The Moneychanger
Daily Commentary
Wednesday, 4 June a.d. 2014 Browse the commentary archive

These markets are getting so lively I reckon I can just publish one commentary a week, then every Friday say, "Go see what I said last Friday."

I did see a worthwhile commentary by Larry Levin of Trading Advantage today entitled "Bull" putting the present stock bull market in context:

1. S&P500 has nearly tripled from the 6 March 2009 lows.

2. 5 year rolling return has been 5th largest in 140 years.

3. Current bull market is second longest in 80 years.

4. Current rally has spent 80 weeks above the 200 day moving average. Over the last 50 years, no other rally has lasted this long.

5. All against a context of an economy struggling to breathe. [End quotation]

Natural? Naww, not hardly. It implies a very large and non-profit entity buying, or another large & anti-profit entity printing money. Either way, tain't natural.

Stocks struggled today but the S&P500 made a new high. S&P500 added 3.64 to 1,927.88 (up 0.2%). Dow trailed behind, adding only 15.19 (0.09%) to 16,737.53. A trend in force remains in force until it changes.

I note with the same interest a toad fixes on a fly that the 10 year US treasury note yield has over the last 5 days staged a dramatic rebound. What did it hit? The upper boundary line of the channel it broke out of last June, and it has sliced through its 20 DMA and drawn a bead on its 50 DMA. Bear in mind always that the key to Federal Reserve control & the continuing acceptance of the dollar & the whole economic Potemkin village the central banks have cobbled together is INTEREST RATES. When the market finally wrests interest rates from the Fed's cold, icy hands, the Fed might as well go ahead and close its eyes, after first making sure its burial insurance is paid up. Ten year note yield today rose 0.5% to 6.606%.

US Dollar index pulled the same old trick today, retracing yesterday's range but closing at the high end of its range. Ended at 80.71, up 12 basis points. Dollar should rise higher although the daily chart shows a complete confusion that does NOT look like a rallying market. Euro lost 0.21% to $1.3599. Yen lost 0.2% to 97.7. Nice Government Men are keeping everything quiet.

Gold rose thirty (yes, 30) cents to $1,244.00. Silver rose THREE POINT FOUR cents to 1876.6c.

Gold's range today was $6.70, from $1,242.80 to $1,249.50. Silver's was even worse, 16 cents between 1888 c and 1872 c.

Only the full stochastics are even hinting at a turnaround. Markets only very rarely go this dead. Most hopeful thing I can say is that silver & gold appear to have run out of sellers, but I'm afraid to say that too loud or the Nice Government Men might hear me.

Be patient, be patient. We have now moved into the time of year most likely to see lows in gold and silver.

On 4 June 1919 US Marines invaded Costa Rica, which had been threatening to launch an invasion of Texas and an amphibious landing in Florida.

I'm in Chattanooga tonight and Susan and I are going to enjoy supper with restaurateur Lawton Haygood and his wife Karen. Lawton founded The Boathouse on the Tennessee River in Chattanooga, just about my favorite restaurant in the Western World. But tonight we're going to another of his restaurants, the Canyon Grill up on Lookout Mountain. I'll be thinking about y'all eating peanut butter and jelly sandwiches while I'm up there.

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
4-Jun-14 Price Change % Change
Gold, $/oz 1,244.00 -0.30 -0.02%
Silver, $/oz 18.77 0.03 0.18%
Gold/Silver Ratio 66.290 -0.136 -0.21%
Silver/Gold Ratio 0.0151 0.0000 0.21%
Platinum 1,435.90 0.40 0.03%
Palladium 836.65 0.45 0.05%
S&P 500 1,927.00 3.64 0.0
Dow 16,737.53 15.19 0.09%
Dow in GOLD $s 278.13 0.32 0.11%
Dow in GOLD oz 13.45 0.02 0.11%
Dow in SILVER oz 891.91 -0.81 -0.09%
US Dollar Index 80.71 0.12 0.15%
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: 1,243.90      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,277.49 1,287.44 1,287.44
1/2 AE 0.50 633.88 655.22 1,310.45
1/4 AE 0.25 316.94 333.83 1,335.33
1/10 AE 0.10 130.50 136.21 1,362.07
Aust. 100 corona 0.98 1,213.17 1,222.17 1,246.86
British sovereign 0.24 295.01 299.76 1,273.41
French 20 franc 0.19 233.98 237.09 1,269.88
Krugerrand 1.00 1,257.58 1,267.58 1,267.58
Maple Leaf 1.00 1,258.90 1,273.90 1,273.90
1/2 Maple Leaf 0.50 715.24 653.05 1,306.10
1/4 Maple Leaf 0.25 317.19 332.74 1,330.97
1/10 Maple Leaf 0.10 131.85 135.59 1,355.85
Mexican 50 peso 1.21 1,492.15 1,503.15 1,246.70
.9999 bar 1.00 1,248.25 1,262.90 1,262.90
SPOT SILVER: 18.75      
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 14,335.75 14,585.75 20.40
US 40% silver 1/2s 0.30 5,339.50 5,489.50 18.61
100 oz .999 bar 100.00 1,880.00 1,930.00 19.30
10 oz .999 bar 10.00 188.00 193.00 19.30
1 oz .999 round 1.00 18.85 19.35 19.35
Am Eagle, 200 oz Min 1.00 20.60 21.00 21.00
SPOT PLATINUM: 1,435.90      
Plat. Platypus 1.00 1,450.90 1,467.90 1,467.90
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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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