The Moneychanger
Daily Commentary
Tuesday, 1 April a.d. 2014 Browse the commentary archive

I'm not a bit good for this today. Sun is shining, it's about 78 degrees, we have a place covered with daffodils, and we have 47 new piglets. Too much to distract me. But here goes anyway:

Think about the whole mess as a shift from real assets to paper assets and a shift back. In 2011 commodities -- real stuff -- all peaked after long rises, and have spent about 2-1/2 years correcting those rallies. They are not commodities, but they are real, so I include silver & gold under that heading "commodities."

Where's my proof? Look at the Reuters -CRB (CCI) commodity index, or at platinum, or palladium, or gold, or silver, or oil, and now copper. That last seems to be recovering from its bad fall, & if it can close above $3.25 will turn up. All of these have either broken out above their downtrend lines from 2011 peaks or are now challenging those lines. Meanwhile, for the first quarter in a long time, the Dow did not rise in the first quarter 2014, and the S&P500 only a trivial amount.

Investor attention is shifting from paper to real assets. And a roll like that doesn't happened overnight, it wheels slowly, so you have to be patient. Against this long term backdrop all this daily back & forth confusion is unrolling. Helps to lift up your eyes & look at the horizon now & then to make sure where you're going. Later this year a crisis & hard fall will come in paper assets, namely, stocks, but it will take a long time before the crowd understands that the tides have turned.

I think that stocks broke out to the upside today, but they need one more up day to confirm that. Dow rose 74.95 (0.46%) to 16,532.61 and the S&P bumped up 13.18 (0.7%) to 1,885.52, a new high. That pokes the heads of both indices above the upper boundary of that, and since an uptrend has long been in progress, the presumption lies with higher prices. Looking for a top in May, but maybe later.

On strength in stocks the Dow in Metals indicators are still correcting upward. Dow in gold rose 0.81% today, reaching 12.92 oz (G$267.08 gold dollars). To give you a feeling where this is, the December high was 13.8 oz (G$285.57) and the Dow in gold has not quite retraced 61.8% of the plunge from that high.

The Dow in silver reached 839.73 oz (0.78%), correcting nearly 90% of the fall from December to mid-February. December high was 853.15 oz, and who knows, it may retrace that whole fall. That would paint a big double top on the chart. Both the Dow in Gold & Dow in Silver are way overbought & itching to drop.

The infamous US dollars index (well, the index isn't infamous, but the dollar surely is) behaved very oddly today: it closed unchanged. Traded in a narrow range from 80.12 to 80.29 and closed at 80.24. Inspires confidence like watching your pilot climb on the plane, reach in his pocket and take out a half pint of whiskey, throw it back for a long slug, and then turn & smile at you.

Not that the Euro looks much better. It rose 0.15% today to $1.3793, but remains under its 20 day moving average and a strong downtrend line, charming as a slug in salt.

Japanese yen lost 0.45% in an accelerating downtrend. Closed at 96.46, right at the last low of 96.38 cents/Y100. Below that it has no support before 95.51. Yea, it stinketh.

Silver was basically flat today. Closed Comex 6-1/2 cents (0.3%) lighter than it started, but at 1966.9 that was no big fall. Range was 1991 - 1964c. Gold lost $3.80 (0.3%) & ended Comex at $1,279.60.

Gold continues to dance over & under that neckline from the Dec-Feb. upside down Head & Shoulders. Stochastic is trying to turn up, lower now that it was at the December low. So is the rate of change, & the RSI is nearly that low. It would be very surprising to see a market as oversold as gold stage another big drop. Possible, but not likely. Volume is dropping, a sign the move is drying up.

What about silver? Well, RSI is lower than the December low, as is the rate of change & full stochastics. The downtrend has run out of steam.

Oh, I know, the Federal Reserve may announce tomorrow they've learned how to transmute compost into gold, & drive the market straight down, but that is NOT in the charts. Maybe a hair more price erosion, but very little. And if the Fed did announce that, you can be sure that the next day they would announce, "Whoops! We made a mistake! We meant to say 'transmute compost into loam.' Typo. Never mind."

I bought more silver today, and a little gold.

On 1 April 1572 the Sea Beggars (Watergeuzen) landed in Holland and captured the small town of Briel during the 80 Years War for Dutch independence from Spain. It was the first foothold on land for the Dutch Republic. Depending on which side you take, the Sea Beggars were either filthy pirates or glorious patriots. That always happens in a war for independence & liberty. The reigning tyranny calls the patriot a terrorist, and the patriot bears the shame proudly.

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
1-Apr-14 Price Change % Change
Gold, $/oz 1,279.60 -3.80 -0.30%
Silver, $/oz 19.67 -0.07 -0.33%
Gold/Silver Ratio 65.057 0.022 0.03%
Silver/Gold Ratio 0.0154 -0.0000 -0.03%
Platinum 1,428.00 9.50 0.67%
Palladium 708.10 2.60 0.37%
S&P 500 1,885.52 13.18 0.70%
Dow 16,532.61 74.95 0.46%
Dow in GOLD $s 267.08 2.00 0.75%
Dow in GOLD oz 12.92 0.10 0.75%
Dow in SILVER oz 840.54 6.57 0.79%
US Dollar Index 80.24 0.00 0.00%
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: 1,280.70      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,315.28 1,325.52 1,325.52
1/2 AE 0.50 652.65 674.61 1,349.22
1/4 AE 0.25 326.32 343.71 1,374.83
1/10 AE 0.10 134.37 140.24 1,402.37
Aust. 100 corona 0.98 1,249.07 1,258.07 1,283.48
British sovereign 0.24 303.74 308.49 1,310.48
French 20 franc 0.19 240.90 243.96 1,306.68
Krugerrand 1.00 1,298.63 1,308.63 1,308.63
Maple Leaf 1.00 1,295.70 1,310.70 1,310.70
1/2 Maple Leaf 0.50 736.40 672.37 1,344.74
1/4 Maple Leaf 0.25 326.58 342.59 1,370.35
1/10 Maple Leaf 0.10 135.75 139.60 1,395.96
Mexican 50 peso 1.21 1,536.29 1,547.29 1,283.31
.9999 bar 1.00 1,285.18 1,299.70 1,299.70
SPOT SILVER: 19.77      
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 14,918.48 15,168.48 21.21
US 40% silver 1/2s 0.30 5,638.93 5,788.93 19.62
100 oz .999 bar 100.00 1,981.50 2,031.50 20.32
10 oz .999 bar 10.00 198.15 203.15 20.32
1 oz .999 round 1.00 19.87 20.37 20.37
Am Eagle, 200 oz Min 1.00 21.27 22.47 22.47
SPOT PLATINUM: 1,428.00      
Plat. Platypus 1.00 1,443.00 1,460.00 1,460.00
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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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