The Moneychanger
Daily Commentary
Wednesday, 25 September a.d. 2013 Browse the commentary archive

Y'all aren't flattering & deluding yourselves that somehow the system will muddle through this chronic financial & economic crisis, are y'all? It won't. The unthinkable WILL happen. Only two outcomes are possible, (1) default or (2) hyperinflation. In no other way can the colossal government debt (and all the rest of the debt) be dealt with. The longer you ponder it, the stronger & more ineluctable becomes this conclusion.

If you are deluding yourself that somehow or other the government-banking cartel can make good on its promises to you -- healthcare, social security, cheap loans, unending prosperity, the good life & the American dream -- you are fooling only yourself, & you will bear the eventual consequences.

Y'all ought to start IMMEDIATELY reducing toward zero your dependence on government & the financial system. If you have debt, give your eyes no rest until it is paid off. Cut up & throw away your credit cards. Learn to admire people who wisely drive used cars instead of accepting debt slavery to buy a new car to look good. Kick in your TV set, get to know your own family & neighbors. Spend time with them and ditch you addiction to digital devices & virtual socializing. Plant a garden. Use cash instead of leaving your money with the banks to use as they will to feed off you and destroy society. Most importantly, start building a future that secures your source of revenue & frees it from the banking system. Oh, buy or develop productive assets, and silver & gold, whose value doesn't depend on government or banking.

One way or the other, sooner or later, the system will hit the wall in default or hyperinflation. No other exit. Start building the new economy now.

Meanwhile, the farce continues in Washington, propaganda to keep the public hovering always between hope & despair, off-balanced & confused, while the end is plain from the beginning. Congress will vote to raise the debt ceiling, because congress can do nothing else. Survival of the system -- and their jobs -- depends on more borrowing & spending, so they will. The system must borrow or die and inflate or die, and as Joseph Stalin said, "Ruling classes never leave the stage of history voluntarily."

The drama, however, is unsettling stock & currency markets. US dollar index lost 25.1 basis points (0.32%), a sizeable but not extraordinary move. Dollar index now has a floor of support about 80.30. Puncturing that would flatten the dollars tires & send it lower. Critical is the 79.50 level, beneath which lieth only air.

Euro bounced back today on the dollar's woes. Rose 0.41% to $1.3527, but still looks none too ready to climb.

Yen closed 101.57 cents/Y100, up 0.29%. Yen managed to close above its 50 DMA (101.41) today, and the short term downtrend line, but who can picture that the Japanese Nice Government Men who have so diligently wrecked the yen these long months would now let it climb? Unlikely.

The congressional fiasco continues to sap stock market morale. S&P500 & Dow fell for the fifth straight day. Dow closed below its 50 DMA. No change peeking out here.

Dow in gold dropped 1.88% today to 11.433 oz (G$236.34 gold dollars). Dow in silver fell below 700 oz, down 12.56 oz (1.76%0 to 699.39 oz.

Gold rose sharply today & felt like it was dragging silver with it. I say that because the Gold-Silver ratio actually rose from 61.098 to 61.173 today.

Gold popped up $19.09 (1.5%) to $1,335.90, taking it through a band of resistance that stretches from $1,325 to $1,332. Today also positions gold to cross above its 50 DMA (now 1,344.90) tomorrow, or, better yet, $1,350 resistance.

None of this availeth much, however, unless gold jumps through the last high at $1,375.40, then follows through by conquering the August high at $1,434.00.

So far, gold is confirming my suspicions that it has a secret intention not to drop further. That would change if gold traded below $1,305.

Silver jumped 29.9 cents (1.4%) to close at 2183.8 cents on Comex. This is encouraging, this is snappy, this takes silver above its 50 DMA (2181c), but this was not a close above 2200c, or the last high at 2344c. Silver must show us more power.

On the other hand, though, it held nicely above 2130c, and has formed an embryonic uptrend. One strong day would attract buyers like free beer attracts moochers.

One last news tidbit to put a smile on your faces. The government's Alcohol, Tobacco, & Firearms (ATF) agents, acting without authorization, ran dozens of undercover investigations into illegal tobacco sales, misused $162 million in profits from the sting operations, and "lost track" of at least 420 MILLION cigarettes. Out of $15 million they got for cigarettes, they turned over $4.9 million to a confidential informant. Best of all, it was all off the books, secret, and they used to proceeds to pay for ATF's costs. Well, that's what they say, but those big piles of cash would present a mighty temptation to reach in and take a handful for yourself, now wouldn't they?

Can anybody spell R-O-G-U-E agency?

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
25-Sep-13 Price Change % Change
Gold, $/oz 1,335.90 19.90 1.51%
Silver, $/oz 21.84 0.30 1.39%
Gold/Silver Ratio 61.173 0.075 0.12%
Silver/Gold Ratio 0.0163 -0.0000 -0.12%
Platinum 1,428.80 10.00 0.70%
Palladium 724.20 5.85 0.81%
S&P 500 1,692.77 -4.65 -0.27%
Dow 15,273.26 -61.33 -0.40%
Dow in GOLD $s 236.34 -4.54 -1.88%
Dow in GOLD oz 11.43 -0.22 -1.88%
Dow in SILVER oz 699.39 -12.56 -1.76%
US Dollar Index 80.34 -0.25 -0.31%
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: 1,332.70      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,364.68 1,376.01 1,376.01
1/2 AE 0.50 679.17 702.00 1,404.00
1/4 AE 0.25 339.58 357.66 1,430.65
1/10 AE 0.10 139.83 145.93 1,459.31
Aust. 100 corona 0.98 1,299.78 1,309.78 1,336.24
British sovereign 0.24 315.60 327.60 1,391.67
French 20 franc 0.19 248.82 255.82 1,370.19
Krugerrand 1.00 1,351.36 1,362.36 1,362.36
Maple Leaf 1.00 1,347.70 1,362.70 1,362.70
1/2 Maple Leaf 0.50 766.30 699.67 1,399.34
1/4 Maple Leaf 0.25 339.84 356.50 1,425.99
1/10 Maple Leaf 0.10 141.27 145.26 1,452.64
Mexican 50 peso 1.21 1,595.46 1,609.84 1,335.19
.9999 bar 1.00 1,337.36 1,348.36 1,348.36
SPOT SILVER: 21.76      
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 16,198.33 16,448.33 23.00
US 40% silver 1/2s 0.30 6,225.98 6,375.98 21.61
100 oz .999 bar 100.00 2,165.50 2,245.50 22.46
10 oz .999 bar 10.00 222.55 223.55 22.36
1 oz .999 round 1.00 21.86 22.66 22.66
Am Eagle, 200 oz Min 1.00 23.01 24.56 24.56
SPOT PLATINUM: 1,428.80      
Plat. Platypus 1.00 1,453.80 1,493.80 1,493.80
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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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