The Moneychanger
Daily Commentary
Tuesday, 15 October a.d. 2013 Browse the commentary archive

For y'all who still believe I am a raving lunatic, something instructive happened this past weekend. A glitch in the yankee government's food stamp computer (food stamps are no longer stamps, but cards like debit cards called EBT) gave buyers unlimited credit. While the glitch lasted, EBT shoppers in Louisiana went wild, stripping the Wal-Mart shelves & charging the goods to their EBT cards. When after two hours the glitch was fixed, those who had not yet checked out with their loot just abandoned full baskets in line and walked away.

Now ask yourself: what if the situation had been less calm? What if the EBT cards no longer worked at all? The incident witnesses that the veneer of civilization in the US is razor thin, liable to crack under any pressure.

With no pleasure but with sharp grief I point this out, just as I keep pointing to the certainty that the government will default, either outright or by inflation. Y'all have two choices: Shake your head, stifle the evidence, & say that will never happen here, or look the facts in the eyes and take appropriate protective action.

Stocks took a bad turn today. Having yesterday & the day before pierced their 20 & 50 day moving averages, their upward momentum ought to have waxed stronger. Instead, it disappeared today. S&P500 merely fell back to its 20 DMA, but the Dow fell through its 50 & 20 DMAs.

The entire stock market advance since last November has been puffed up by clouds of newly created money -- Quantitative Easing. That has spawned a false & unsustainable rally. It could drag on into next year, but when it collapses, 'twill be sudden.

Dow in gold & Dow in silver both turned down today, but remain above their 20 & 50 DMAs. Momentum remains upward.

In the teeth of a higher US dollar index (up 0.2% or 17.6 basis points to 80,.435) gold held on and by Comex close had lost only $3.40 to $1,273.00. Silver lost 16.4 cents to 2114.6. But what catches the eye is the aftermarket where gold is nearly ten bucks higher at $1,281.70 & silver 20 cents higher at 2135c.

I know it sounds like a cheap answer, but all the same I have to suspect the NGM are working overtime to suppress silver & gold. Let that go, though. Both are pointing down, and if they break those levels I mentioned yesterday, $1,272 & 2090 cents, they'll tumble sharply for one last leg down. Odd, if they are as weak as all the pointy-toed Wall Street experts claim, that they haven't broken down before now. But what do I know?

I've been bloodied before by these seasons of low prices & corrections, so I know that all a man can do is wait. None of the causes have changed, so the outcome will be silver & gold at WAY higher prices.

Thanks be to God, my son Justin & his wife Ellen were blessed with a baby today, Henry. Please pray for her rapid recovery.

On 15 October 1863 the Confederate submarine H.L. Hunley sank during a practice drive in Charleston Harbor, drowning it inventory with seven crew members. The Hunley was raised and later succeeded on 17 February 1864 in sinking a US blockade ship Housatonic, but sank itself. Located in 1995, the Hunley was raised in 2000 and now is on display in Charleston, another monument to Southern ingenuity.

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
15-Oct-13 Price Change % Change
Gold, $/oz 1,273.00 -3.40 -0.27%
Silver, $/oz 21.15 -0.16 -0.77%
Gold/Silver Ratio 60.201 0.304 0.51%
Silver/Gold Ratio 0.0166 -0.0001 -0.50%
Platinum 1,380.40 -0.20 -0.01%
Palladium 705.30 -8.95 -1.25%
S&P 500 1,698.06 -12.08 -0.71%
Dow 15,168.01 -133.25 -0.87%
Dow in GOLD $s 246.31 -1.50 -0.61%
Dow in GOLD oz 11.92 -0.07 -0.61%
Dow in SILVER oz 717.30 -0.73 -0.10%
US Dollar Index 80.44 0.18 0.22%
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: 1,281.70      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,316.31 1,323.36 1,323.36
1/2 AE 0.50 653.16 675.14 1,350.27
1/4 AE 0.25 326.58 343.98 1,375.90
1/10 AE 0.10 134.47 140.35 1,403.46
Aust. 100 corona 0.98 1,250.04 1,260.04 1,285.49
British sovereign 0.24 303.52 315.52 1,340.37
French 20 franc 0.19 239.29 246.29 1,319.19
Krugerrand 1.00 1,306.69 1,317.69 1,317.69
Maple Leaf 1.00 1,296.70 1,311.70 1,311.70
1/2 Maple Leaf 0.50 736.98 672.89 1,345.79
1/4 Maple Leaf 0.25 326.83 342.85 1,371.42
1/10 Maple Leaf 0.10 135.86 139.71 1,397.05
Mexican 50 peso 1.21 1,537.49 1,548.35 1,284.19
.9999 bar 1.00 1,286.19 1,297.19 1,297.19
SPOT SILVER: 21.35      
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 15,944.50 16,194.50 22.65
US 40% silver 1/2s 0.30 6,106.50 6,256.50 21.21
100 oz .999 bar 100.00 2,125.00 2,205.00 22.05
10 oz .999 bar 10.00 218.50 219.50 21.95
1 oz .999 round 1.00 21.45 22.25 22.25
Am Eagle, 200 oz Min 1.00 22.60 24.15 24.15
SPOT PLATINUM: 1,380.40      
Plat. Platypus 1.00 1,405.40 1,445.40 1,445.40
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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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