The Moneychanger
Daily Commentary
Monday, 30 September a.d. 2013 Browse the commentary archive

Y'all ask yourself this, as rational folks: Why should a government shutdown send down the stock market? Answer: Federal government spending provides more than 30% of the income in the country. Put another way, Federal government spending plus state & local government spending provide over 50% of the income in America (GDP). If I'm lying, I'm dying.

America really has no economy -- the government IS the economy. Or, only half the people in the country produce something for a living. The other half consume the taxes the others pay, plus all the money the federal government borrows into existence.

Of course, the yankee government will never pay all that debt. They cannot, just as they cannot stop spending, so the debt WILL be repudiated, either by default or by hyperinflation.

But the truth of that obvious conclusion runs so contrary to accepted wisdom -- "what everybody knows" -- that only very few can hear and accept it. People believe what they want to believe.

Stocks took a body blow today from the debt ceiling drama. Dow lost 128.57 (0.84%) to end at 15,129,67. MACD has crossed over & turned down, & the Dow has fallen way below its 50 DMA (15,280) and 20 DMA (15,269.84). RSI points down. Histogram has fallen below zero.

S&P500 wasn't much better. Lost 10.2 (0.6%) to 1,681.55, & it carries all the Dow's same negatives except it hasn't closed below its 50 DMA (1680).

At the end of the Day the Dow in Gold was slightly down, flat really, while the Dow in silver was lower by 0.26% at 698.64 oz. Still below 700 oz.

Ongoing downtrend in Dow in Gold & Dow in Silver argues that gold and silver are about to spend a long time gaining value on stocks, whether stocks rise again or not.

Currencies changed little today. US dollar index, that old charlatan, dropped 6.6 basis points (0.08%) while the Yen & Euro barely moved. Maybe all the Nice Government Men are working around the globe to manipulate currency stability. Maybe they're afraid that the sinking dollar might mess up their party & cost them their cushy jobs.

Same old pendulum swung in gold & silver today, in the same old trading range. Gold lost 11.90 & ended Comex at $1,326.50. Silver gave up 12.7 cents to end at 2165.6c.

The daily highs are getting higher, & the lows higher, so there's an uptrend from the September low. Gold's 20 and 50 DMAs ($1,348.53 & $1,347.62) are nearly crossing, the 20 below the 50, which is not good, but the MACD is about to climb above zero. 12 day rate of change just turned positive but the 21 day remains negative.

Like gold, silver has established a little uptrend, but capped just above 2200c. All other indicators speak as gold's.

For right now, silver & gold are just holding on, & nothing suggests they are about to rally. Gold can't pierce $1,340 and silver can't jump over 2200c. Debt ceiling mess is probably hurting metals nearly as much as stocks.

Of course, it will end positively for metals. After the puffing, blowing, & posturing, congress WILL raise the debt ceiling. They can't cut spending, & their little mouse-burp cuts amount to nothing. Wherefore, the Federal Reserve/federal government partnership will continue to inflate the dollar, depreciating it, and driving silver & gold higher & higher.

But when there's a big price drop like April's, people's fear drives all this out of their minds. Markets are not rational.

On 30 September 1946 22 Nazi leaders were found guilty of war crimes at Nuremberg. One thing that still smells of mackerel in the so-called collapse of the East Bloc & communism is that no tyrants were tried, & except for Ceausescu & his wife in Rumania, none executed. In fact the communists just seamlessly melded into the new governments. Maybe Anatoliy Golitsyn was right, maybe it was all a strategic deception. With all the revelations about the NSA & government torture, etc., maybe we need some trials right here. Problem is, our communists all get away with their crimes, too. There's one law for you and me, and another for the Mighty Ones in government. We just don't understand.

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
30-Sep-13 Price Change % Change
Gold, $/oz 1,326.50 -11.90 -0.89%
Silver, $/oz 21.66 -0.13 -0.58%
Gold/Silver Ratio 61.253 -0.189 -0.31%
Silver/Gold Ratio 0.0163 0.0001 0.31%
Platinum 1,408.10 -6.80 -0.48%
Palladium 726.15 -4.65 -0.64%
S&P 500 1,681.55 -10.20 -0.60%
Dow 15,129.67 -128.57 -0.84%
Dow in GOLD $s 235.78 0.11 0.05%
Dow in GOLD oz 11.41 0.01 0.05%
Dow in SILVER oz 698.64 -1.83 -0.26%
US Dollar Index 80.22 -0.07 -0.08%
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: 1,327.70      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,359.56 1,370.85 1,370.85
1/2 AE 0.50 676.62 699.37 1,398.73
1/4 AE 0.25 338.31 356.32 1,425.29
1/10 AE 0.10 139.30 145.38 1,453.83
Aust. 100 corona 0.98 1,294.90 1,304.90 1,331.26
British sovereign 0.24 314.42 326.42 1,386.64
French 20 franc 0.19 247.88 254.88 1,365.19
Krugerrand 1.00 1,346.29 1,357.29 1,357.29
Maple Leaf 1.00 1,342.70 1,357.70 1,357.70
1/2 Maple Leaf 0.50 763.43 697.04 1,394.09
1/4 Maple Leaf 0.25 338.56 355.16 1,420.64
1/10 Maple Leaf 0.10 140.74 144.72 1,447.19
Mexican 50 peso 1.21 1,589.47 1,603.81 1,330.19
.9999 bar 1.00 1,332.35 1,343.35 1,343.35
SPOT SILVER: 21.64      
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 16,080.35 16,330.35 22.84
US 40% silver 1/2s 0.30 6,192.05 6,342.05 21.50
100 oz .999 bar 100.00 2,154.00 2,234.00 22.34
10 oz .999 bar 10.00 221.40 222.40 22.24
1 oz .999 round 1.00 21.74 22.54 22.54
Am Eagle, 200 oz Min 1.00 22.89 24.44 24.44
SPOT PLATINUM: 1,408.10      
Plat. Platypus 1.00 1,433.10 1,473.10 1,473.10
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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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