The Moneychanger
Daily Commentary
Tuesday, 18 February a.d. 2014 Browse the commentary archive

Whooo! I hope y'all had a good time yesterday on Generic Presidents Day. Markets were closed so the prices you see below are compared to Friday's closes.

Today I spent a long time gazing on charts of what the Federal Reserve hath done to the money supply since 2008, & I interviewed a friend who worked 20 years for several Federal Reserve banks as a lawyer & economist. "Renewed optimism" was not the outcome of my meditation. With its unlimited money creation the Fed has climbed up for a ride on a tiger. They have no safe way to dismount, & like an alcoholic, no more imagination than to keep drinking the same rotgut whiskey every day while expecting a different result. 'Twill end in unspeakable pain.

Meanwhile the yankee government continues seizing control of the rest of the economy, what ears & tail the Fed doesn't already control. O'Bama's generous philanthropy raising the federal minimum wage (CBO says) will raise 900,000 people out of poverty but -- whoops-- put 500,000 people out of work. What's a communist to do? You have to hurt the poor to help the poor, I reckon. They're all the same, communists and socialists: they love all mankind but no man. That's why they can kill 60 million people to save mankind.

But look on the bright side: once their stupidity, regulations, and greed (don't forget Wall Street, feeding off the corpse of the nation) has brought the economy to collapse, we'll get a chance to rebuild a just, stable, and prosperous one -- without them in charge!

On to markets!

Ya'll remember how the Dow in January signaled the big drop coming by falling when the other indices were rising? Well, it's repeating that act. Dow today lost 23.99 (0.15%) to 16,130.40 while other indices rose slightly. S&P500 added 2.13 (0.12%) to 1,840.76.

Since 1997 stocks have been building a deadly Megaphone or broadening top pattern. The last highs took the Dow to the very top boundary. 'Tis possible it could make a marginally higher high, but look at the previous two touches (2000 & 2007) & see what you think. Looks about to reverse toward the earth's core. Chart is at http://bit.ly/1htj7y5

Meanwhile the Dow in Gold & Dow in Silver continue to roll downhill. Dow in gold today lost 0.56% to close at 12.18 oz. It has now traversed about half the distance between its 20 DMA above & 200 DMA below. Go look: http://bit.ly/1atJjFJ

But the excitement today comes from the Dow in Silver. Whoa! Sank 15.28 oz (2.03%) to end at 736.62 oz, BELOW the 200 DMA (739.51). Gaze upon it at http://bit.ly/1mrYzYW

Metals have reversed against stocks, and should continue to outperform them.

Those Nice Government Men better get busy earning those fat paychecks and manipulate the US Dollar Index back up into the sky. It fell again today 12 basis points (0.16%) to 80.06. One more day lower puts it in danger of crashing through 79.50 for a freefall. Ultimately, the dollar index will lose another 50% of its value.

It makes no sense at all -- but in the age of government run markets, nothing makes sense anyway -- to see the euro rise today 0.49% to $1.3759. Yet who am I to argue? Who am I to protest that their sovereign debt is bigger than the US's, their banks sicker, their social cohesion weaker? It's nuts.

Yen lost 0.48% to 97.70 cents/Y100. May be the Nipponese NGM are trying to send it lower.

Silver confirmed Friday's breakout & close above the 200 DMA (2112c)today by closing 47.7 cents (2.23%) higher at 2188.8c. If 2100c & 2200c are passed, can 2300c be far behind? Here's silver's monthly chart, http://bit.ly/1gSXKmr

Gold was actually $5 higher yesterday, but today still closed Comex $5.70 (0.43%) higher than Friday at $1,324.70. This also is a two-day close over the 200 DMA ($1,309). Here's gold's monthly, http://bit.ly/1bjrcm0

Both silver & gold have been rising twelve days running leaving both overbought & begging for a correction. However, "overbought" can get a LOT MORE overbought before the rally's over.

I fall back on rational rules. We buy breakouts, & both silver & gold have proven breakouts above their since-April downtrends. Gold has completed and pulled away from an upside down head and shoulders.

Buy any correction. And if you were waiting to buy a breakout, buy now.

Y'all are always my fallback for research. Can any of y'all recommend an infrared sauna for price & quality? If so, email me at franklin@the-moneychanger.com. And thanks.

On 18 February 1861 Jefferson Davis was inaugurated as the first president of the Confederacy, in Montgomery.

On 17 February 1865 the Confederate submarine CS HL Hunley sank the Union ship Housatonic blockading Charleston Harbor. The Hunley has been raised and is on display in Charleston. It was history's first successful submarine attack.

Argentum et aurum comparanda sunt —
Silver and gold must be bought.

— Franklin Sanders, The Moneychanger

Your source for gold and silver. Read our latest reviews and testimonials.
Market Snapshot See more charts and market data
18-Feb-14 Price Change % Change
Gold, $/oz 1,324.70 5.70 0.43%
Silver, $/oz 21.89 0.48 2.23%
Gold/Silver Ratio 60.522 -1.082 -1.76%
Silver/Gold Ratio 0.0165 0.0003 1.79%
Platinum 1,422.90 -5.60 -0.39%
Palladium 736.95 -0.45 -0.06%
S&P 500 1,840.76 2.13 0.12%
Dow 16,130.40 -23.99 -0.15%
Dow in GOLD $s 251.71 -1.46 -0.58%
Dow in GOLD oz 12.18 -0.07 -0.58%
Dow in SILVER oz 736.95 -17.54 -2.32%
US Dollar Index 80.06 -0.12 -0.15%
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: 1,321.70      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,360.03 1,367.96 1,367.96
1/2 AE 0.50 673.56 696.54 1,393.07
1/4 AE 0.25 338.43 354.88 1,419.51
1/10 AE 0.10 138.67 144.73 1,447.26
Aust. 100 corona 0.98 1,289.05 1,298.05 1,324.27
British sovereign 0.24 312.99 324.99 1,380.61
French 20 franc 0.19 248.61 251.56 1,347.41
Krugerrand 1.00 1,344.17 1,354.17 1,354.17
Maple Leaf 1.00 1,336.70 1,351.70 1,351.70
1/2 Maple Leaf 0.50 759.98 693.89 1,387.79
1/4 Maple Leaf 0.25 337.03 353.55 1,414.22
1/10 Maple Leaf 0.10 140.10 144.07 1,440.65
Mexican 50 peso 1.21 1,585.47 1,596.47 1,324.11
.9999 bar 1.00 1,326.33 1,340.70 1,340.70
SPOT SILVER: 21.91      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 25.50 27.50 35.95
VG+ Peace dollar 0.77 22.00 23.50 30.72
90% silver coin bags 0.72 16,166.15 16,416.15 22.96
US 40% silver 1/2s 0.30 6,271.70 6,421.70 21.77
100 oz .999 bar 100.00 2,691.00 2,246.00 22.46
10 oz .999 bar 10.00 219.10 225.10 22.51
1 oz .999 round 1.00 21.91 22.46 22.46
Am Eagle, 200 oz Min 1.00 23.41 24.71 24.71
SPOT PLATINUM: 1,422.90      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,447.90 1,487.90 1,487.90
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© 2015 Little Mountain Corporation, d.b.a. The Moneychanger. All rights reserved. May not be republished in any form, including electronically, without our express permission.

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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