The Moneychanger
Daily Commentary
Monday, 9 December a.d. 2013 Browse the commentary archive

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Something's happening in gold & silver. More below.

I could hardly have called stocks more wrongly last Thursday when I was expecting them to continue dropping. Instead, the Dow rose nearly 200 points on Friday.

Well, maybe that ends the little correction. Dow rose 5.33 (0.03%) today to 16,025.53 while the S&P500 gained 3.28 (0.18%) for a new high close -- not a new intraday high, but a new high close by 1.15 points.

This leaves both the Dow & the S&P500 charts looking about the same, with a lower high from Friday's & today's trading. Both have closed above their 20 DMAs, but the MACD hasn't yet flashed a buy signal. In the last 18 months, though, that cross above the 20 DMA has been a reliable mark of an upward reversal.

Yet meanwhile the Dow in Gold & Dow in Silver haven't been able to rise above the 2 December highs (13.138 & 836.19 oz). They both dropped again today, basis End of Day. Dow in Silver lost 1.48% to end 808.55 oz. Rate of change is near zero, but most of all, the MACD has flashed a SELL signal. Rate of change is pointing down and near zero.

Dow in Gold lost 0.75% to end at 12.93 oz (G$267.29 gold dollars). Has formed a widening top, and the MACD klaxoned SELL last week. ROC draweth nigh to zero and lower.

Both indicators need to fall through their 20 Day Moving Averages, now 12.75 oz & 797.09 oz, to confirm a trend reversal. Both show a toppy formation, sort of a tiny Head & Shoulders, but both need that confirmation.

The US DOLLAR INDEX is sawing and sawing on that limb it's sitting on. Closed today at 80.14, down 13 basis points (0.16%) from Friday and racing for support at 80, which it appears competent to crash. Below the 50 & 20 & 200 DMAs, MACD pointing down, it's a basket case.

The Euro is taking advantage of the Dollar's woes to climb. Rose 0.24% today with a tiny gap up. Evidently targetting 1.3825, where the big resistance begins.

The yen wants none of that climbing. It dropped 0.33% to 96.85 cents/Y100, a new low for the move and right near the May low at 96.41. Closing below that would suggest the Japanese Nice Government Men are targetting some deep number -- 90 or even 80, but at a minimum 90. Crazy.

But what bothers me is WHY the dollar is dropping? Lo, I am aware that many are calling for a dollar rally, but I can't see it on the chart. I see a breakdown in September that suggests a drop to 73. However, I can't imagine how the Europeans could live with that, as it would dry up their export markets like Death Valley in a drought.

Question is whether the Fed is pushing the dollar down or the market.

Y'all, silver & gold may have turned up.

Today gold gained $5 to close Comex at $1,235.30 Silver added 17.9 cents to 1964.4. Highs came at $1,242.60 and 1998c, lows at 1943c & $1,224.60.

Let me just tick these positives off for y'all:

1. Both silver & gold flashed MACD buy signals on Friday. Yes, Friday.

2. Rate of Change for both stands a smidgen below turning positive (-.19% for gold & -.1% for silver).

3. Wednesday's low for both was confirmed by a double (gold) or higher (silver) bottom.

4. Both have drawn near their 20 DMAS (2004c & gold's $1,252).

5. Both may be forming an upside down head & shoulders pattern, with last week tracing out the head.

Of course, all that will mean less than nothing if confirmations don't dome. First confirmation comes when they cross those 20 DMA. Next when they climb above the last peaks 2309c & $1,295.

I wish I could explain it. When I write it out it looks too thin. Maybe I'm leaving out the bounce back last Wednesday, Thursday, Friday & today. All that showed stubborn strength, being knocked down and getting right back up. Then both climbed vigorously in the aftermarket today. Something's brewing.

Maybe we get nothing more than another annoying dead cat rally, but I bought a little on Friday, just in case, and more today.

On 9 December 1793 Noah Webster established New York's first daily newspaper. He is the same who became the first American lexicographer & spelling Nazi, trying to enforce his own spelling standurds on the rest ov us. As that famus Tennesseean Andrew Jackson once said, "Ah nevah cud trust a man withno more imaginashun than to spell a word the same way every time."

You Ozzies, listen up:

An Australian named Rod Holden has started a petition to repatriate Australia's Gold reserves. If you're an Ozzie, go to his website and think about helping,

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
9-Dec-13 Price Change % Change
Gold, $/oz 1,235.30 5.00 0.41%
Silver, $/oz 19.64 0.18 0.92%
Gold/Silver Ratio 62.884 -0.321 -0.51%
Silver/Gold Ratio 0.0159 0.0001 0.51%
Platinum 1,367.60 12.20 0.90%
Palladium 734.50 0.95 0.13%
S&P 500 1,808.37 3.28 0.18%
Dow 16,025.53 5.33 0.03%
Dow in GOLD $s 268.17 -1.00 -0.37%
Dow in GOLD oz 12.97 -0.05 -0.37%
Dow in SILVER oz 815.80 -7.23 -0.88%
US Dollar Index 80.14 -0.13 -0.16%
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SPOT GOLD: 1,242.40      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,279.67 1,285.88 1,285.88
1/2 AE 0.50 633.11 655.37 1,310.73
1/4 AE 0.25 330.52 333.90 1,335.58
1/10 AE 0.10 131.59 136.66 1,366.64
Aust. 100 corona 0.98 1,208.06 1,218.06 1,242.66
British sovereign 0.24 294.22 306.22 1,300.83
French 20 franc 0.19 233.70 236.76 1,268.11
Krugerrand 1.00 1,262.28 1,273.28 1,273.28
Maple Leaf 1.00 1,257.40 1,272.40 1,272.40
1/2 Maple Leaf 0.50 714.38 652.26 1,304.52
1/4 Maple Leaf 0.25 316.81 332.34 1,329.37
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Mexican 50 peso 1.21 1,485.85 1,500.96 1,244.89
.9999 bar 1.00 1,246.75 1,258.40 1,258.40
SPOT SILVER: 19.89      
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 14,936.35 15,186.35 21.24
US 40% silver 1/2s 0.30 5,675.80 5,825.80 19.75
100 oz .999 bar 100.00 1,979.00 2,039.00 20.39
10 oz .999 bar 10.00 203.90 204.90 20.49
1 oz .999 round 1.00 19.99 20.49 20.49
Am Eagle, 200 oz Min 1.00 21.64 22.89 22.89
SPOT PLATINUM: 1,367.60      
Plat. Platypus 1.00 1,392.60 1,432.60 1,432.60
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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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