The Moneychanger
Weekly Commentary
Friday, 30 May a.d. 2014 Browse the commentary archive
Here's the weekly scorecard:
  23-May-14 30-May-14 Change % Change
Silver, cents/oz. 1,938.80 1,865.30 -73.50 -3.8
Gold, dollars/oz. 1,291.70 1,245.60 -46.10 -3.6
Gold/silver ratio 66.624 66.777 0.154 0.2
Silver/gold ratio 0.0150 0.0150 -0.0000 -0.2
Dow in Gold Dollars (DIG$) 265.76 277.44 11.68 4.4
Dow in gold ounces 12.86 13.42 0.56 4.4
Dow in Silver ounces 856.52 896.22 39.70 4.6
Dow Industrials 16,606.27 16,717.17 110.90 0.7
S&P500 1,900.53 1,923.57 23.04 1.2
US dollar index 80.43 80.43 0.00 0.0
Platinum 1,475.20 1,454.70 -20.50 -1.4
Palladium 831.45 835.65 4.20 0.5

'Twas an up-week for stocks but pitiless for metals -- owch. US dollar index spun wheels & went nowhere, didn't even throw up much mud. White metals moved sideways, while central banks around the globe continued to suck the blood out of their victim populations.

When markets DON'T react to news as they logically ought, something's up. Yesterday despite economist's rosy forecasts, first Quarter GDP came out contracting at a 1% annual rate. Mmmmm. Two quarters contracting running makes it a recession, yet the S&P500 rose to a new all time high despite this news. Complacency and optimism have reached narcotic levels.

Now y'all think: if GDP is contracting, economic activity is contracting, and that can't be good for stocks. Yet they rose anyway. Metastatic optimism.

And the economists forecasting, almost as accurate as Nordic rune-casters, found all sorts of excuses why GDP ought to have been down, mostly centering on bad weather. There are excuses, bad excuses, and plumb sorry excuses, and that one is plumb sorry and has more holes than a sweater at a moth farm.

But what do I know? I'm only a suspicious durned fool from Tennessee who only knows a little Latin: Timeo economistes et dona ferentes.

Dow confirmed the Dow transports' new high as well as the S&P500's new highs, while the SP500 clocked another new high today. By golly, we've got a proverbial Mexican cat ranch by the tail here, a perpetual money-making scheme. (Y'all know about the Mexican cat ranch? You raise rats to feed the cats and skin the cats, sell the hides, and feed the carcasses back to the rats. It's a never ending money-making mo-sheen.")

Get serious, Moneychanger.

Okay, Dow added 18.43 (0.11%) to climb to 16,717.17, although it remained underwater the whole day until the last 15 minutes. That's as convenient as finding a $100 bill -- in somebody else's pocket. Never mind, it got onto the scoreboard. In America, that's all that counts. Previous high was 13 May 2014 at 16,715.44. S&P inched up 3.54 (0.18%) to end at 1,923.57, against yesterday's new high at 1,920.53.

That bumps the Dow smack up against the top boundary of the megaphone of death that has been forming since 1998. S&P500 already crossed above ("overthrew") its analogous upper boundary earlier this year. Time to fish or cut bait. Either stocks will make a lasting top here and crumple for years to come, taking the economy with them, or there is a Santa Claus, who, with the Easter Bunny & the Money Fairy, works for the Federal Reserve.

Throwovers and tops feed on themselves, and are unpredictable. This can last several more weeks, but the end is sure.

Dow in silver gained 1.23% to close 888.27 oz (S$1,148.47 silver dollars). This approaches my target of 912 oz (S$1,179.15). In the last twelvemonth the Dow in silver has formed a rising wedge, which can be expected to break out to the downside. Chart is at Interesting -- even with a Dow at 17,000, 912 oz works out to silver at 1864 cents. By the way, that 888.27 oz is a new high for the move.

Dow in Gold only inched up 0.44% to 13.37 oz (G$276.38 gold dollars. You can view a chart at Dow in gold is trading in a channel about 2.8 oz wide. By mid-June the top boundary will be around 15.1 oz. No sign of turning down yet, although the RSI & Full Stochastics are reaching overbought levels (silver, too.)

Currencies are spending days in a coma, only to wake up and sprint a mile. US dollar fell below its 200 DMA (80.46) to 80.43, down ten basis points or 0.12%. Daily chart shows no direction but erosion lower, but if the US dollar index can struggle above that 200 DMA it should rise to 81.50. Every time I think the dollar is about to rise, it slumps.

The euro rose 0.23% to $1.3634, smack on its 200 DMA, but other than a little oversold reaction rally, there's no hope in this chart. If the European Central Bank criminals announce new easing measures next week, it should accelerate its plunge.

Yen is barely moving. Lost 0.3% to close today at 98.27. Technically in an uptrend, but trapped beneath its 200 DMA. Congestion will break soon, probably upward.

