The Moneychanger
Daily Commentary
Tuesday, 19 November a.d. 2013 Browse the commentary archive

In congressional hearings today Federal regulators testified favorably toward Bitcoin, the digital currency. And why wouldn't they? They're all slobbering & licking their chops at the thought of castrating Bitcoin by regulation. What our modern tyrants simply cannot abide is the idea that somebody, somewhere might be free. The reality of spontaneous human organization, the REAL free market, infuriates and terrifies the tyrants. It is their natural enemy. They must slay it.

Me, I'm no fan of Bitcoin because it has no substance, only an artificial scarcity. However, if anybody wants to take a chance on that -- caveat emptor! -- it doesn't hurt me. After the regulators get finished carving up the corpse of Bitcoin, however, there won't be any freedom left in it.

And of course, the excuse for killing it will be the usual suspects, the red herrings of terrorism & drugs and money laundering, but their real enemy is freedom, yours & mine, mushrooms, yours & mine.

Markets were pretty quiet today. Stocks kept on arching in that trajectory from yesterday that suggests a correction has begun. The US dollar index lost more ground, leaving me to doubt to outcome prophesied by the optimists. And silver & gold marked time.

Stocks made tiny moves -- Dow lost 8.99 (0.06%) to 15,967.03 & S&P500 lost 3.66 (0.2%) to 1,787.87 -- but it wasn't the size of the moves that speak. Rather, it was their direction, confirming what looked yesterday like a key reversal in some indices. Stocks are way overdue for a correction. When any market piles up new highs day after day & the optimists run hog wild, the days of the move are numbered, & I don't give two hoots how many "experts" tell me "It's different this time." They always say that, right before a crash.

Dow in Gold & Dow in Silver continue to hang in the balance, the DiG near its June high -- mmmm, with gold much higher but stocks higher, too, and not by a lower gold price -- while the DiS stubbornly refuses to rise that high. DiG closed 12.539 oz, down 0.15% while the DiS gained 0.6% to 785.55 oz. Keep watching them, because that's where we'll see the turn of stocks & the turn of metals first.

If the dollar index is not forming a bullish flag or pennant (a downsloping correction that looks like a flag), then its in trouble. Lost another 5.5 basis points today to 80.675. Euro rose 0.23% to $1.3539 & the Yen fell 0.18% back below 100c to 99.88 cents/Y100.

Ho! JP Morgan paid the yankee government $13 billion to settle charges that it knowingly sold putrescent mortgage backed securities to investors. Let's see, what did that English chief justice say about corporations? They have no body to kick and no soul to damn? Far as I can tell, none of that settlement goes to the people hurt, namely, the investors suckered by JP Morgan & others. And no human beings will be punished for the misdeeds in the name of this juridical person, this legal fiction.

Kind of reminds me of the aftermath of the fall of communism. After 70 years of tyranny & murder, they never did have trials. Nobody was brought to book (other than the Ceaucescus in Romania), & most of the apparatchiki just slid into cushy new positions in the "free" market.

So, what changed? JP Morgan paid a fine that's not much more than a traffic ticket to you or me. What changed? We have a very efficient justice system in the US, comrades, the best money can buy! Retail criminals go to jail, but wholesale criminals walk.

Silver fell 2.3 cents to 2032.6c while gold climbed $1.20 to $1,273.40. That was on a 23 cent range for silver and a $7 range on gold, dead as a ball-peen hammer.

I'm starting to get suspicious. Markets have a way of slapping you in the back of the head with surprises. What's keeping them up? Both appear to be dead. I have to suspect some big move, up or down, will emerge soon. However, this time of year is often very slow as investors wind down positions toward the Thanksgiving holiday.

No point in chafing. Metals will resolve soon enough, and resolve upward since the bull markets in both are still alive.

On 19 November 1919 the US Senate rejected the Treaty of Versailles & the League of Nations, precursor of the UN. After two years of war, people in the US were fed up with meddling in other nations' affairs.

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
19-Nov-13 Price Change % Change
Gold, $/oz 1,273.40 1.20 0.09%
Silver, $/oz 20.33 -0.02 -0.11%
Gold/Silver Ratio 62.649 0.130 0.21%
Silver/Gold Ratio 0.0160 -0.0000 -0.21%
Platinum 1,518.10 8.90 0.59%
Palladium 721.60 5.20 0.73%
S&P 500 1,787.87 -3.66 -0.20%
Dow 15,967.03 -8.99 -0.06%
Dow in GOLD $s 259.20 -0.39 -0.15%
Dow in GOLD oz 12.54 -0.02 -0.15%
Dow in SILVER oz 785.55 0.45 0.06%
US Dollar Index 80.67 0.06 0.07%
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: 1,273.70      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,309.36 1,318.28 1,318.28
1/2 AE 0.50 649.08 671.88 1,343.75
1/4 AE 0.25 338.86 342.31 1,369.23
1/10 AE 0.10 134.91 140.11 1,401.07
Aust. 100 corona 0.98 1,238.49 1,248.49 1,273.71
British sovereign 0.24 301.63 313.63 1,332.32
French 20 franc 0.19 239.58 242.60 1,299.41
Krugerrand 1.00 1,296.63 1,307.63 1,307.63
Maple Leaf 1.00 1,288.70 1,303.70 1,303.70
1/2 Maple Leaf 0.50 732.38 668.69 1,337.39
1/4 Maple Leaf 0.25 324.79 340.71 1,362.86
1/10 Maple Leaf 0.10 135.01 138.83 1,388.33
Mexican 50 peso 1.21 1,523.29 1,538.70 1,276.19
.9999 bar 1.00 1,278.16 1,289.70 1,289.70
SPOT SILVER: 20.32      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 25.00 26.50 34.64
VG+ Peace dollar 0.77 22.00 24.25 31.70
90% silver coin bags 0.72 15,172.30 15,422.30 21.57
US 40% silver 1/2s 0.30 5,802.65 5,952.65 20.18
100 oz .999 bar 100.00 2,022.00 2,092.00 20.92
10 oz .999 bar 10.00 208.20 209.20 20.92
1 oz .999 round 1.00 20.42 20.97 20.97
Am Eagle, 200 oz Min 1.00 22.07 23.32 23.32
SPOT PLATINUM: 1,518.10      
Plat. Platypus 1.00 1,543.10 1,583.10 1,583.10
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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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