The Moneychanger
Weekly Commentary
Thursday, 5 December a.d. 2013 Browse the commentary archive
Here's the weekly scorecard:
  27-Nov-13 5-Dec-13 Change % Change
Silver, cents/oz. 1,963.30 1,951.40 -11.90 -0.6
Gold, dollars/oz. 1,237.80 1,233.20 -4.60 -0.4
Gold/silver ratio 63.047 63.196 0.149 0.2
Silver/gold ratio 0.0159 0.0158 -0.0000 -0.2
Dow in Gold Dollars (DIG$) 268.83 265.21 -3.62 -1.3
Dow in gold ounces 13.00 12.83 -0.18 -1.3
Dow in Silver ounces 819.91 810.78 -9.13 -1.1
Dow Industrials 16,097.33 15,821.51 -275.82 -1.7
S&P500 1,807.23 1,785.03 -22.20 -1.2
US dollar index 80.74 80.26 -0.48 -0.6
Platinum 1,351.20 1,362.60 11.40 0.8
Palladium 714.35 736.75 22.40 3.1

Tomorrow I have to travel so I am sending the weekly summary out today. I used last Wednesday's prices for comparison, because the Friday 29 November prices came on a fluky, thin market & so offer no sound comparison.

Silver & gold had a sorry week, but not too sorry. It was a lot tougher week for stocks, and tougher still on the US dollar index. Platinum & palladium throve.

Let's grab hold of the US dollar index first. Today the dollar fell through that trap door of support at 80.50, shucking 37.5 basis points to land at 80.25c. And below its 50 DMA at 80.40. It appears the dollar has been dealt a fall clean to 79, although it might catch at 79.75. Only if it falls through 79 would the dollar be meditating a really suicidal plunge.

Dollar's woes were enough to push the Euro through downtrend line support and its 50 DMA toward the downtrend line at 1.3825, powered by the European Central Bank's decision to do -- nothing. It gained 0.59% to $1.3672, a nice jump for a decrepit fiat currency backed by mountains of regulations, bad banks, and bankrupt countries. Wait, wait -- did I say "weighed down by socialist stupidity"? That, too.

Japanese yen has turned up hard. Rose 0.56% today to 98.27 cents per 100 yen. Might only be a bounce trying to fill in the gap at 99.25. On the other hand, the unashamed & curious mind is bound to ask, when the US stock market is fattening on Fed inflation like a hog on restaurant slop & the US economy is supposedly turning up, WHY the US dollar index failed at 80.50, and why the yen & euro are suddenly so frisky? What does the market know that we don't know? Leprosy in the dollar's future?

The bond market seems to think so. Today the 10 year US treasury note yield rose again, up 0.74% to 2.862%. The 30 year bond yield rose 0.23% to 3.914%. Both yields broke out upside in June. Having traded sideways & tested support at what formerly stood as the upper channel line, yields (a.k.a. interest rates) are beginning to advance, preparatory to smashing the Fed's Zero Interest Rate Policy. Or is it "pricking the Fed's bond bubble"? Either way, it'll be a mess.

Meanwhile Obama has sent that old charmer, Joe "Bad Hair Transplant" Biden to smooze the Chinese after crossing them on the Diaoyu Islands. Y'all remember the Chinese? They own more US bonds than anybody else in the world. Poke 'em in the eye again, Joe! You show 'em how tough Obama is!

Stocks continue to decline after the top last Wednesday. Lows today didn't quite match yesterdays, but both the Dow & the S&P500 closed below their 20 day moving averages, pointing their momentum down. More downside coming.

Dow Jones Industrial Average lost 68.26 (0.43%) today to 15,821.51, & lost 275.82 (1.7%) since last week. S&P500 backed off 7.78 (0.43%) and ended at 1,785.03, down 22.2 or 1.2% in the last sevennight.

They turned up a bit today, but the Dow in Gold & Dow in Silver keep whispering that silver & gold are about to turn up. The Dow in Silver today gave a downturn signal when the MACD turned down. DiS in fact rose on the day by 1.03% to 815.96 oz.

Lo and behold, the DiG's MACD has given a sell signal, too! And this in spite of the DiG's 1.05% rise today to 12.92 oz (G$267.08 gold dollars). 20 Day moving average lurks below at 12.66 oz (G$261.70). Crossing that will confirm the turn the MACD is already suggesting.

I remind y'all that when the DiG & DiS turn down, it will signal that a bottom in silver & gold is near or behind us. Both really need to fall back below their long term downtrend lines, but that's another story.

Today both silver & gold dropped back, shying away from confirming yesterday's key reversals. Yet that may not be as dark as it seemeth.

Gold backed off $15 to $1,233.20 with a $1,216.30 low, slightly higher than yesterday's $1,210.80 low, the low of the move since October.

Silver dropped 26 cents to 1951.4c, with a 1922c low much higher than yesterday's 1889c.

MACD indicators for both silver & gold are straining to turn up. Rate of change for both has turned up, although still negative.

It's too early to write this pattern off. Should silver & gold not trade lower than their recent lows tomorrow, & close higher, then both would still be candidates for a turnaround. Closes below yesterday's lows would gainsay that and push silver & gold lower.

A bottom to the 2011-2013 correction, confirming the June low, looms close by. Keep your eyes peeled.

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
5-Dec-13 Price Change % Change
Gold, $/oz 1,233.20 -15.00 -1.2
Silver, $/oz 19.51 -0.26 -1.3
Gold/Silver Ratio 63.196 -0.760 -1.2
Silver/Gold Ratio 0.0158 -0.0002 -1.3
Platinum 1,362.60 -12.50 -0.9
Palladium 736.75 8.15 1.1
S&P 500 1,785.03 -7.78 -0.4
Dow 15,821.51 -68.26 -0.4
Dow in GOLD $s 265.21 2.08 0.8
Dow in GOLD oz 12.83 0.10 0.8
Dow in SILVER oz 810.78 7.21 0.9
US Dollar Index 80.28 -0.39 -0.5
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SPOT GOLD: 1,226.90      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,263.71 1,269.84 1,269.84
1/2 AE 0.50 625.21 647.19 1,294.38
1/4 AE 0.25 326.40 329.73 1,318.92
1/10 AE 0.10 129.95 134.96 1,349.59
Aust. 100 corona 0.98 1,192.99 1,202.99 1,227.29
British sovereign 0.24 290.55 302.55 1,285.24
French 20 franc 0.19 230.78 233.86 1,252.61
Krugerrand 1.00 1,247.76 1,258.76 1,258.76
Maple Leaf 1.00 1,241.90 1,256.90 1,256.90
1/2 Maple Leaf 0.50 705.47 644.12 1,288.25
1/4 Maple Leaf 0.25 312.86 328.20 1,312.78
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Mexican 50 peso 1.21 1,467.32 1,482.27 1,229.39
.9999 bar 1.00 1,231.19 1,242.90 1,242.90
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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 14,518.08 14,768.08 20.65
US 40% silver 1/2s 0.30 5,503.23 5,653.23 19.16
100 oz .999 bar 100.00 1,920.50 1,980.50 19.81
10 oz .999 bar 10.00 198.05 199.05 19.91
1 oz .999 round 1.00 19.41 19.91 19.91
Am Eagle, 200 oz Min 1.00 21.06 22.31 22.31
SPOT PLATINUM: 1,362.60      
Platinum Platypus 1.00 1,387.60 1,427.60 1,427.60
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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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