The Moneychanger
Daily Commentary
Wednesday, 9 April a.d. 2014 Browse the commentary archive

Today near Pittsburgh a high school student with two kitchen knives stabbed 20 other kids before the principal tackled him. This brings to mind a number of questions: How long before the Obama administration acts to outlaw kitchen knives and end tragic incidents like this forever? Why do people need those assault-style butcher knives in their kitchens anyway, since an ordinary dull table knife will cut everything but meat? Why do people need more than one sharp knife to run a kitchen? Why do knife-nuts need so many knives? Are serrated knives EVER safe?

It also raises another line of questioning: Were there no chairs in that high school that someone could pick up and throw at the knifer? Were the students so trained to call 911 that nobody knew how to protect himself? Was the principal the only person trained to tackle knifers?

Finally the third set of questions, along the "Is it real or Memorex?" line. Did this really happen? If it did really happen, what sort of psychotropic drugs was the knifer taking? What other important thing happening in the world did this event distract our attention from?

If all this weren't crazy enough, ponder this: Greece, yes, the Greek government which is bankrupt from now until, oh, about a.d. 2255, is about to re-enter the bond market to sell 2.5 billion Euros worth of bonds. Top that: they are looking for an interest rate of 5.3% or less. Mean as I sound, I have to say it: any loony who buys those bonds deserves what he will get, which will be another default. The market is not benevolent.

Minutes of the last FOMC meeting were released today & showed that all the members agreed to jettison any objective standards for action. That is, they would keep on tapering and suppressing interest rates until, well, I reckon until it FEELS good. Why this should make stock investors more optimistic -- to learn that the pilot has no idea where he is going and won't know to land when he gets there -- I could not say, but stocks did rise today, although they may have risen for propitious astrological signs, for all I know.

Listen, I know that a 1.1% increase in the Dow (up 181.04 to 16,437.18) & the S&P500 (up 20.22 to 1,872.18 makes everybody feel rich, but today hasn't changed the charts. I'm not saying they won't change and turn up, but this alone didn't do it. It did close both above their 20 DMAs, but still below relevant resistance and coming off a downward key reversal.

Dow in Silver jumped up 2.6% to 831.42 (S$1,074.97). Remains above the 20 DMA but the MACD has signaled sell. Dow in gold rose 1.28% to 12.59 oz (G$260.26 gold dollars). Trying to roll over downward.

Yes, yes, markets & the FOMC conspired to leave me with egg all over my face. Or did they? Silver fell 28.7 cents to 1975.5c while gold lost $3.20 to $1,305.50. But isn't that the durndest thing: gold's now trading in the aftermarket at $1,314.10 (as I expected) & silver at 1991c. Can anybody spell paint-the-tape?

How did it play out? About New York opening somebody sold lots of gold, driving the price down form $1,308 to $1,301. Traded sideways from 9:00 to 3:00 p.m, gapped down from $1,305 for an instant, then gapped above $1,306 and shot clean to $1,315. Then it backed off but held above $1,310.

Silver? Ditto.

Gold/Silver ratio today rose to 66.085, not a helpful sign, and silver persists in lagging behind and not closing above 2015c. Ahh, but today silver's low at 1960c painted a double bottom for the move with an earlier low at 1958c. In fact, silver has four times defended this level. That could be good OR bad.

Still I am persuaded that silver & gold have posted their lows &, once silver gets into gear, will rise. Closes below $1,277 or $1,960 would gainsay that interpretation and open the door to lower prices.

A lot of the time I feel like the fellow in 1939 warning "War!" after Germany invaded Poland. Naw, naw, that'll never happen, the ostriches said all through the fall of 1939 and until the Battle of France began in May 1940. This Sitzkrieg or Phoney War will just dribble out to nothing, and things will settle back to the way they were.

In the same way for years I have watched and warned that the Federal Reserve and the US government are pushing the country off the monetary cliff. 2008 scared some folks, but all the Fed had to do was quadruple the money supply & stocks turned back up and everybody started purring again, all warm and fuzzy, except the millions unemployed.

Here's the truth, O holders of stocks & trusters in the dollar: you are the French in 1940 sitting snug & warm behind the Maginot Line. Wann der Sitzkrieg haelt, dann faengt der Blitzkrieg an. When the Sitzkrieg ends, the Blitzkrieg begins.

On the remote chance I might be right, y'all ought to buy a little silver & gold.

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
9-Apr-14 Price Change % Change
Gold, $/oz 1,305.50 -3.20 -0.24%
Silver, $/oz 19.76 -0.29 -1.43%
Gold/Silver Ratio 66.085 0.787 1.20%
Silver/Gold Ratio 0.0151 -0.0002 -1.19%
Platinum 1,437.00 -2.80 -0.19%
Palladium 782.80 6.70 0.86%
S&P 500 1,872.18 20.22 1.09%
Dow 16,437.18 181.04 1.11%
Dow in GOLD $s 260.27 3.50 1.36%
Dow in GOLD oz 12.59 0.17 1.36%
Dow in SILVER oz 832.05 20.95 2.58%
US Dollar Index 79.58 -0.25 -0.31%
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: 1,314.10      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,349.58 1,360.09 1,360.09
1/2 AE 0.50 669.68 692.20 1,384.40
1/4 AE 0.25 334.84 352.67 1,410.69
1/10 AE 0.10 137.88 143.89 1,438.94
Aust. 100 corona 0.98 1,281.64 1,290.64 1,316.71
British sovereign 0.24 311.66 316.41 1,344.13
French 20 franc 0.19 247.18 250.19 1,340.08
Krugerrand 1.00 1,331.18 1,341.18 1,341.18
Maple Leaf 1.00 1,329.10 1,344.10 1,344.10
1/2 Maple Leaf 0.50 755.61 689.90 1,379.81
1/4 Maple Leaf 0.25 335.10 351.52 1,406.09
1/10 Maple Leaf 0.10 139.29 143.24 1,432.37
Mexican 50 peso 1.21 1,576.36 1,587.36 1,316.54
.9999 bar 1.00 1,318.70 1,333.10 1,333.10
SPOT SILVER: 19.91      
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 15,057.90 15,307.90 21.41
US 40% silver 1/2s 0.30 5,681.70 5,831.70 19.77
100 oz .999 bar 100.00 1,996.00 2,046.00 20.46
10 oz .999 bar 10.00 199.60 204.60 20.46
1 oz .999 round 1.00 20.01 20.51 20.51
Am Eagle, 200 oz Min 1.00 21.41 22.61 22.61
SPOT PLATINUM: 1,437.00      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,452.00 1,469.00 1,469.00
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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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