The Moneychanger
Daily Commentary
Tuesday, 15 April a.d. 2014 Browse the commentary archive

You'd think that an institution charged with promoting the gold industry would produce reports that at least cast the best light on gold's prospects. You'd think wrong, if you're thinking about the World Gold Council. They've been negative on gold for, oh, the last 14 years or so. Today they issued a report that contained a nugget about Chinese business using physical gold as collateral for bank credit ($40 bn worth) but they managed to tease a gloomy forecast even out of this inventive monetary use. That and bad economic news out of China appeared to be the catalyst for gold's drop today.

But when the drop is ready, the cause appears. That fall was likely already in the market, and the report, plus jitters over the first anniversary of the April Massacre in gold and silver last year, furnished an excuse. I had been thinking that gold had possibly completed a three leg (A-B-C) correction, but clearly another leg remains. That began today.

Gold dropped $27.20 (2.1%) to $1,300 while silver erased 52.1 cents to close Comex at 1947.8c.

For gold, two outcomes are possible. First is a return to or near the April low ($1,277.40). Second is a drop to a lower low, $1,240 - $1,260. Yet a third possible outcome is that the June & December lows were not a double bottom and one further drop may come. I account that the least likely, & look for a low here by the end of the week, but I'm no more'n a nacheral born durnd fool from Tennessee, so what do I know?

Silver and gold have come unsynchronized. Silver's drop today wrecked the 1960c support, and sets the stage for a spike to next support about 1897c. This should come fast, next three or so days.

Stocks recovered a bit today. Dow Closed at 16,262.56, up 89.2 (0.6%) and even jumped over its 50 DMA. S&P500 lifted 12.37 (0.7%) to 1,842.98, but not above its 50 DMA. Nasdaq Comp nearly touched its 200 DMA at 3,942.51 when it hit a low of 3,946.03, then turned up. Did that surprise anybody, that buyers were lurking at the 200 DMA?

Stocks have suffered brutal technical damage. I suspect we will look back and see the early -2014 new all time highs as the peaks in stocks, although I still expect one last peak, maybe lower, maybe higher, in May.

Although the US Dollar index rose only 6 basis points (0.7%) to 79.89, clearly money has flown into US treasuries because they are higher & the yield on the 10 year treasury is trying to break down, indeed, has broken down. Copper fell off the cliff with the bad news out of China, and closed at $2.99. Nasty break. The other scabrous, disgusting fiat currencies did nothing today, & the Central banking criminals were quiet.

Y'all keep your heads. Lift your eyes to the horizon. In the next few days the market will hand you a superb buying opportunity in silver & gold. Get locked and loaded.

Please remember I will be away the rest of the week attending a grazing seminar. I won't be sending commentaries, but will return on Easter Tuesday.

Y'all have a blessed Easter celebration!

On 15 April 1729 Johann Sebastian Bach's St. Matthew Passion premiered in Leipzig. Now THAT is something to remember.

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
15-Apr-14 Price Change % Change
Gold, $/oz 1,300.00 -27.20 -2.05%
Silver, $/oz 19.48 -0.52 -2.61%
Gold/Silver Ratio 66.742 0.379 0.57%
Silver/Gold Ratio 0.0150 -0.0001 -0.57%
Platinum 1,444.10 -22.70 -1.55%
Palladium 796.15 -15.60 -1.92%
S&P 500 1,842.98 12.57 0.69%
Dow 16,262.56 89.32 0.55%
Dow in GOLD $s 258.60 6.69 2.66%
Dow in GOLD oz 12.51 0.32 2.66%
Dow in SILVER oz 834.92 26.22 3.24%
US Dollar Index 79.89 0.06 0.08%
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: 1,301.40      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,335.24 1,346.95 1,346.95
1/2 AE 0.50 663.20 685.51 1,371.02
1/4 AE 0.25 331.60 349.26 1,397.05
1/10 AE 0.10 136.54 142.50 1,425.03
Aust. 100 corona 0.98 1,269.25 1,278.25 1,304.07
British sovereign 0.24 308.65 313.40 1,331.34
French 20 franc 0.19 244.79 247.82 1,327.38
Krugerrand 1.00 1,318.32 1,328.32 1,328.32
Maple Leaf 1.00 1,316.40 1,331.40 1,331.40
1/2 Maple Leaf 0.50 748.31 683.24 1,366.47
1/4 Maple Leaf 0.25 331.86 348.12 1,392.50
1/10 Maple Leaf 0.10 137.95 141.85 1,418.53
Mexican 50 peso 1.21 1,561.12 1,572.12 1,303.91
.9999 bar 1.00 1,305.95 1,320.40 1,320.40
SPOT SILVER: 19.50      
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 14,761.18 15,011.18 20.99
US 40% silver 1/2s 0.30 5,559.28 5,709.28 19.35
100 oz .999 bar 100.00 1,954.50 2,004.50 20.05
10 oz .999 bar 10.00 195.45 200.45 20.05
1 oz .999 round 1.00 19.60 20.10 20.10
Am Eagle, 200 oz Min 1.00 21.00 22.20 22.20
SPOT PLATINUM: 1,444.10      
Plat. Platypus 1.00 1,459.10 1,476.10 1,476.10
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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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