The Moneychanger
Daily Commentary
Wednesday, 30 April a.d. 2014 Browse the commentary archive

Sorry I missed sending y'all a commentary on Monday & Tuesday, but I was finishing up my monthly Moneychanger newsletter for paid subscribers, then yesterday evening had to drive up to Cookeville to pick up some hardy kiwi plants. I was shocked at the honesty I saw demonstrated on the road. We passed a van with US government license plates, and on the back was this bumper sticker: "We Oppress People -- That's Our Business!"

All kind of news broke while I was away. I heard on National Proletarian Radio that President Obama is levying sanctions on Los Angeles to keep Donald Sterling out of the Ukraine & Russians out of the NBA.

And I had disremembered the FOMC meeting announcement today, so as I was travelling I checked the gold & silver prices I was dismayed to see them lower. When I found out about the FOMC announcement I was relieved, because the up and down was merely more of the same moronism that inevitably results from central banking and government economic meddling. Thus, it is to be ignored as feckless fiddling with things at the margin.

Truth is, if the FOMC blarney cannon shot doesn't have any more affect than today's, they need bigger shells or grapeshot. Our Masters at the Fed were very careful not to say much except that they would taper another $10 billion a month. Before the FOMC pontificated, first quarter economic statistics had already appeared in surprising (to the experts) weakness. That had taken the dollar down, and supports the conclusion that the Fed must suppress interest rates longer. Bingo, down came the 10 year Treasury note yield, which brought down the interest rate differential between the buck & the other two disgusting scrofulous fiat currencies and in turn sent the euro and yen up. Not even stocks were much moved by the FOMC's decree, rising about 0.3%. Here's more detail.

Stock indices rose across the board, but not much. Dow climbed 45.47 (0.3%) to 16,580.84 while the S&P500 scaled 5.62 (0.3%). That was enough to close both slightly above their reigning downtrend lines, but whether that's meaningful or not we'll see tomorrow. May's the time I expect the last peak in stocks.

Dow in metals aren't saying much. Dow in Silver has formed a bearish rising wedge, but is still moving up. Rose 1% today to 849.27 oz (S$1,098.05 silver dollars). Dow in gold remains in a downtrend, but is blowing hot & cold out of both sides of its mouth.

US dollar index fell 0.42% or 33 basis points to 79.56. It has nearly reached again the April low at 79.385. Falling through that would be cosmic bad taste, & take the dollar much lower. Euro & the yen just rose the same amount the dollar fell. Yen ended at 97.92, up 0.49% & the euro at $1.3870, up 0.43%.

Gold fell to $1,284.90, but recovered to end the day only 40 cents lower at $1,295.60. Silver traded as low as 1908 cents and ended down 36.9 cents at 1911.9c.

On a three day chart gold today made a double bottom with yesterday's $1,386.10 low and recovered nearly to yesterday's close. This ain't great, but it's not Waterloo, either. Large bets had been placed on what the Fed would say today, by which I mean large shorts. They drove gold down, but couldn't keep it down. That recovery is positive, but not closing above yesterday is not. We'll just have to see how it shakes out tomorrow. Notice also that the last two days' lows were higher than last week's lows. Gold, however, has balked at $1,305 & must climb over that to confirm last week's lows.

Silver, ahh, silver. Low today was higher than last week's, but chart looks crummy. Off last week's dramatic bounce silver hit the downtrend line and 20 day moving average, but couldn't hold on above either one. Now silver must cross 2000c to regain credibility. Ratio rose today to 67.765:1, more proof of silver's relative weakness. All of that, of course, may be construed as an argument to buy silver rather than gold right now.

By the way, silver did make a double bottom today, at 11:30 & 3:30 p.m. Not much, but . . .

Folks, consider this. Things are far too calm, far too quiet, which means complacency reigns universally. And complacency cometh before a crisis. I can't help it, I'm suspicious, because I just don't believe things are that good, certainly not good enough to warrant complacency.

But then, I'm only a nacheral born durned fool from Tennessee.

On 30 April 1900 died American engineer Jonathan Luther "Casey" Jones when his passenger train, the Cannonball Express, collided with a stalled freight train at Vaughan, Mississippi. Because he stayed on the train and succeeded in slowing it from 75 mph to about 35 mph, not one of the passengers died or was seriously injured. Casey Jones was from Jackson, Tennessee and left a wife and three children.

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
30-Apr-14 Price Change % Change
Gold, $/oz 1,295.60 -0.40 -0.03%
Silver, $/oz 19.12 -0.37 -1.89%
Gold/Silver Ratio 67.765 1.263 1.90%
Silver/Gold Ratio 0.0148 -0.0003 -1.86%
Platinum 1,426.60 -3.50 -0.24%
Palladium 812.65 4.60 0.57%
S&P 500 1,883.95 5.62 0.30%
Dow 16,580.84 45.47 0.27%
Dow in GOLD $s 264.55 0.81 0.31%
Dow in GOLD oz 12.80 0.04 0.31%
Dow in SILVER oz 867.24 18.75 2.21%
US Dollar Index 79.56 -0.33 -0.41%
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: 1,291.10      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,326.61 1,336.29 1,336.29
1/2 AE 0.50 657.95 680.09 1,360.17
1/4 AE 0.25 328.98 346.50 1,386.00
1/10 AE 0.10 135.46 141.38 1,413.75
Aust. 100 corona 0.98 1,259.21 1,268.21 1,293.83
British sovereign 0.24 306.20 310.95 1,320.96
French 20 franc 0.19 242.86 245.90 1,317.08
Krugerrand 1.00 1,309.18 1,319.18 1,319.18
Maple Leaf 1.00 1,306.10 1,321.10 1,321.10
1/2 Maple Leaf 0.50 742.38 677.83 1,355.66
1/4 Maple Leaf 0.25 329.23 345.37 1,381.48
1/10 Maple Leaf 0.10 136.86 140.73 1,407.30
Mexican 50 peso 1.21 1,548.77 1,559.77 1,293.66
.9999 bar 1.00 1,295.62 1,310.10 1,310.10
SPOT SILVER: 19.10      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 26.50 28.50 37.25
VG+ Peace dollar 0.77 22.50 23.75 31.05
90% silver coin bags 0.72 14,693.25 14,943.25 20.90
US 40% silver 1/2s 0.30 5,442.75 5,592.75 18.96
100 oz .999 bar 100.00 1,915.00 1,965.00 19.65
10 oz .999 bar 10.00 191.50 196.50 19.65
1 oz .999 round 1.00 19.20 19.70 19.70
Am Eagle, 200 oz Min 1.00 20.95 21.35 21.35
SPOT PLATINUM: 1,426.60      
Plat. Platypus 1.00 1,441.60 1,458.60 1,458.60
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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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