The Moneychanger
Weekly Commentary
Friday, 2 May a.d. 2014 Browse the commentary archive
Here's the weekly scorecard:
  25-Apr-14 2-May-14 Change % Change
Silver, cents/oz. 1,969.10 1,949.20 -19.90 -1.0
Gold, dollars/oz. 1,300.70 1,302.60 1.90 0.1
Gold/silver ratio 66.056 66.827 0.772 1.2
Silver/gold ratio 0.0151 0.0150 -0.0002 -1.2
Dow in Gold Dollars (DIG$) 260.03 262.05 2.02 0.8
Dow in gold ounces 12.58 12.68 0.10 0.8
Dow in Silver ounces 830.91 847.16 16.25 2.0
Dow Industrials 16,361.46 16,512.89 151.43 0.9
S&P500 1,863.40 1,881.14 17.74 1.0
US dollar index 79.83 79.56 -0.27 -0.3
Platinum 1,422.80 1,439.70 16.90 1.2
Palladium 811.45 812.55 1.10 0.1

Whoa! Today was an unexpectedly strong day for silver & gold. Stocks rose again today but find their progress mired deeper and deeper in mud. White metals gained, while the US dollar index has joined the ranks of the walking dead.

For the second time this week, the Feds fired their bully blarney cannon, but instead of a bang, 'twas only a burp. FOMC announcement on Wednesday hardly moved markets. Today the lying yankee government made its lying jobless report. To hear them tell it, the jobless rate fell from 6.7% to 6.3%, but that's all guesses piled on speculation & estimates. Yet the lie gained little. Markets feinted a reaction, then went their own way.

I know not the cause beneath this, but sure as a dead pig gets high in July, it ain't an America-wide outbreak of rationality. Stock markets are tired, & it takes a lot to get tired folks excited. Government needs to up the ante -- speaking of that, Obama's doing a great job of stumbling toward world war. Maybe that's the fall-back distraction.

It's not a sign of wiry strength when during a day markets break to new highs for the move, then close lower. It whispers that resolve & direction are wanting. Dow today high a new high for the move (16,620) but for the second day running closed lower, by 45.98 (0.28%) to 16,512.89. Two days ago the Dow made a new all time high at 16,580.84. So did the S&P500 (1,883.95), but also for the second day closed lower. Both remain, however, broken out over their downtrend lines, so you can expect they will struggle to higher prices in May. That will probably mark the ultimate top.

I spent time gawking and gazing at the Dow in Silver Chart today, and have a better target for the ultimate top. It draweth nigh, and should not exceed 917 oz (S$1,185.62 silver dollars). A little more likely is 890 oz (S$1,150.71). Today the DiS fell 2.73% to 845.73 oz (S$1,093.47). Since June last year the DiS has formed a rising wedge. At the reversal the DiS should break down out of that wedge.

Dow in Gold may have already turned down at end-December, but that's a long shot because it stands above all its moving averages. Momentum is upward, even though MACD and stochastics are not optimistic. Closed down 1.5% at 12.70 oz (G$262.53 gold dollars).

US dollar index reminds me of one of those silent movies where the hero is hanging onto the lip of a cliff by his fingernails, and they start breaking. Since February it has bounced off the narrowing sides of an even-sided triangle. Thrice now hath it touched the bottom boundary, thrice bounced. That increases the odds it won't bounce again. This is my arcane and obscure way of saying that the US dollar index must turn & climb soon or fall off that cliff.

Lo, y'all may observe the Dollar's flakiness in today's chart. On that prevaricating jobs report it shot clean up about 8:30, from 79.60 to 79.85, traded sideways a couple of hours, then fell like Congressman Wilber Mills when he went swimming in that Washington fountain with his girlfriend, stripper Fanne Foxe. Has all the flavor of an island reversal without the gaps.

Meanwhile the euro rallies, but without conviction. UP 0.8% today after a near nasty fall, to close at $1.3879. Yen also reacted in mirror image to the dollar, with an initial fall followed by sudden rise. Closed up 0.11% at 97.85 cents/Y100.

Ten year treasury yield fell today to its lowest level this year, 2.591%. That suggests investors are crowding into bonds, scared by stocks.

Copper still hasn't without qualification confirmed it does not intend to become cheaper than gully dirt. From its March $2.877 low it has continued to rally, got as high as $3.14, but dropped off this week. 200 DMA hovers above at $3.21. Falling copper prices suggest trouble for stocks and "deflation," which ain't been seen in these parts (by which I mean the Earth) since 1933, & won't be as long as those rotten central banks keep inflating. Of course, expecting them not to inflate is like expecting a tick not to suck your blood.

Silver ballooned 50.3 cents (2.7%) to end at 1949.2c. Gold leapt $19.50 (1.5%) for a $1,302.60 Comex close.

Y'all remember that on last Thursday silver & gold both broke into new lows for the move then surged back dramatically to close higher? Something similar happened today, which after this past week was a welcome surprise.

