The Moneychanger
Weekly Commentary
Friday, 1 November a.d. 2013 Browse the commentary archive
Here's the weekly scorecard:
  25-Oct-13 1-Nov-13 Change % Change
Silver, cents/oz. 2,260.30 2,180.40 -79.90 -3.5
Gold, dollars/oz. 1,352.40 1,313.10 -39.30 -2.9
Gold/silver ratio 59.833 60.223 0.390 0.7
Silver/gold ratio 0.0167 0.0166 -0.0001 -0.6
Dow in Gold Dollars (DIG$) 238.00 245.83 7.84 3.3
Dow in gold ounces 11.51 11.89 0.38 3.3
Dow in Silver ounces 688.86 716.18 27.32 4.0
Dow Industrials 15,570.28 15,615.55 45.27 0.3
S&P500 1,759.77 1,761.64 1.87 0.1
US dollar index 79.26 80.72 1.46 1.8
Platinum 1,451.50 1,449.40 -2.10 -0.1
Palladium 741.70 737.70 -4.00 -0.5

Sorry about my absence yesterday. Our power went out at my office and at home. No power, no computer, no commentary. For those of y'all who follow end of month pricing, here 'tis: Gold, 1323.6; Silver 2183.2; Platinum 1,445.9; Palladium 736.25; US dollar index, 80.2; Dow Industrials, 15,545.75; S&P500 1,756.54.

This week demolished all the work silver & gold had done in the previous two weeks. Silver lost 3.5% for the week, and 4.9% (111.4c) yesterday. The same concerted selling attack took gold down 1.9% ($25.40). Stocks peaked & began descending, although for the week the Dow gained 0.3% and the S&P500 .01%. Oddly enough, the white metals hardly moved week to week, although they, too, had risen quite a bit this week. Dollar index was the show, up 1.8% and a huge 146 basis points.

Well, I'm plumb wordless. Federal Reserve creates roughly $2-1/2 trillion, & nothing happens. That's the story of the last 5 years, boosting Adjusted Monetary Reserves up 4.11 times. The various splurges of QE raise the stock market because new money runs first to the financial markets. Although the economy needs a mirror under its nostrils still to make sure it's breathing, stock market keeps rising. Meanwhile, silver & gold continue in a two year correction.

A friend of mine used to point to events and ask, "Is it real, or Memorex?" Is it real, or just a Potemkin government set up? Example: FOMC announces it will continue depreciating the dollar by creating $85 billion of new money a month. You would guess, if your brain is working, that would send the US dollar down, all the more so since the interest rate is so low. You would be on the wrong side of that market, because dollar index gained 110 basis points in the last three days. Real, or Memorex?

Contrary to some "experts," markets are IRrational. People don't buy value, they buy a rising market. They have the attention span of a gnat, & they are constantly bombarded by feel-good propaganda promising that "Every day in every way things are getting better and better." It takes time for fundamentals -- like money already pushed into the inflation pipeline -- to work its effect. But over time, Reality has a way of coming down on your head with a giant fly-swatter. So we patiently wait.

US dollar index had reached a low last Friday at 79.26, and bounced up off 79 -- straight up, above the downtrend line. Closed today 80.723, up 0.62% today alone.

The yen was not happy about this, losing 0.39% to 101.28 cents/Y100 today. But the euro took a brickbat to the forehead. It was just waiting to collapse. Wednesday it dropped sharply, then gapped down the next day beneath its 20 DA. Gapped down again today, fractured the uptrend line, and closed beneath its 50 DMA ($1.3491) to roost at $1.3488, down a modest 0.71% on the day. Back in September the euro broke out of its trading channel but for a long time refused to make good on it. Traded higher on the Debt Farce, but mostly with all the enthusiasm of a condemned man for a rope factory. Closed today back within that old channel line, wiping out a month and a half's gains.

All this whispers that the dollar will rally at least to 81, maybe even to the 200 DMA at 81.77 before it slows down. That's not the best news for silver & gold, since it raises a headwind against their progress.

Stocks probably ran out of gas this week, notwithstanding today's little gains. They were way overbought. Stocks bear market rally hasn't ended yet. May run into first quarter 2014.

