 16 September a.d. 2013 Browse the commentary archive

The lore of the sailor sayeth that whenever rats stream off a ship in port, they are signaling that once it leaves port, that ship won't come back. Rats, you see, have a sixth sense that warns them of forthcoming events.

Speaking of rats, Larry Summers announced today that he would not accept appointment as the Chairman of the Federal Reserve. What do y'all think that Larry, in the opinion of many as big a rat as ever scoured a dumpster for dainties, knows that the other rats don't?

And don't ever forget this other ancient seaman's proverb: "A nation without a central bank is like a fish without a bicycle."

On the news that Larry cared not to climb aboard the sinking ship of state, the stock market went loony. Twas widely (not wisely, but widely) assumed that Larry (engineer of the "strong dollar policy" and probably of the gold price suppression scheme) would not create new dollars so generously & hectically as Ben. Never mind for the nonce, you rationalist, that no nation ever has or ever will printed its way to prosperity, that appears to be what stock markets believe. So removing Larry and making Janet Yellen (where do they get people with these goofy names?) the confirmed money-printress Fed chairman must mean Happy Days Are Here Again. Dow rose 118.72 to 15,494.78 (up 0.77%) & the S&P500 rose 9.61 (0.57%) to 1,697.60.

Yea, even the vigilantes of the bond market were fooled. Ten year treasury yield dropped 0.83% to 2.874% (bond prices rose). Maybe somebody can tell me one day (I am such a durned natural born fool from Tennessee that I am not smart enough to grasp it) how the prospect of printing MORE dollars makes holding bonds more attractive, since they are only promises to pay future dollars, now guaranteed to be worth ever less than today.

I'm tellin' y'all, them boys in Warshingtun done figured out a perpetchul moshun mo-sheen. They can fix anything and guarantee prosperity forever by just cranking up the press & printin' more money.

Personally I'm a-thinkin' this is about as good as it gets for stocks, but what do I know?

US dollar rose (that's right, rose) 18.7 basis points (0.24%) to 81.26. However, the yen & euro also rose. I reckon this IS the best of all possible worlds, where everybody's prosperous, the government is always right, and even central bankers are loved.

Silver & gold also rose today. Silver gained 29.3 cents to 2196.3 and gold added $9.50 to $1,317.90, bouncing off the same low as Fridays, $1,307 & change.

If I've drawn the neckline for gold's upside-down head and shoulders correctly, then that $1,307 is about where it sits. That makes the last two week's action nothing more than a touch back for a kiss good-bye Course that'll all blow up like your daddy when he found that package of Lucky Strikes in your 12-year old back pocket if gold drops below $1,300, but the market will tell us.

If the neckline of silver's upside-down H&S runs about 2500c, then the top of the shoulders runs about 2190 - 2200c. Accurate or note, 2140c marked the low on Friday, so a close below that, which coincides with the 50 DMA at 2146c, would take silver lower.

I certainly don't dismiss the possibility of a drop much lower, but right now both metals are playing around their 50 DMA (yes, gold is lower). Everybody is expecting lower silver & gold prices, but markets have a way of fooling folks.

Maybe silver & gold know the same thing Larry Summers knows.

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
16-Sep-13 Price Change % Change
Gold, $/oz 1,317.90 9.50 0.73%
Silver, $/oz 21.96 0.29 1.35%
Gold/Silver Ratio 60.005 -0.373 -0.62%
Silver/Gold Ratio 0.0167 0.0001 0.62%
Platinum 1,440.60 -3.00 -0.21%
Palladium 704.30 6.80 0.97%
S&P 500 1,697.60 9.61 0.57%
Dow 15,494.78 118.72 0.77%
Dow in GOLD $s 243.04 0.11 0.05%
Dow in GOLD oz 11.76 0.01 0.05%
Dow in SILVER oz 705.49 -4.06 -0.57%
US Dollar Index 81.26 0.19 0.23%
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: 1,309.50      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,342.24 1,352.06 1,352.06
1/2 AE 0.50 667.34 689.78 1,379.56
1/4 AE 0.25 333.67 351.44 1,405.75
1/10 AE 0.10 137.39 143.39 1,433.90
Aust. 100 corona 0.98 1,277.15 1,287.15 1,313.15
British sovereign 0.24 310.11 322.11 1,368.33
French 20 franc 0.19 244.48 251.48 1,346.99
Krugerrand 1.00 1,325.21 1,336.21 1,336.21
Maple Leaf 1.00 1,324.50 1,339.50 1,339.50
1/2 Maple Leaf 0.50 752.96 687.49 1,374.98
1/4 Maple Leaf 0.25 333.92 350.29 1,401.17
1/10 Maple Leaf 0.10 138.81 142.74 1,427.36
Mexican 50 peso 1.21 1,567.68 1,581.86 1,311.99
.9999 bar 1.00 1,314.08 1,325.08 1,325.08
SPOT SILVER: 21.75      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 26.00 29.00 37.91
VG+ Peace dollar 0.77 24.00 27.00 35.29
90% silver coin bags 0.72 16,226.93 16,651.93 23.29
US 40% silver 1/2s 0.30 6,223.03 6,373.03 21.60
100 oz .999 bar 100.00 2,164.50 2,244.50 22.45
10 oz .999 bar 10.00 222.45 223.45 22.35
1 oz .999 round 1.00 21.85 22.65 22.65
Am Eagle, 200 oz Min 1.00 23.00 24.55 24.55
SPOT PLATINUM: 1,440.60      
Plat. Platypus 1.00 1,465.60 1,505.60 1,505.60
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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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