Sellers began hammering gold from $1,285 about 9:30, and hit it hard, Gold reeled back to $1,272.90, traded back up within 30 minutes, then sellers hit it again just before 11:00. No good, couldn't break it. About 11:30 silver shot skyward like a 4th of July rocket, all the way to a $1,302.90 high and closed Comex up there. Only thing better would have been a close over $1,305 resistance.

But silver was leading the way today. It broke very little against a 9:30 attach, from 1920c down to 1891c. After a pause for breath, sliver took wings and flew to 1970c, then closed at 1949.2.

What meaneth this bragging? Simply that both markets surprised sellers with their strength at those lose, which now seem "sold out." By that I mean there are no more sellers lurking around those lows, only buyers.

But dealing with markets is like being married to a bad jealous woman, you have to keep proving yourself every day. So, too, silver must pull on its 7-league boots and step out over 1950c, then quickly 2000c. 20 DMA is at 1965c, and that's the first milestone. MACD is trying to turn up.

To prove today was not merely a fluke occasioned by shorts covering their positions before the weekend, next week gold must better $1,305. Above that gold must pierce the last (April) high at $1,331.40.

The Fed has been successful so long with its blarney cannon & stocks have so long "miraculously" levitated that the public, those who still have jobs, have waxed smug and complacent. But then, we have become a people who wants to believe that government, central banks, and other socialist charlatans can save us. When Lenin's secret police chief Dzerzhinsky asked Lenin what to tell people so they would believe his lies, Lenin said, "Tell them what they want to hear."

I am warning y'all against complacency, against projecting the Sitzkrieg present out into the future, world without end. The game has an end. Y'all'd better be holding some chips when it arrives, and I don't mean cow chips.

On 2 May 373 died Athanasius the Great, theologian and bishop. By defending Trinitarianism against Arianism, he helped mold the Western world. Trinitarianism is the only solution to the ancient philosophical problem, Which is ultimate, the one or the many? In the Trinity all are equally ultimate. If that weren't so, then the world would be monist, and not only a free society but even love would be impossible, for the lover must have a beloved.

Athanasius was so stubborn and so often outnumbered by his enemies, and so valiant for the truth, that the saying arose about him that it was "Athanasius contra mundum" -- Athanasius against the world.

On 2 May 1611 the Authorized (usually called "King James") Version of the Bible was first published. It was extremely unpopular at first. James had published it to displaced the Geneva Bible with its anti-authoritarian marginal notes. It took the better part of two generations for the KJV to squeeze out the Geneva. The KJV broadly incorporates the Geneva, & together they made the Bible the fountain of English language and literature.

On 2 May 1863 at the moment of his greatest victory, having smashed Hooker's flank, Confederate General Stonewall Jackson was accidentally wounded by his own men. He died 8 days later, on a Sunday. He had often stated to friends that his prayer was that he would not outlive the independence of his country, and that he would die on a Sunday.

Y'all enjoy your weekend!

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
2-May-14 Price Change % Change
Gold, $/oz 1,302.60 19.50 1.5
Silver, $/oz 19.49 0.05 0.3
Gold/Silver Ratio 66.827 0.999 1.5
Silver/Gold Ratio 0.0150 0.0000 0.3
Platinum 1,439.70 1.35 0.1
Palladium 812.55 -1.75 -0.2
S&P 500 1,881.14 -2.54 -0.1
Dow 16,512.89 -45.98 -0.3
Dow in GOLD $s 262.05 -4.70 -1.8
Dow in GOLD oz 12.68 -0.23 -1.8
Dow in SILVER oz 847.16 -4.68 -0.5
US Dollar Index 79.56 -0.01 -0.0
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SPOT GOLD: 1,297.90      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,334.24 1,343.33 1,343.33
1/2 AE 0.50 661.42 683.67 1,367.34
1/4 AE 0.25 330.71 348.32 1,393.30
1/10 AE 0.10 136.17 142.12 1,421.20
Aust. 100 corona 0.98 1,265.84 1,274.84 1,300.59
British sovereign 0.24 307.82 312.57 1,327.81
French 20 franc 0.19 244.14 247.17 1,323.88
Krugerrand 1.00 1,314.77 1,324.77 1,324.77
Maple Leaf 1.00 1,312.90 1,327.90 1,327.90
1/2 Maple Leaf 0.50 746.29 681.40 1,362.80
1/4 Maple Leaf 0.25 330.96 347.19 1,388.75
1/10 Maple Leaf 0.10 137.58 141.47 1,414.71
Mexican 50 peso 1.21 1,556.92 1,567.92 1,300.43
.9999 bar 1.00 1,302.44 1,316.90 1,316.90
SPOT SILVER: 19.44      
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 14,968.53 15,218.53 21.28
US 40% silver 1/2s 0.30 5,541.58 5,691.58 19.29
100 oz .999 bar 100.00 1,948.50 1,998.50 19.99
10 oz .999 bar 10.00 194.85 199.85 19.99
1 oz .999 round 1.00 19.54 20.04 20.04
Am Eagle, 200 oz Min 1.00 21.29 21.69 21.69
SPOT PLATINUM: 1,439.70      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Platinum Platypus 1.00 1,454.70 1,471.70 1,471.70
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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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