The Moneychanger
Weekly Commentary
Thursday, 3 July a.d. 2014 Browse the commentary archive
Here's the weekly scorecard:
  27-Jun-14 3-Jul-14 Change % Change
Silver, cents/oz. 2,107.70 2,108.90 1.20 0.1
Gold, dollars/oz. 1,319.00 1,320.40 1.40 0.1
Gold/silver ratio 62.580 62.611 0.031 0.0
Silver/gold ratio 0.0160 0.0160 -0.0000 -0.0
Dow in Gold Dollars (DIG$) 264.11 267.22 3.11 1.2
Dow in gold ounces 12.78 12.93 0.15 1.2
Dow in Silver ounces 799.54 809.34 9.81 1.2
Dow Industrials 16,851.84 17,068.26 216.42 1.3
S&P500 1,960.96 1,985.44 24.48 1.2
US dollar index 80.07 80.27 0.20 0.2
Platinum 1,478.50 1,506.10 27.60 1.9
Palladium 843.25 862.30 19.05 2.3

Stocks did well for the week, silver & gold went sideways, platinum & palladium climbed. US dollar index reversed.

Looking across markets the two charts that jump out & slap me are the US dollar index and the Ten Year Treasury note yield. The Dollar Index because it spiked down two days ago, reversed slightly, then today jumped 29 basis points(.036%) to close at 80.27. It sliced into its 50, 20, & 200 day moving averages but only closed above the 50, above internal resistance about 80.25, and above the risk of falling to the center of the earth. That last was a distinct possibility three days ago.

This new found dollar strength landed like a ball peen hammer on the euro and yen. Euro sank from $1.3650 to a low of $1.3596 but closed down 0.36% at $1.3608. Twenty day moving average stands at $1.3602 as well as support, so breaching $1.3600 should put the euro back into free fall mode. Yen fell all the way to the bottom side of the long narrow even-sided triangle it had been building, and had been wanting to escape skyward. It sank 0.39% to 97.87.

For now, the US dollar has 'em all on the run. Think of the strongest leper chasing the other lepers out of the leper colony, nothing more.

After attempting to pierce its intermediate downtrend line in mid-June, the 10 year Treasury yield fell back, but to a higher low than May's. Day before yesterday it gapped up. Yesterday it jumped through its 20 & 50 DMAs AND broke through that downtrend line. Today it jumped clean away, nearly hit the 200 DMA (2.696%), & closed 0.75% higher at 2.648%. I can't quite parse that. Maybe the market thinks an improved economy per the jobs report means the Fed will let interest rates rise sooner -- senseless wind, all, but Zero Interest Rate Policy is the keystone of central bank control, & if the market wrestles interest rate control from the Fed's hands, Janet Yellen will need not one but two therapists AND a case of Scotch.

Stocks made another marginal new high, floating atop the lying employment report. Dow gained 0.54% to close at 17,068.26 & the S&P500 gained 10.82 (0.55%) to 1985.44. Both are making new highs on falling volume. Imagine one of those old Tarzan movies with Johnny Weissmuller. Remember what happened when the English heard the drums in the distance? How all the bearers in the safari threw away their bundles & ran away? "Bad juju, bwana!" That falling volume is those drums beating in the jungle, but the Wall Street English are so complacent they are paying no attention.

Dow in silver turned up again and broke through its steep downtrend line. Ended up 0.68% to 806.06 oz (S$1,042.18 silver dollars) After that steep fall all through June & a severely overbought condition, some upward correction has been overdue.

Dow in gold also broke through its downtrend line today and hit a resistance line left over from April & May trading. Closed up 1.12% at 12.93 oz (G$267.29 oz).

Both indicators have needed an upside correction. It will tell us whether the June peaks were permanent downturns or not.

Comex today saw gold lose $10.30 (0.9%) to $1,320.40 and silver give up 16.5 cents to 2108.9c.

Both gold and silver are coming off overbought conditions, so it is logical for them to fall further. Gold's low today hit $1,309.40. A 50% correction of the move from $1,258.00 on 17 June would take gold to $1,396.45. A close above $1,334.90 would knock that expectation in the head and shout that gold is going higher.

If silver corrected half of its last rise it would fall back to 2042c, not coincidentally the current location of its 200 DMA also (2040c). But look out: a close above 2133.5c says silver wants to hit 2220c before it rests.

I hope y'all have a wonderful Fourth of July, but as you do you ought to remember that the human drive to tyranny is so great that freedom must be won anew by every generation. Today most of us think we have too much to lose to risk life, liberty, or property for liberty. The irony is, you won't keep property if you lose liberty.

Over 100 years ago the Swiss philosopher Henri Amiel stated our case perfectly: "If liberty is to be saved, it will not be by doubters, men of science, or materialists; it will be by religious conviction, by the faith of the individuals who believe that God wills men to be free."

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
3-Jul-14 Price Change % Change
Gold, $/oz 1,320.40 -10.30 -0.8
Silver, $/oz 21.09 -0.17 -0.8
Gold/Silver Ratio 62.611 -0.483 -0.8
Silver/Gold Ratio 0.0160 -0.0001 -0.8
Platinum 1,506.10 -3.60 -0.2
Palladium 862.30 4.50 0.5
S&P 500 1,985.44 10.82 0.5
Dow 17,068.26 92.02 0.5
Dow in GOLD $s 267.22 3.53 1.3
Dow in GOLD oz 12.93 0.17 1.3
Dow in SILVER oz 809.34 10.61 1.3
US Dollar Index 79.98 0.14 0.2
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: 1,320.00      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,354.32 1,366.20 1,366.20
1/2 AE 0.50 672.69 696.30 1,392.60
1/4 AE 0.25 351.18 354.75 1,419.00
1/10 AE 0.10 139.81 145.20 1,452.00
Aust. 100 corona 0.98 1,282.22 1,291.22 1,317.30
British sovereign 0.24 312.59 324.59 1,378.90
French 20 franc 0.19 248.29 251.24 1,345.71
Krugerrand 1.00 1,333.20 1,343.20 1,343.20
Maple Leaf 1.00 1,335.00 1,350.00 1,350.00
1/2 Maple Leaf 0.50 759.00 693.00 1,386.00
1/4 Maple Leaf 0.25 336.60 353.10 1,412.40
1/10 Maple Leaf 0.10 139.92 143.88 1,438.80
Mexican 50 peso 1.21 1,581.84 1,592.84 1,321.09
.9999 bar 1.00 1,324.62 1,336.00 1,336.00
SPOT SILVER: 21.16      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 25.00 26.50 34.64
VG+ Peace dollar 0.77 22.00 24.25 31.70
90% silver coin bags 0.72 15,486.90 15,736.90 22.01
US 40% silver 1/2s 0.30 6,050.45 6,200.45 21.02
100 oz .999 bar 100.00 2,106.00 2,166.00 21.66
10 oz .999 bar 10.00 216.60 217.60 21.76
1 oz .999 round 1.00 21.26 21.76 21.76
Am Eagle, 200 oz Min 1.00 22.91 24.16 24.16
SPOT PLATINUM: 1,506.10      
Platinum Platypus 1.00 1,531.10 1,571.10 1,571.10
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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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