The Moneychanger
Daily Commentary
Monday, 24 March a.d. 2014 Browse the commentary archive

We had a fine time at the Upcountry Literary Festival in Union, South Carolina. Susan & I saw our friend Karen Stokes again & picked up her new book, The Soldier's Ghost: A Tale of Charleston. Set just as the War Between the States ends, it is a touching and wondrously woven mystery. Characters are well drawn and faithful to the period. It's only 111 pages, so Susan & I read it to each other on the way home. Readers young and old will enjoy this one. Only $6.29 from Amazon,

Markets are teetering back & forth & not even blizzard of new bucks from the Fed can give them rest and direction.

Sorta spooky in stocks. On Friday the S&P500 made a double top intraday at 1,883.97 with the 1,883.57 March high. That also flashed the first half of a key reversal (new intraday high for the move with a lower close for the day) & confirmed that as a key reversal today with a lower close. That 1,857.64 close, down 9.08 or 0.49% also fell below the old uptrend line I've been writing about.

That ain't all. Since that earlier March top the S&P500 has formed an even-sided triangle -- Friday's high punched above it but Friday's close fell back within it). Today it closed near the bottom boundary of that even-sided triangle.

I remind y'all that even-sided triangle formations do not hint which way they will break out, only that they will soon. With that spooky double top and an MACD pointing downward, odds lean to a downward breakout. However, volume fell so maybe 'twill teeter back the other way. Chart's at

Dow closed at 16,276.69, lower by 26.08 (0.16%). It has also painted both halves of a key reversal Friday & today, & closed below its 20 day moving average (as did the S&P500).

I am biased to expect another peak between now & June, but I can't argue with a chart. This one looks heavy, like a cast-iron kite.

Zut alors! The Dow in Metals jumped up today, but struck some provocative points. Dow in gold rose 1.61% to 12.41 oz (G$256.54 gold dollars) & stopped on the 50 DMA (12.41 oz). Could market the upward correction's limit, but no other indicators argue for that outcome except the full stochastics.

As we always expect from more volatile silver, the Dow in Silver has moved further, up today by 0.95% to 811.12 oz (S$1,048.72 silver dollars). That's well above its 50 DMA (784.40 oz) & at an old internal resistance line whose lineage would be too complicated to explain. Momentum is up for the nonce, but those who swapped stocks for silver back in June 2001 when the Dow cost 2,562 oz are not much bothered.

US dollar index has once again proven true to character & stabbed its friends in the back. Last week it broke bravely upside out of a bullish falling wedge, slammed into its 50 DMA at 80.50, then fell back as fast as it paper legs cloud carry it. Closed today at 80.06, 19 basis points (0.24%) cheaper than Friday. Technically still in an uptrend, but to me remains esthetically & instinctually a piece by Bela Bartok or Marc Chagall. (Call me a Philistine, I don't care. Y'all expect a nacheral born fool from Tennessee would like music that don't muse & pichers that don't picher nothin'? Not likely.)

Euro meanwhile appeared to recover from its breakdown last week. It climbed 0.34% to $1.3840. Say what you will, it is a chart I would never buy.

Yen moved a giant 0.1% up to 97.82 cents/Y100. Range-bound, & sayeth naught until it closeth over 99.24 or beneath 96.38.

Gold caught an updraught on Friday but hit the skids today, losing $24.80 to close Comex at $1,311.20.

Until about 9:30 EST gold was fine if lower, trading about $1,325. Then it dropped to $1,315, traded sideways, and fell as low as $1,308.50. Tomorrow & the next day might see gold climb, but the ultimate target here is [likely] either the meeting of lateral support & the 50 & 200 DMAs around $1,300, or the 50% correction of the December - March rally at $1,287, coinciding with the neckline of gold's upside down head & shoulders traced out November - January.

Lo, this is not grist for y'all's panic mill. It's a correction. Normal, after a long rally. Take a deep breath.

Silver today lost 24.3 cents & closed Comex at 2004.3c. Like gold, silver was rocking along smoothly between 2010c and 2025c until about 9:30 when the selling struck, taking it down to 2003c. Silver fought back with a rally to 2020c, but the rest of the day wore it down. In the aftermarket it fell even lower than the Comex 1997c low.

In silver look for an ultimate (by month's end) target from 1975c to 1945c. More likely is something around 1950c - 1960c, where the downtrend line from April 2013 now intersects. Recall that silver burst through that line on 14 February, so it would be typical for it to kiss back to that breakaway line before it resumes rallying. Another nested target is the 75% correction of the Dec - February rally at 1958.5c. It has already fulfilled a 61.8% correction at 2004c.

Gold & silver will probably spend most of the rest of March correcting. Soon will come an exceptionally favorable buying opportunity. Watch. Get ready.

On 24 March 2014 Charles II of England awarded the Carolinas in America to eight noblemen who had helped restore him to the throne. One of the few good things a Stuart ever did.

On 24 March 1721 the immortal Johann Sebastian Bach published the six Brandenburg Concertos.

Whoops. On 24 March 1862 Abolitionist Wendell Phillips speaks to a Cincinnati crowd about emancipation & is pelted by eggs. Maybe the war wasn't about slavery after all.

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
24-Mar-14 Price Change % Change
Gold, $/oz 1,311.20 -24.80 -1.86%
Silver, $/oz 20.04 -0.24 -1.20%
Gold/Silver Ratio 65.419 -0.439 -0.67%
Silver/Gold Ratio 0.0153 0.0001 0.67%
Platinum 1,430.70 4.80 0.34%
Palladium 795.35 6.60 0.84%
S&P 500 1,857.64 -9.08 -0.49%
Dow 16,276.69 -26.08 -0.16%
Dow in GOLD $s 256.61 4.36 1.73%
Dow in GOLD oz 12.41 0.21 1.73%
Dow in SILVER oz 812.09 8.44 1.05%
US Dollar Index 80.06 -0.19 -0.24%
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SPOT GOLD: 1,309.60      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,344.96 1,355.44 1,355.44
1/2 AE 0.50 667.39 689.83 1,379.66
1/4 AE 0.25 333.69 351.46 1,405.86
1/10 AE 0.10 137.40 143.40 1,434.01
Aust. 100 corona 0.98 1,277.25 1,286.25 1,312.23
British sovereign 0.24 310.59 315.34 1,339.60
French 20 franc 0.19 246.34 249.35 1,335.58
Krugerrand 1.00 1,324.01 1,334.01 1,334.01
Maple Leaf 1.00 1,324.60 1,339.60 1,339.60
1/2 Maple Leaf 0.50 753.02 687.54 1,375.08
1/4 Maple Leaf 0.25 333.95 350.32 1,401.27
1/10 Maple Leaf 0.10 138.82 142.75 1,427.46
Mexican 50 peso 1.21 1,570.96 1,581.96 1,312.07
.9999 bar 1.00 1,314.18 1,328.60 1,328.60
SPOT SILVER: 19.94      
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 14,897.03 15,147.03 21.18
US 40% silver 1/2s 0.30 5,689.08 5,839.08 19.79
100 oz .999 bar 100.00 1,998.50 2,048.50 20.49
10 oz .999 bar 10.00 199.85 204.85 20.49
1 oz .999 round 1.00 20.04 20.54 20.54
Am Eagle, 200 oz Min 1.00 21.44 22.64 22.64
SPOT PLATINUM: 1,430.70      
Plat. Platypus 1.00 1,445.70 1,462.70 1,462.70
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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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