Ten year US treasury not yield rose 0.41% to 2.457%. This brings it back to the upper channel line it overthrew a year ago. Must turn here or drop much further. Chart is at

Gold mislaid another $10.70 (0.85%) today and closed Comex at $1,245.60. Silver slumped 33 cents (1.74%) to 1,865.30.

Are metals destined to hit last June's lows ($1,180 & 1817c) again? Durned if I know, but if they don't stop here soon, they must suffer further humiliation.

Silver's low today at 1864c matched the 1 May intraday low at 1868.5c. This is it, the bottom of the support range. Excuses don't count here, you either hold or die.

Gold's low today at $1,241.80 lies not far from where a rough target measurement from the preceding triangle's height ought to take it (about $1,216). Besides that is the January low at $1,237.50.

Meanwhile, volume in silver is drying up, and in gold has fallen so low you wonder why any traders bother going to work any more. Normally declining volume signals that the trend is running out of steam.

There 'tis. I'm just like a fool at a tennis match who's following the instructions of that fellow who told him to watch the ball. I'm watching amazed as values move further and further from agreement with price, but this is the best thing that could happen to gold and silver investors, better than free donuts for life. Y'all ought to hanging over this market like hungry buzzards, jumping on every fresh decline.

I reckon I'm going to have to work on my metaphors and similes. Sometimes they're a little less than tasty. Bottom line is that markets are not rational, and when the more outrageously irrational they become, the greater our opportunity to take advantage and profit. Remember my Tennessee proverb: Sooner or later, reality revenges itself.

On 30 May 1806 in a duel Andrew Jackson killed Charles Dickinson after Dickinson published an article accusing Jackson's wife, Rachel, of bigamy. Knowing Dicksonson was a better & quicker shot, Jackson intentionally allowed him to shoot first, since the duelling rules required him to keep his place. He hit Jackson in the chest, near the heart, but Jackson took careful aim and killed Dickinson. Jackson's "ungentlemanly" behavior made him a social outcast. He was, however, a live social outcast, and crazy brave.

On 30 May 1908 was born the vocal genius Mel Blanc who furnished the voices for Bugs Bunny, Daffy Duck, Porky Pig, Tweety Bird, Sylvester the Cat, Yosemite Sam, Foghorn Leghorn, Marvin the Martian, Pepe Le Pew, Speedy Gonzales, Wile E. Coyote, the Tasmanian Devil and others.

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
30-May-14 Price Change % Change
Gold, $/oz 1,245.60 -10.70 -0.9
Silver, $/oz 18.65 -0.33 -1.7
Gold/Silver Ratio 66.777 -0.562 -0.8
Silver/Gold Ratio 0.0150 -0.0003 -1.7
Platinum 1,454.70 -7.40 -0.5
Palladium 835.65 1.85 0.2
S&P 500 1,923.57 3.54 0.2
Dow 16,717.17 18.43 0.1
Dow in GOLD $s 277.44 2.69 1.0
Dow in GOLD oz 13.42 0.13 1.0
Dow in SILVER oz 896.22 16.55 1.9
US Dollar Index 80.43 -0.10 -0.1
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: 1,251.50      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,285.29 1,295.30 1,295.30
1/2 AE 0.50 637.76 659.23 1,318.46
1/4 AE 0.25 318.88 335.87 1,343.49
1/10 AE 0.10 131.30 137.04 1,370.39
Aust. 100 corona 0.98 1,220.59 1,229.59 1,254.42
British sovereign 0.24 296.81 301.56 1,281.06
French 20 franc 0.19 235.41 238.51 1,277.48
Krugerrand 1.00 1,266.52 1,276.52 1,276.52
Maple Leaf 1.00 1,266.50 1,281.50 1,281.50
1/2 Maple Leaf 0.50 719.61 657.04 1,314.08
1/4 Maple Leaf 0.25 319.13 334.78 1,339.11
1/10 Maple Leaf 0.10 132.66 136.41 1,364.14
Mexican 50 peso 1.21 1,501.26 1,512.26 1,254.26
.9999 bar 1.00 1,255.88 1,270.50 1,270.50
SPOT SILVER: 18.86      
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 14,378.65 14,628.65 20.46
US 40% silver 1/2s 0.30 5,371.95 5,521.95 18.72
100 oz .999 bar 100.00 1,891.00 1,941.00 19.41
10 oz .999 bar 10.00 189.10 194.10 19.41
1 oz .999 round 1.00 18.96 19.46 19.46
Am Eagle, 200 oz Min 1.00 20.71 21.11 21.11
SPOT PLATINUM: 1,454.70      
Platinum Platypus 1.00 1,469.70 1,486.70 1,486.70
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© 2015 Little Mountain Corporation, d.b.a. The Moneychanger. All rights reserved. May not be republished in any form, including electronically, without our express permission.

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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