The Moneychanger
Daily Commentary
Monday, 30 December a.d. 2013 Browse the commentary archive

We're still walking through doll-house markets, so thin you could poke your finger through the walls. Dangerous to draw many conclusions from these.

Dow made another new all-time closing high today, although not an intraday high. That came Friday at 16,529.01. Oddly enough, with the Dow closing up 25.88 at 16,504.29, all the other indices fell. S&P lost 0.33 or 0.02% to 1,841.07. That negates the chance for a key reversal in the Dow, but not in the S&P500.

What can you say about markets climbing a wall? Stay out of their way. No telling where they will go or when they will break.

Silver and gold were slapped silly today, so the Dow in Gold & Dow in Silver rose. DiG added 0.98% to 13.71 oz, a new high for the move. DiS didn't quite make a new high, 841.41 oz against the last high at 841.56 oz. Both moved up and away from their 20 day moving averages, first tripwire of a downturn. I keep looking at these charts & seeing a near completed move, but there's nothing to confirm that.

Scabrous US dollar stabbed its fans in the back again today, falling 33 basis points (0.42%) to 80.17. It crumpled at the downtrend line like Count Dracula facing a crucifix. I keep on reading analysts calling for a higher dollar, but I can't find anything here even as inspiring as drinking a cup of coffee and finding a drowned fly at the bottom. Worse, the Dollar Index has formed a falling triangle, & those most often break out to the downside.

Euro tempered its excitement today and traded in a smaller range but with a higher close. Gained 0.37% to $1.3800, right on the downtrend line. Let's see what happens when the Big Boys return on 2 January to scatter all these thin market chiselers.

Yen rose a little today, about like frost heaving the ground over a grave. Up 0.4% to 95.13 cents/Y100. Only question is, what's keeping it even that high?

Ten year treasury yield closed at 2.976% today. Friday saw the highest interest rate since July 2011. Higher rates mean trouble for the Fed on the same scale as the La Brea tarpit for a saber-toothed tiger.

Today silver & gold gave back all Friday's gains. Gold shrank $11 to $1203.10 while silver faded 43.2 cents to 1958.1c. Gold continues to dance around & now below an internal resistance/support line from the April low, while it remains above the downtrend line from the May high. Main point to observe is that it has not yet given any solid signal of turning up. Absent a close above $1,220 expect more downside.

Silver has the mildest of uptrends going, with double bottoms early in December and mid-December. Needs to stay above 1930c to maintain even that mediocre uptrend. A close over 2050c would signal an uptrend.

On 30 December 1861 US banks suspended convertibility of their paper money into gold or silver. This was so much fun (for the banks) that it continued until 1879.

Y'all think now. What other business, other than banking, could default on its most solemn contract yet remain in business? If any of the rest of us tried that, we'd go to jail, but now the bankers, our new nobility, are Too Big To Jail. In the US we have a very advanced legal system, with two complete sets of laws: one for the banks, then one for us peasants. Pass the gruel.

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
30-Dec-13 Price Change % Change
Gold, $/oz 1,203.10 -11.00 -0.91%
Silver, $/oz 19.58 -0.43 -2.16%
Gold/Silver Ratio 61.442 0.777 1.28%
Silver/Gold Ratio 0.0163 -0.0002 -1.26%
Platinum 1,364.00 -12.00 -0.87%
Palladium 709.90 -1.15 -0.16%
S&P 500 1,847.07 -0.33 -0.02%
Dow 16,504.29 25.88 0.16%
Dow in GOLD $s 283.58 3.01 1.07%
Dow in GOLD oz 13.72 0.15 1.07%
Dow in SILVER oz 842.87 19.49 2.37%
US Dollar Index 80.17 -0.33 -0.41%
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: 1,198.20      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,229.35 1,240.14 1,240.14
1/2 AE 0.50 610.57 632.05 1,264.10
1/4 AE 0.25 318.75 322.02 1,288.07
1/10 AE 0.10 126.90 131.80 1,318.02
Aust. 100 corona 0.98 1,168.60 1,178.60 1,202.41
British sovereign 0.24 283.75 295.75 1,256.37
French 20 franc 0.19 225.38 228.50 1,223.91
Krugerrand 1.00 1,219.77 1,230.77 1,230.77
Maple Leaf 1.00 1,213.20 1,228.20 1,228.20
1/2 Maple Leaf 0.50 688.97 629.06 1,258.11
1/4 Maple Leaf 0.25 305.54 320.52 1,282.07
1/10 Maple Leaf 0.10 127.01 130.60 1,306.04
Mexican 50 peso 1.21 1,434.44 1,447.67 1,200.69
.9999 bar 1.00 1,202.39 1,214.20 1,214.20
SPOT SILVER: 19.57      
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 14,636.05 14,886.05 20.82
US 40% silver 1/2s 0.30 5,581.40 5,731.40 19.43
100 oz .999 bar 100.00 1,947.00 2,007.00 20.07
10 oz .999 bar 10.00 200.70 201.70 20.17
1 oz .999 round 1.00 19.67 20.17 20.17
Am Eagle, 200 oz Min 1.00 21.32 22.57 22.57
SPOT PLATINUM: 1,364.00      
Plat. Platypus 1.00 1,389.00 1,429.00 1,429.00
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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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