The Moneychanger
Daily Commentary
Monday, 21 October a.d. 2013 Browse the commentary archive

Friends, Volume 2 of At Home In Dogwood Mudhole (Best Thing We Ever Did) is now available for preorder at www.dogwoodmudhole.com. It went to the printer today and we estimate it will be ready to ship the first week in December, in time for Christmas.

I must be crazy generous, but if you will use the discount code HOGWILD I will give you free shipping to US addresses, up to $6 (enough for 2 copies). Offer expires Sunday, 30 November 2013. Also, the PDF version will be available for sale and immediate download tomorrow, with Kindle & ePub editions coming in a few weeks.

No author should try to judge his own work, but I believe Volume 2 is even funnier than Volume 1. I already know the stories and I laughed until I nearly choked.

The US DOLLAR INDEX acts as if it wants to drop. It's sitting on the edge of a cliff at 79.50, and the rocks below are at 73. Nothing in the chart or other indicators whisper a reversal, but it's hard to imagine that Bernanke & the US treasury would really want the dollar index to drop 8-1/2%.

Although it gapped up last Thursday, the euro is having trouble making up its mind to advance. Ended today at $1.3675, down 0.09%. Japanese yen refuses any movement but crabwise, jerking up & down around its intertwined 20 & 50 day moving averages, going nowhere. Lost 0.45% to 101.86 cents/Y100. If I were all those Nice Government Men "tasked" with manipulating exchange rates, I'd be scared to death the whole structure might blow up. That's central bank stability for you.

Stocks went nowhere again today, while the Dow again ominously gainsaid the S&P500. S&P500 made a new all-time high -- by 0.16 points. Y'all call home and tell Mama about that. She'll want to know. S&P500 stands at the very top trendline of a rising wedge. Margin debt is at record levels. How long can this continue? I reckon until they run out of booze -- whoops, make that "inflationary money."

Gold added a tiny $1.30 (0.1%) to $1,315.70, but silver jumped 36.4 cents (1.66%) to 2223.3c, above 2200c AT LAST.

Gold remains in a breakout from that falling wedge that has been forming since August, and above its 20 DMA ($1,308.52). No time for fiddling, Gold! You must close above $1,332 resistance, then above the 50 DMA ($1,343). Small but positive whispers keep bubbling out of gold.

Silver's chart looks even better than gold's, and the gold/silver ratio dropped through 60 today to close at 59.178 (a good sign of strength). Silver has escaped the falling wedge pattern, and made good that escape by closing above its 20 DMA (2173c) and closing in on its 50 DMA (now 2248c). Yet no klaxons blow until silver closes over 2252c, its last high.

Buy when they close over those 50 DMAs. Buy more when gold closes over $1,376. Stay out if they close below $1,272 and 2090c.

I have to make a trip to Richmond the rest of this week, so probably won't be publishing a commentary. I'm going to visit Jefferson Davis' last resting place.

A veritable tidal wave of hogwash pours out of Washington daily, but it is nowhere deeper than in all the talk how the United States has "never defaulted."

Hogwash. The US defaulted from 1862 through 1879 when it refused to make good its promise to pay its debts in gold and forced its creditors to accept fiat greenbacks. The US defaulted again in 1934 when it reneged on its bonded obligation to pay its debts in gold. Then in 1971 President Nixon defaulted on the US promise to redeem US dollars for gold.

That's at least three defaults by my count. My friend Nick Laird of www.sharelynx.com, charting site extraordinaire, had a brilliant insight. Between 1933 and 1971 is a 38 year gap. Current gap is 42 years -- about time for another default!

On 21 October 1849 the first Tattooed man, James F. O'Connell, was put on exhibition at the Franklin Theater in New York City. Shucks, you can see tattooed men AND women at every swimming pool, gas station, & grocery store nowadays -- whether you want to or not.

On 21 October 1910 my father was born. He loved learning so much that he stayed two years in the 10th grade at his little country school in Michie, Tennessee, until they added the 10th and 11th grades. Played professional baseball for a summer, then went to what later became Memphis State and lettered in four sports, two he'd never before played. He passed away in 1998. I thank God for his life. Requiescat in pace.

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
21-Oct-13 Price Change % Change
Gold, $/oz 1,315.70 1.30 0.10%
Silver, $/oz 22.23 0.36 1.66%
Gold/Silver Ratio 59.178 -0.926 -1.54%
Silver/Gold Ratio 0.0169 0.0003 1.56%
Platinum 1,435.70 0.90 0.06%
Palladium 749.25 9.60 1.30%
S&P 500 1,744.66 0.16 0.01%
Dow 15,392.20 -7.45 -0.05%
Dow in GOLD $s 241.84 -0.36 -0.15%
Dow in GOLD oz 11.70 -0.02 -0.15%
Dow in SILVER oz 692.31 -11.86 -1.68%
US Dollar Index 79.69 0.06 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: 1,314.50      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,351.31 1,360.51 1,360.51
1/2 AE 0.50 669.89 693.40 1,386.80
1/4 AE 0.25 349.72 353.27 1,413.09
1/10 AE 0.10 139.23 144.60 1,445.95
Aust. 100 corona 0.98 1,282.03 1,292.03 1,318.13
British sovereign 0.24 311.29 323.29 1,373.36
French 20 franc 0.19 245.42 252.42 1,351.99
Krugerrand 1.00 1,338.16 1,349.16 1,349.16
Maple Leaf 1.00 1,329.50 1,344.50 1,344.50
1/2 Maple Leaf 0.50 755.84 690.11 1,380.23
1/4 Maple Leaf 0.25 335.20 351.63 1,406.52
1/10 Maple Leaf 0.10 139.34 143.28 1,432.81
Mexican 50 peso 1.21 1,576.84 1,587.89 1,316.99
.9999 bar 1.00 1,319.10 1,330.50 1,330.50
SPOT SILVER: 22.19      
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 16,580.85 16,830.85 23.54
US 40% silver 1/2s 0.30 6,354.30 6,504.30 22.05
100 oz .999 bar 100.00 2,209.00 2,279.00 22.79
10 oz .999 bar 10.00 226.90 227.90 22.79
1 oz .999 round 1.00 22.29 22.84 22.84
Am Eagle, 200 oz Min 1.00 23.94 24.69 24.69
SPOT PLATINUM: 1,435.70      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,460.70 1,500.70 1,500.70
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© 2015 Little Mountain Corporation, d.b.a. The Moneychanger. All rights reserved. May not be republished in any form, including electronically, without our express permission.

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.

Other Important Information

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