The Moneychanger
Daily Commentary
Tuesday, 3 June a.d. 2014 Browse the commentary archive

Stock rally gets thinner and thinner, and so does the precious metals' plunge. But I reckon they can get thinner still.

While I'm thinking about it, the euro, scrofulous spawn of centralizing central banks & bureaucrats, has been dropping since 8 May, nearly a month with ne'er a rally. More, everybody in the world expects the ECB criminals to announce more inflation one way or another. In other words, once the ECB news hits Thursday, the euro might undergo a "sell the rumor/buy the news" rally. The euro's trend against the dollar has turned down, but a rally would burn the shorts and send them running, which would boost the euro. It closed today up 0.21% to $1.3627, but that's still below its 200 day moving average.

Can y'all even IMAGINE how much money, mind power, & productive capacity is wasted merely on currency exchange rates? If the world had only two monies, gold and silver, as it did for 6,000 years until 125 years ago, all of that ink, thought, and talk could be applied to some useful purpose, like indicting and trying central bankers.

US Dollar index backed up 8 big basis points (0.1%) to 80.60 after yesterday's 80.73 high. Trading up one day and down two. It remains, however, above its moving averages (200 is at 80.47) and above the downtrend line, so lazy as it is, remains in an uptrend and should rise further. Japanese yen dropped 0.16% to 97.54. Broke down yesterday below its uptrend line, but remains in the same range that has imprisoned it since February.

All stock indices fell today, but not decisively. Dow lost 21.29 or 0.13%, S&P500 eased off 0.73 to 1,924.24. Miss not that the bluer chip indices are rising faster than the others as risk appetite decreases and investors roll over to what they consider "safer" stocks. That does not foretell sharply higher prices.

Dow measured in metals backed off today but 'tis all sound & fury, signifying nothing -- yet. Just be patient.

Be still, my beating heart! Gold rose sixty cents today (not fifty-nine, but sixty) while silver rose 2.3 cents, an amount no self-respecting person would bend over to pick up off the sidewalk if he saw it lying there. Gold ended at $1,244.30 and silver at 1873.2 cents.

By the way, Commitment of Traders reports show that gold dropped last week not due to longs selling, but huge new short positions. Nothing new there.

I expect gold will turn around either from here or between here and $1,230. Silver could re-visit its June 2013 lows. The last week has done a lot of damage to silver & gold, and delayed a rally further.

Makes no difference how long this drags out, it won't be much longer now. Sometimes, it seems, things take longer than they do.

Whenever things seem to work out illogically, I go back and check my premise, which is, INFLATION DRIVES GOLD & SILVER BULL MARKETS. Fed creates inflation for government spending & to keep the borrow-money-into- existence money system going. So if y'all are worried about silver & gold, get on the internet & look up the answers to these questions:

1. Has the US Federal Reserve been abolished? Are there any plans to abolish it?

2. Has the US government balanced its budget? Is there any plan to balance it?

3. Where does one-half of US GDP arise? Hint: Government spending.

4. Does any statesman appear anywhere with plan & resolve to abolish the Fed or curtail government spending, let alone restore sound money?

5. Can pigs fly?

Once you've completed that research, you'll understand why I remain so bullish on silver & gold.

On 3 June 1539 Hernando de Soto claimed Florida for Spain. Moments later hundreds of boats loaded with land developers hit the shores.

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
3-Jun-14 Price Change % Change
Gold, $/oz 1,244.30 0.60 0.05%
Silver, $/oz 18.73 0.02 0.12%
Gold/Silver Ratio 66.426 -0.050 -0.07%
Silver/Gold Ratio 0.0151 0.0000 0.07%
Platinum 1,435.50 -3.20 -0.22%
Palladium 83.62 4.15 5.22%
S&P 500 1,924.24 -0.73 -0.04%
Dow 16,722.34 -21.29 -0.13%
Dow in GOLD $s 277.81 -0.49 -0.18%
Dow in GOLD oz 13.44 -0.02 -0.18%
Dow in SILVER oz 892.72 -2.24 -0.25%
US Dollar Index 80.60 -0.08 -0.10%
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: 1,246.20      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,279.85 1,289.82 1,289.82
1/2 AE 0.50 635.05 656.44 1,312.87
1/4 AE 0.25 317.53 334.45 1,337.80
1/10 AE 0.10 130.75 136.46 1,364.59
Aust. 100 corona 0.98 1,215.42 1,224.42 1,249.15
British sovereign 0.24 295.56 300.31 1,275.72
French 20 franc 0.19 234.41 237.52 1,272.18
Krugerrand 1.00 1,261.15 1,271.15 1,271.15
Maple Leaf 1.00 1,261.20 1,276.20 1,276.20
1/2 Maple Leaf 0.50 716.57 654.26 1,308.51
1/4 Maple Leaf 0.25 317.78 333.36 1,333.43
1/10 Maple Leaf 0.10 132.10 135.84 1,358.36
Mexican 50 peso 1.21 1,494.91 1,505.91 1,248.99
.9999 bar 1.00 1,250.56 1,265.20 1,265.20
SPOT SILVER: 18.79      
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 14,364.35 14,614.35 20.44
US 40% silver 1/2s 0.30 5,351.30 5,501.30 18.65
100 oz .999 bar 100.00 1,884.00 1,934.00 19.34
10 oz .999 bar 10.00 188.40 193.40 19.34
1 oz .999 round 1.00 18.89 19.39 19.39
Am Eagle, 200 oz Min 1.00 20.64 21.04 21.04
SPOT PLATINUM: 1,435.50      
Plat. Platypus 1.00 1,450.50 1,467.50 1,467.50
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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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