The Moneychanger
Weekly Commentary
Friday, 28 February a.d. 2014 Browse the commentary archive
Here's the weekly scorecard:
  21-Feb-14 27-Feb-14 Change % Change
Silver, cents/oz. 2,178.20 2,131.40 -46.80 -2.1
Gold, dollars/oz. 1,323.90 1,331.60 7.70 0.6
Gold/silver ratio 60.780 62.475 1.696 2.8
Silver/gold ratio 0.0165 0.0160 -0.0004 -2.7
Dow in Gold Dollars (DIG$) 251.44 252.62 1.18 0.5
Dow in gold ounces 12.16 12.22 0.06 0.5
Dow in Silver ounces 739.29 763.47 24.18 3.3
Dow Industrials 16,103.30 16,272.65 169.35 1.1
S&P500 1,836.25 1,854.29 18.04 1.0
US dollar index 80.30 80.32 0.02 0.0
Platinum 1,426.30 1,452.15 25.85 1.8
Palladium 740.00 742.25 2.25 0.3

I'm going to the Space Center in Huntsville with some of my grandchildren tomorrow, so I'm sending you the Friday report on Thursday.

This week probably put the cap on silver & gold for a little while. Stocks are laboring to rise, but not convincingly. US dollar index is stuck, spinning wheels.

Mama Yellen spake to the Senate Banking Committee, and her remarks are the reason cited by the media for stocks rise today. As usual, I couldn't tease anything so optimistic out of her remarks, but observed she has adopted the Greenspan Technique of saying nothing in a lot of words. But if stocks were willing to rise on a speech like that, they were rising anyway.

S&P500 made a new high close at 1,854.29, up 9.13 (0.49%) today and 5.99 higher than its last all-time high in January (1,848.30). There's an old rule that says that breakouts don't count until they exceed by 2% (some say 3%). So the S&P500 really needs a new high at (1,848.30 x 1.02%) 1,885.27 to create real excitement.

Meanwhile, back on the chart, the S&P500 has merely sketched out a megaphone or broadening top, which you can see at http://bit.ly/1dGbvAZ This can be a very long, frustrating formation, making higher highs and lower lows, reversing again and again until finally it breaks down. And the S&P500 might move higher still.

But other markets ought to make stock buyers uneasy. Why is the Dow Industrials lagging so badly? Why is the Dow Transportation average lagging, too? Dow Industrial Average today rose 0.46% or 74.24 to 16,272.65. That remains a right smart below the 31 December 2013 16,588.25 intraday high.

Think of silver & gold. They might play leapfrog from time to time, but they can't continually contradict each other. That signals a reversal ahead. So it is with the various stock indices, they ought to confirm each other, & when they don't, they're whispering a warning.

US dollar index today closed at 80.32, losing 12 basis points (0.15%) or half of what it gained yesterday. The Dollar index stands in a position at its trading range's bottom where it might turn & climb, but so far it can't even pierce its 20 DMA (80.63). Maybe Mama Janet can talk it up.

Euro retraced today what it lost yesterday, up 0.17% to $1.3710. It has rolled over and acts as if it is breaking down. Yen gained 0.24% to 97.93, popping above its 20 DMA as if it had a mind to rise.

Silver & gold both rose today, silver by 6 cents (0.28%) to 2131.4c and gold by $3.60 (0.27%) to $1,331.60.

All the same, other indicators still imply silver & gold must correct a while before rising further. A 50% correction of the long upmove from the December low would take silver back to 2050c, where silver broke out on 14 February. A kiss back to the breakaway point is fairly common. For gold the breakout was about $1,280, the break out from an upside down head and shoulders formation. But $1,300 was important resistance, so it might stop there.

Of course, I might have it all wrong and this might prove no more than a short breath-catcher before gold tries again to break through $1,360 resistance. When I'm confused, I just sit still till it passes. Gold closing above $1,350 and silver above 2220c would contradict my correction expectation.

Any correction gives us one last spendid opportunity to swap gold for silver above 60:1, holding the silver to swap back below 32:1. Act now.

On 27 February 1933 the Reichstag (German parliament) building in Berlin was set on fire. Much evidence pointed to a communist plot, but many historians wonder if the Nazis hadn't simply staged the fire as a "false flag" operation. Either way, the fire gave them an excuse to suspend civil liberties and arrest all their enemies, many of whom were communist parliamentarian. That neatly gave the Nazis a parliamentary majority also. Wow, I'm glad we don't live in a country where people wonder about the government staging "false flag" operations. What? What about Fort Sumter? Pearl Harbor? Tonkin Gulf? 9/11? I don't know about any of that.

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
27-Feb-14 Price Change % Change
Gold, $/oz 1,331.60 3.60 0.3
Silver, $/oz 21.31 0.06 0.3
Gold/Silver Ratio 62.475 0.167 0.3
Silver/Gold Ratio 0.0160 0.0000 0.3
Platinum 1,452.80 24.60 1.7
Palladium 742.25 10.75 1.5
S&P 500 1,854.29 9.13 0.5
Dow 16,272.65 74.24 0.5
Dow in GOLD $s 252.62 0.50 0.2
Dow in GOLD oz 12.22 0.02 0.2
Dow in SILVER oz 763.47 1.34 0.2
US Dollar Index 80.32 -0.12 -0.1
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: 1,331.60      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,367.55 1,378.21 1,378.21
1/2 AE 0.50 678.61 701.42 1,402.84
1/4 AE 0.25 339.30 357.37 1,429.47
1/10 AE 0.10 139.71 145.81 1,458.10
Aust. 100 corona 0.98 1,298.71 1,307.71 1,334.12
British sovereign 0.24 315.81 320.56 1,361.77
French 20 franc 0.19 250.47 253.46 1,357.58
Krugerrand 1.00 1,347.58 1,357.58 1,357.58
Maple Leaf 1.00 1,346.60 1,361.60 1,361.60
1/2 Maple Leaf 0.50 765.67 699.09 1,398.18
1/4 Maple Leaf 0.25 339.56 356.20 1,424.81
1/10 Maple Leaf 0.10 141.15 145.14 1,451.44
Mexican 50 peso 1.21 1,597.35 1,608.35 1,333.96
.9999 bar 1.00 1,336.26 1,350.60 1,350.60
SPOT SILVER: 21.26      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 25.50 27.50 35.95
VG+ Peace dollar 0.77 22.50 24.50 32.03
90% silver coin bags 0.72 15,629.90 15,879.90 22.21
US 40% silver 1/2s 0.30 6,079.95 6,229.95 21.12
100 oz .999 bar 100.00 2,131.00 2,181.00 21.81
10 oz .999 bar 10.00 213.10 218.10 21.81
1 oz .999 round 1.00 21.36 21.86 21.86
Am Eagle, 200 oz Min 1.00 22.76 23.96 23.96
SPOT PLATINUM: 1,452.80      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Platinum Platypus 1.00 1,467.80 1,484.80 1,484.80
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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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