The Moneychanger
Daily Commentary
Monday, 10 March a.d. 2014 Browse the commentary archive

The weather's too good. Spring fever has taken me & I'd rather be outside in the sun than sitting here thinking about markets.

Worse yet, one of our Jersey cows, Becky, had a calf a few days ago and I've been helping milk the last couple of days. If I milked 100 years I would never get over the miracle of it. Not just the cow giving creamy rich milk by the bucket, not just that unspeakable miracle, but her letting me sit down beside her, stick my head in her flank, grab a teat & milk. Y'all think there's something better, but there ain't.

I've been thinking that we're all like folks living on the slope of a volcano in a hut. We are so used to the rumbling & the smoke and the fire on the mountain that we just discount it all, but one day Vesuvius will erupt. I keep studying the US economy and especially its monetary state, and all I can see is smoke and earthquake and fire and lava flow. We've been living with it so long we've become hardened to it.

The Fed & the government have one job: keep the volcano from blowing off. Keep it burning slowly so nobody moves off the mountain. And here I am fiddling & fuming about whether gold might go up or down $20, when I simply ought to buy before the whole mountain goes up in flame.

Stocks sat down today after a little run on Friday. Dow then rose to an intraday high of 16,505.7, closing in on the December intraday high at $16,588.25 & working on ending the non-confirmation between the Dow & other indices. Today the Dow lost 34.04 (0.21%) to 16,418.68 while the S&P500 backed off 0.87 (0.5%) to 1,877.17. No sign of any change to the uptrend.

Dow in Gold today lost 0.33% for a close at 12.24 oz (G$253.02 gold dollars). I have been expecting a counter trend rally through the downtrend line, correcting the long fall from December. Well, Friday the DiG just walked through the downtrend line and the 20 DMA (12.23 oz), so momentum is up, but listless.

Dow in silver dropped 0.28% to 785.21 oz. Has not yet closed above its downtrend line but is above the 20 DMA (763.35 oz). All this is baffling because silver & gold keep hanging on rather than following through with a correction downward. More of that below.

Think today about copper, industrial metal so the gauge for economic outlook. "Dr. Copper, the metal with a PhD in economics." And the proverb, "Every major stock market top has a copper roof." In the last two days copper has broken down badly, from $3.20 to $3.032 today, a waterfall on high volume. If it breaks $2.98, well, it would fall a long ways.

Copper made its high and entered a correction before silver did in April 2011. No argument, copper is pointing to lower economic activity, a LOT lower if it breaks $3.00.

Then there's the US dollar. It fell out of bed last week and has only modestly recovered. Gained a whole basis point today to end at 79.75. Needs to climb over 80 soon to recapture respect.

More trouble for the dollar: the 10 year treasury yield rose to 2.821% intraday high on Friday. The lynchpin of the Fed's insane strategy is keeping interest rates low. If the market wrenches control of rates out of the Fed's hands, its entire scheme could explode.

Meanwhile among the other lowlife white trash scabby fiat currencies the Euro tried to break out Friday and reached $1.3907. It appears determined to move higher, and should it breach that mark much it will. Yet I am scratching my head: how can European manufacturers stand the euro that high, as it kills their business and the European economy depends far more on exports than the American. Is the Fed passing the ECB some quid pro quo for letting the dollar drop so low, or is its own inherent sorriness dragging it down? A deep question.

Yen is knocked back every time it tries to rally. Now its below its 20 & 50 day moving averages again, and both are below the 200. Cold fall another 10 to 15 cents per Y100. Closed today at 96.85, up 0.01%. Euro fell today 0.4% to $1.3877.

A couple of things keep me from raving gold & silver bullishness. I am bullish already, just not foaming at the mouth. First is the 200 day moving averages, which are still moving down, although very slowly. Those need to turn up. Second is confirmation by climbing over those last two tops, $1,360 & $1,434. So maybe we ought to peck at buying on the way up.

Gold climbed $3.30 to $1,341.40 while silver fell back 1.8 cents to 2087.9. This is merely trading back & forth over the same ground without any progress. Gold will soon meet its 20 DMA ($1,324) and the rising uptrend line about $1,320. It could fall all the way to $1,280 without damaging its rally. Silver has fallen beneath its 200 DMA (2099c today) & bounced off the top boundary of the Nov-Feb trading range. 50 DMA lies not far below at 2038c.

Silver & gold are rallying, and most likely the December low made a firm double bottom with June. All we need now is more confirmation.

I'm a Herrick Kimball junkie. Herrick has a website called "The Deliberate Agrarian" and a splendid and direct writer. Besides, we both like the same things, but Herrick's a lot tougher than I am.

On his website he offers all sorts of products and plans. We are still using the chicken plucker we made from his plans six or eight years ago. It's warm & breezy outside today, & my mind started turning to gardening and Herrick's latest, "The Planet Whizbang Idea Book For Gardeners." He calls it "an eclectic selection of inspiring project plans, useful tips, and how-to advice for people who enjoy growing their own food." There's every kind of idea here to make gardening more efficient, easier, & more fun. Plus, the book is filled with neat illustrations of the plans. Y'all do yourselves a favor & go visit and look at all the stuff Herrick's got there. Look especially at that "Idea Book For Gardeners." You'll want one of those.

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
10-Mar-14 Price Change % Change
Gold, $/oz 1,341.40 3.30 0.25%
Silver, $/oz 20.88 -0.02 -0.09%
Gold/Silver Ratio 64.246 0.213 0.33%
Silver/Gold Ratio 0.0156 -0.0001 -0.33%
Platinum 1,476.60 -6.40 -0.43%
Palladium 776.65 -4.95 -0.63%
S&P 500 1,877.17 0.87 0.05%
Dow 16,418.68 34.04 0.21%
Dow in GOLD $s 253.02 -0.10 -0.04%
Dow in GOLD oz 12.24 -0.00 -0.04%
Dow in SILVER oz 786.37 2.31 0.29%
US Dollar Index 79.75 0.01 0.01%
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: 1,340.50      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,378.03 1,387.42 1,387.42
1/2 AE 0.50 683.15 706.11 1,412.22
1/4 AE 0.25 341.57 359.76 1,439.03
1/10 AE 0.10 140.65 146.78 1,467.85
Aust. 100 corona 0.98 1,307.39 1,316.39 1,342.98
British sovereign 0.24 317.92 322.67 1,370.73
French 20 franc 0.19 252.15 255.12 1,366.48
Krugerrand 1.00 1,356.59 1,366.59 1,366.59
Maple Leaf 1.00 1,355.50 1,370.50 1,370.50
1/2 Maple Leaf 0.50 770.79 703.76 1,407.53
1/4 Maple Leaf 0.25 341.83 358.58 1,434.34
1/10 Maple Leaf 0.10 142.09 146.11 1,461.15
Mexican 50 peso 1.21 1,608.03 1,619.03 1,342.81
.9999 bar 1.00 1,345.19 1,359.50 1,359.50
SPOT SILVER: 20.80      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 26.25 28.25 36.93
VG+ Peace dollar 0.77 22.25 23.75 31.05
90% silver coin bags 0.72 15,440.43 15,690.43 21.94
US 40% silver 1/2s 0.30 5,942.78 6,092.78 20.65
100 oz .999 bar 100.00 2,084.50 2,134.50 21.35
10 oz .999 bar 10.00 208.45 213.45 21.35
1 oz .999 round 1.00 20.90 21.40 21.40
Am Eagle, 200 oz Min 1.00 22.30 23.50 23.50
SPOT PLATINUM: 1,476.60      
Plat. Platypus 1.00 1,491.60 1,508.60 1,508.60
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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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