The Moneychanger
Weekly Commentary
Friday, 27 September a.d. 2013 Browse the commentary archive
Here's the weekly scorecard:
  20-Sep-13 27-Sep-13 Change % Change
Silver, cents/oz. 2,187.60 2,178.30 -9.30 -0.4
Gold, dollars/oz. 1,332.50 1,338.40 5.90 0.4
Gold/silver ratio 60.912 61.442 0.530 0.9
Silver/gold ratio 0.0164 0.0163 -0.0001 -0.9
Dow in Gold Dollars (DIG$) 239.70 235.67 -4.04 -1.7
Dow in gold ounces 11.60 11.40 -0.20 -1.7
Dow in Silver ounces 706.30 700.47 -5.84 -0.8
Dow Industrials 15,451.09 15,258.24 -192.85 -1.2
S&P500 1,709.91 1,691.75 -18.16 -1.1
US dollar index 80.45 80.27 -0.19 -0.2
Platinum 1,432.10 1,414.90 -17.20 -1.2
Palladium 720.30 730.80 10.50 1.5

'Twas a week depressed by the silly debt-ceiling drama in Washington. That's hurting stocks more than metals, but not doing them any good either. Markets hate uncertainty. Silver & gold were roughly flat for the week, stocks dropped a bit over 1%, white metals were mixed, and the US dollar index is struggling to maintain respectability. How can I wax witty describing running in place?

STOCKS. Stocks wrecked today any chance they were forming a falling wedge. Dow lost another 70.06 points (0.46%) & ended at 15,258.24, crashing into its 50 DMA (15,288) and 20 DMA (15,254). Since it did not or has not yet bounced off those moving averages, it's signaling more downward momentum. Relative Strength Index is equivocal but headed down, while the MACD today made a downward crossover. S&P500 doesn't look quite as puking sick as the Dow, but is only hovering above its 50 & 20 DMAs (1680.18 & 1684.74). S&P500 lost 6.92 (0.41%), closing at 1,691.75.

Dow in Gold & Dow in Silver are both trying to roll over for another downleg. Dow in gold lost 1.5% today to end at 11.400 oz, but that's down 1.7% on the week. The DiG's 20 DMA is climbing to meet the falling 50 DMA very soon (11.29 to 11.36), and the DiG stands barely above the 50, 11.40 oz vs. 11.36.

Dow in silver closed down 0.7% today at 700.47 oz, down 0.8% for the week. It stands below its 50 DMA, now 702.31. 20 DMA awaits at 675.09.

Both indicators remain in a downtrend from the June 27 highs, i.e., lows in gold & silver.

CURRENCIES. I believe I'd go ahead & shoot myself & put me out of my misery if my job were managing the US dollar. US dollar index today waffled to the bottom of the little range it has established in the last 8 days. Closed at 80.266, down 26.6 basis points or 0.34%. It has already fallen through support from its bottom channel line from the May 2011 low. If the punier support at 79.50 gives way, the dollar index will spread its wings and fly like a bowling ball.

Dollar weakness left both the competing scrofulous, nasty fiat currencies feeling pretty perky. Euro rose 0.26% to $1.3521, but still appears loath to pull away from $1.35 support & rise. Trend, though, remains up.

Yen gained 0.71% today to 101.77 cents/Y100. It gapped up, even above its 50 DMA, yet still has not undone the damage from its 1 September fall thru support.

METALS. Y'all know that when your car gets stuck in a mudhole, if you gun it you can rock it back & forth, but you're also burning up tire tread. Is it worth it? Silver & gold are burning up buyers to little purpose trading between $1,322 & $1,340l and 2200c and 2130c.

Today gold popped up $14.80 to close at $1,338.40. Silver gained 6.3 cents (be still, my beating heart!) to 2178.3c.

Both metals have formed small uptrends off the 18 September lows. Gold today nearly touched its 50 DMA (1,347.03) with its $1,345.20 high, but didn't. It did, however, obliterate the possibility that Wednesday & Thursday had posted a downward island reversal. Thus gold remains firmly in limbo, trapped in a trading range, $1,315 - $1,345.

On the weekly chart gold must close above $1,434 to break through the downtrend line from the 2011 high. More than that, it needs to clear $1,550, the April breakdown, to prove it has ended its long correction.

Silver's weekly chart says it must cross 2250c to beat that 2011-downtrend line, and 2512 (last high) to gain any attention. Then it needs to climb above 2750c, the April breakdown.

Silver & gold didn't arrive in this hole fast, & it looks like they won't climb out too fast, either. Be patient: all the forces of nature, politics, central banking, inflation, stupid human greed, corrupt crony capitalism, and a corrupt populace, half of whom depend on government spending for their income, are all on gold & silver's side. Until gainsaid by lower prices breaking the present short term uptrends, I will continue to assume that the 2011-2013 silver & gold correction bottomed on 27 June 2013.

On 27 September 1964 the Warren Commission issued a report concluding that Lee Harvey Oswald acted alone in assassinating President Kennedy, & promptly sealed all the records for 50 years just to prove its conclusion. Res ipse loquitur.

Y'all enjoy your weekend!

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
27-Sep-13 Price Change % Change
Gold, $/oz 1,338.40 14.80 1.1
Silver, $/oz 21.78 0.06 0.3
Gold/Silver Ratio 61.442 0.678 1.1
Silver/Gold Ratio 0.0163 0.0000 0.3
Platinum 1,414.90 4.20 0.3
Palladium 730.80 8.35 1.2
S&P 500 1,691.75 -6.92 -0.4
Dow 15,258.24 -70.06 -0.5
Dow in GOLD $s 235.67 -3.70 -1.5
Dow in GOLD oz 11.40 -0.18 -1.5
Dow in SILVER oz 700.47 -5.26 -0.7
US Dollar Index 80.27 -0.27 -0.3
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SPOT GOLD: 1,335.75      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,367.81 1,379.16 1,379.16
1/2 AE 0.50 680.72 703.61 1,407.21
1/4 AE 0.25 340.36 358.48 1,433.93
1/10 AE 0.10 140.15 146.26 1,462.65
Aust. 100 corona 0.98 1,302.76 1,312.76 1,339.27
British sovereign 0.24 316.32 328.32 1,394.74
French 20 franc 0.19 249.38 256.38 1,373.24
Krugerrand 1.00 1,354.45 1,365.45 1,365.45
Maple Leaf 1.00 1,350.75 1,365.75 1,365.75
1/2 Maple Leaf 0.50 768.06 701.27 1,402.54
1/4 Maple Leaf 0.25 340.62 357.31 1,429.25
1/10 Maple Leaf 0.10 141.59 145.60 1,455.97
Mexican 50 peso 1.21 1,599.11 1,613.51 1,338.24
.9999 bar 1.00 1,340.43 1,351.43 1,351.43
SPOT SILVER: 21.80      
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 16,230.50 16,480.50 23.05
US 40% silver 1/2s 0.30 6,239.25 6,389.25 21.66
100 oz .999 bar 100.00 2,170.00 2,250.00 22.50
10 oz .999 bar 10.00 223.00 224.00 22.40
1 oz .999 round 1.00 21.90 22.70 22.70
Am Eagle, 200 oz Min 1.00 23.05 24.60 24.60
SPOT PLATINUM: 1,414.90      
Platinum Platypus 1.00 1,439.90 1,479.90 1,479.90
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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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