Dow in gold & Dow in silver are zig-zagging up and down, up today of course. However, the establish downtrend remains intact.

Yesterday silver dropped off a cliff, down 111.4 cents (4.9%) to 2183.2 & where we started. Gold lost 1.9% ($25.40) to $1,323.60. Today silver was quiet, losing only 2.8 cents to 2180.4c. Gold lost another 0.8% or $10.50 to land at $1,313.10.

Silver has now lost 53% of its preceding gain. It pushed for the high before last at 2344c, but stopped at 2309.c. Yesterday it closed below its 20 DMA (2208c) and of course its 50 DMA, 2247c. Unless silver can rebound quickly and close over that last high at 2309c, it will at least return to the uptrend line from the June low, now at 2100c. Unless silver shows more strength, seems headed for a retest of the June low, at a higher or lower level. That makes that 2100c level crucial.

Gold has given up 50% of its preceding rise, and failed to better the last high at $1,375.40, and closed beneath its 50 DMA ($1,339.68) & 20 DMA ($1,317.15). Is it real, or Memorex? Who knows, but $1,300 again becomes the line that must be held. Remember in October when gold rocketed off its $1,251 low it blasted through resistance at $1,280, $1,300, and $1,320. Thus the $1,300 point becomes crucial. Gold meets its July uptrend line about $1,260, so that must hold.

It's odd, but yearly gold and silver lows almost NEVER strike in October or December. About 20% of the time they come in November. Seems we can look for some low this month to confirm that June low.

Today is All Saints or All Hallows Day. Y'all were so distracted by Hallowe'en (All Hallows Eve) y'all probably forgot that.

On 1 November 1814 the Congress of Vienna opened, aiming to redraw the European political map after France & Napoleon had been defeated. Some of its work lasted until World War I.

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
1-Nov-13 Price Change % Change
Gold, $/oz 1,313.10 -10.50 -0.8
Silver, $/oz 21.80 -0.03 -0.1
Gold/Silver Ratio 60.223 -0.481 -0.8
Silver/Gold Ratio 0.0166 -0.0000 -0.1
Platinum 1,449.40 3.50 0.2
Palladium 737.70 1.45 0.2
S&P 500 1,761.64 5.10 0.3
Dow 15,615.55 69.80 0.4
Dow in GOLD $s 245.83 3.07 1.3
Dow in GOLD oz 11.89 0.15 1.3
Dow in SILVER oz 716.18 4.12 0.6
US Dollar Index 80.72 0.48 0.6
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: 1,314.70      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,350.20 1,360.71 1,360.71
1/2 AE 0.50 669.99 693.50 1,387.01
1/4 AE 0.25 349.77 353.33 1,413.30
1/10 AE 0.10 139.25 144.62 1,446.17
Aust. 100 corona 0.98 1,282.23 1,292.23 1,318.33
British sovereign 0.24 311.34 323.34 1,373.57
French 20 franc 0.19 247.30 250.25 1,340.41
Krugerrand 1.00 1,337.05 1,348.05 1,348.05
Maple Leaf 1.00 1,329.70 1,344.70 1,344.70
1/2 Maple Leaf 0.50 755.95 690.22 1,380.44
1/4 Maple Leaf 0.25 335.25 351.68 1,406.73
1/10 Maple Leaf 0.10 139.36 143.30 1,433.02
Mexican 50 peso 1.21 1,577.08 1,588.13 1,317.19
.9999 bar 1.00 1,319.30 1,330.70 1,330.70
SPOT SILVER: 21.82      
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 16,169.73 16,419.73 22.96
US 40% silver 1/2s 0.30 6,243.68 6,393.68 21.67
100 oz .999 bar 100.00 2,171.50 2,241.50 22.42
10 oz .999 bar 10.00 223.15 224.15 22.42
1 oz .999 round 1.00 21.92 22.47 22.47
Am Eagle, 200 oz Min 1.00 23.57 24.32 24.32
SPOT PLATINUM: 1,449.40      
Platinum Platypus 1.00 1,474.40 1,514.40 1,514.40
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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.

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