The Moneychanger
Daily Commentary
Thursday, 13 February a.d. 2014 Browse the commentary archive

Plainly, we live in a lunatic asylum, or, as a friend of mine often says, "Hell is full, & the damned are walking the earth."

The Belgian parliament is trying to pass a law that allows children to ask for & receive euthanasia -- a polite word to cover the act: somebody puts a pillow over their face and smothers them. This comes from the same sort of people who would deny children the right to buy raw milk.

I have to change the subject. Markets. . .

Oh, wow. How volatile can it get? On news of weak retail sales today (according to the media, who only lie out of one side of their mouths, the front side) the US dollar index slid 40 basis points (0.5%) to 80.36. That move takes it below the uptrend line that had caught the dollar index on ever downmove since end-November.

Here's what makes currency markets impossible to parse: the euro, which gapped down fatally yesterday, gapped up today, although it is still blocked by that long term uptrend line overhead. Currency markets are scared to death when they're this jumpy.

Yen rose 0.3% to 97.84 cents/Y100, so may be resuming its uptrend.

Today offers a perfect example why I wouldn't trade currencies. No fundamental change whatever occurred today in the value of these currencies, & truly, the euro is in far worse shape, along with European banks, than the US dollar. Besides, that, ALL fiat currencies are manipulated by central banks & government. ALL, without exception.

Me, I had rather escape from their power altogether by swapping fiat currency for silver & gold, while those fiat currency still buy something.

Stocks struggled to add a few points today. Dow grabbed 63.65 (0.4%) to close at 16,027.59, a truly beautiful number by the tape painters, above the morale-boosting 16,000 mark. Is it real, or Memorex? Who knows, when governments meddle now in all markets? S&P500 added 10.57 (0.58%) to 1,829.83. Moving Average Convergence Divergence (MACD) indicator is positive, so this can run for a while, but it is a doomed undertaking. Later this year there will be weeping and gnashing of teeth, plus a large dose of wailing, whining, & grieving.

For all stocks bounced, the Dow in Gold & Dow in Silver still fell. DiG edged down 0.26% to 12.33 oz while the DiS inched lower by 0.46% to 785.86 oz. Trend and momentum remains earthward, held in a headlock by gravity.

Ahh, yes! Gold pushed through the $1,290 - $1,295 resistance at $1,300.40, up $5.10 & another $3 in the aftermarket. O, there's still some resistance between here and the 200 DMA at $1,310.49, but shorts will be having deep and gloomy periods of silent meditation when gold crosses that line. Might even grab their wastebaskets for a genteel puke.

Silver rose 5.4 cents to 2038.5c, driving us crazy as we wait for it to cross that 2050c line and begin rising in earnest.

Today brings silver plumb slap up against the downtrend line from April 2013. Mercy, the 20 day moving average hangs in the sky only a few cents higher at 2114c. I'll be mildly surprised if silver closeth not above 2050c tomorrow. Shorts will be pulling out before the weekend & that ought to give it push enough to break through. High today was 2047c, nearly there.

While a remote chance remains that silver & gold might make one last spike down to lower lows, that chance dims with each rising day. I've been buying since end-December & expect the rally to carry much higher into the end of February, say, to the $1,360 neighborhood for gold. Silver hasn't even got it's motor warmed up yet, but ought to reach 2300c at least, maybe even 2500c if it really gets feverish.

Don't miss this gold and silver train!

Listening to the goofs on National Proletarian Radio last night, something occurred to me. Why do politicians always pat each other on the back and call each other "statesmanlike" & congratulate one another for doing the "right" thing when they spinelessly vote for a plan to destroy the US, namely, increasing yet again the debt ceiling? What makes THAT the "right" thing? Why are they demons from hell -- dreaded, filthy "Tea Party-ites" -- when they vote against more borrowing & spending? Couldn't the other side just as well claim that they were the only ones with courage enough to step out of the crowd and do the "right" thing? Why is spending & borrowing more money always the "right" thing? Dad-durned nacheral born fool like me never will get to be a politician! Just too dad-durned dumb to catch on. To somebody as ignerunt as I am, stealing is just stealing, no matter who calls it "right."

On 13 February 1862 the four day Battle of Fort Donelson began at Dover, Tennessee. Thanks to a stupidly divided command, the South lost an impregnable position, an opportunity to withdraw the army safely, & opened the heart of Tennessee to the yankees. It was not our finest hour, command-wise.

On 13 February 1945 the British airforce devastated the German city of Dresden by night raids. Next day the US Air Force followed, and in all they dropped some 3,900 tons of bombs & incendiary devices on the city. This created a firestorm that sucked in its own oxygen & fed on itself, destroying over 1,600 acres in the city and killing nearly 25,000 people. Dresden, called the Florence on the Elbe for its Baroque cultural heritage, wasn't even a particularly vital military target. War turns everyone into barbarians.

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
13-Feb-14 Price Change % Change
Gold, $/oz 1,300.40 5.10 0.39%
Silver, $/oz 20.39 0.05 0.27%
Gold/Silver Ratio 63.792 0.081 0.13%
Silver/Gold Ratio 0.0157 -0.0000 -0.13%
Platinum 1,415.00 9.30 0.66%
Palladium 730.90 2.05 0.28%
S&P 500 1,829.83 10.57 0.58%
Dow 16,027.60 63.65 0.40%
Dow in GOLD $s 254.78 0.01 0.00%
Dow in GOLD oz 12.33 0.00 0.00%
Dow in SILVER oz 786.24 1.04 0.13%
US Dollar Index 80.36 -0.40 -0.50%
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SPOT GOLD: 1,303.30      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,335.88 1,348.92 1,348.92
1/2 AE 0.50 664.17 686.84 1,373.68
1/4 AE 0.25 333.71 349.94 1,399.74
1/10 AE 0.10 136.74 142.71 1,427.11
Aust. 100 corona 0.98 1,271.11 1,280.11 1,305.97
British sovereign 0.24 308.64 320.64 1,362.10
French 20 franc 0.19 245.15 248.13 1,329.01
Krugerrand 1.00 1,325.46 1,335.46 1,335.46
Maple Leaf 1.00 1,318.30 1,333.30 1,333.30
1/2 Maple Leaf 0.50 749.40 684.23 1,368.47
1/4 Maple Leaf 0.25 332.34 348.63 1,394.53
1/10 Maple Leaf 0.10 138.15 142.06 1,420.60
Mexican 50 peso 1.21 1,561.83 1,572.83 1,304.50
.9999 bar 1.00 1,307.86 1,322.30 1,322.30
SPOT SILVER: 20.48      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 22.50 25.00 32.68
VG+ Peace dollar 0.77 20.00 22.50 29.41
90% silver coin bags 0.72 15,211.63 15,461.63 21.62
US 40% silver 1/2s 0.30 5,848.38 5,998.38 20.33
100 oz .999 bar 100.00 2,547.50 2,102.50 21.03
10 oz .999 bar 10.00 204.75 210.75 21.08
1 oz .999 round 1.00 20.48 21.03 21.03
Am Eagle, 200 oz Min 1.00 21.98 23.28 23.28
SPOT PLATINUM: 1,415.00      
Plat. Platypus 1.00 1,440.00 1,480.00 1,480.00
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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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