The Moneychanger
Daily Commentary
Thursday, 10 July a.d. 2014 Browse the commentary archive

In far-off Portugal today all the news concerns the Banco Espirito Santo, one of the country's biggest, which is in trouble. After accounting irregularities were made public in May, the parent company has now delayed coupon payments on some short term debt securities. Stock dropped 19%. Fear of contagion & a string of bank failures poked a gigantic monkey wrench into stock markets' spokes around the world.

Now I ain't no mor'na nacheral born fool from Tennessee, but I remember some furrin bank that failed on 11 May 1931. What was that? Creditanstalt in Vienna. Sent banks falling like dominoes around the world. But that was before we had government safety nets, wasn't it? Nope. In fact, the Austrian bailed out Creditanstalt.

Naww, nothing to worry about today. Central banks have a firm hand on the reins. Yasssir, nothing slips by them boys! Why, just today the boys at the Bank of Portugal said the "solvency situation of BES is solid." Shucks, an official denial like that ought to set your suspicions to rest. After all, nothing is confirmed until officially denied.

Fear shook the trees on Wall Street today. Dow lost 70.54 (0.42%) to 16,915.07 while the S&P500 shaved off 8.15 (0.41%) to 1,964.68.

It's hard to describe this chart precisely to you, so you can look at the chart for the S&P500 at and the Dow at

The Dow spent four months forming a bearish rising wedge within a larger rising wedge. The Dow had broken above the top line of that rising wedge, and now has collapsed back through that wedge's nose, bit into the 20 DMA (16,893) during the day, and hit the larger rising wedge's top line. The S&P500 has broken through the top line of a rising wedge, and now has fallen back through that. Didn't close below its 20 DMA (1,959.41), but sliced into it.

This is a picture of a breakdown.

Most likely target is the 50 DMA at 1,925.40 or 16,740.88. And 'tis also possible stocks won't make it that far, but will turn and reach one more new high before collapsing.

By the way, while y'all are looking at those charts, look how close are the red lines marked "Uptrend from March 2009".

Fear sent investors out of stocks and into gold, and that flight showed plainly in the Dow in Metals today. Dow in gold dropped 1.06% to 12.66 oz (G$261.70 gold dollars) and hath fixed its eyes on the 200 DMA at 12.58 oz (G$260.05).

Owch! Dow in silver dove below its 200 DMA today. Fell 1.88% to 787.85 oz (S$1,018.63 silver dollars). 200 DMA is at 796.35 oz (S$1,029.64). Gravity is pulling HARD on the DiS.

US Dollar caught a safe-haven bid, too. It rose ten basis points (0.13%) to 80.17, still under its 50 DMA (80.21), still under weighty internal resistance, still sick as a hound eating collard greens. Euro lost 0.25% to $1.3607, still flirting with the critical $1.3600 level like a kid playing with matches while sitting on a gas can. The Yen, on the other side of the globe from Portugal's trouble, gapped up to the upper boundary of that long, narrow even sided triangle I've been writing about, but then closed about where it opened. Market can't decide what it wants.

Gold gobbled up $14.93 (1.13%) to Close Comex at $1,338.70. Silver gained 43.7 cents (2.08%!) to 2145.90. Where does that leave us?

Gold closed above the downtrend line from October 2012, and broke cleanly above the last (April0 high at $1,331.40, on RISING volume. Pale, weak resistance awaits at $1,350, but at the March peak at $1,392.60 the real test comes. Gold has climbed above its 300 DMA for the first time since February 2013. Could reach $1,402 before it gets winded.

Silver last month cleared the downtrend line from its August 2013 high, and also stands above all its moving averages, including the 300 DMA for the first time since February 2013. Silver is targeting about 2350c.

Remember amidst all the glee that support from safe haven bids tends to disappear as soon as its cause settles down, & those gains are often given back. Still, this looks like the tail end of the rally that began 1 June & it could carry to those higher targets I mentioned above.

On 10 July 1832 President Andrew Jackson vetoed legislation to re-charter the Second Bank of the United States. Imagine Bernard O'Bama pulling the charter of the Federal Reserve. To state it is to grasp its impossibility.

On 10 July 1509 in Noyon, Picardy, France was born Jean Calvin, religious reformer who became the leader and theologian of the Reformed branch of the Reformation. Interesting to see that he is called the "founder of Calvinism," a title he would have loathed and abhorred.

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
10-Jul-14 Price Change % Change
Gold, $/oz 1,338.70 14.90 1.13%
Silver, $/oz 21.46 0.44 2.08%
Gold/Silver Ratio 62.384 -0.588 -0.93%
Silver/Gold Ratio 0.0160 0.0001 0.94%
Platinum 1,516.00 10.10 0.67%
Palladium 873.05 0.05 0.01%
S&P 500 1,964.68 -8.15 -0.41%
Dow 16,915.07 -70.54 -0.42%
Dow in GOLD $s 261.20 -4.04 -1.52%
Dow in GOLD oz 12.64 -0.20 -1.52%
Dow in SILVER oz 788.25 -19.74 -2.44%
US Dollar Index 80.17 0.10 0.12%
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: 1,335.80      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,370.53 1,382.55 1,382.55
1/2 AE 0.50 680.75 704.63 1,409.27
1/4 AE 0.25 355.39 359.00 1,435.99
1/10 AE 0.10 141.49 146.94 1,469.38
Aust. 100 corona 0.98 1,298.88 1,307.88 1,334.30
British sovereign 0.24 316.33 328.33 1,394.79
French 20 franc 0.19 251.26 254.19 1,361.51
Krugerrand 1.00 1,350.49 1,360.49 1,360.49
Maple Leaf 1.00 1,350.80 1,365.80 1,365.80
1/2 Maple Leaf 0.50 768.09 701.30 1,402.59
1/4 Maple Leaf 0.25 340.63 357.33 1,429.31
1/10 Maple Leaf 0.10 141.59 145.60 1,456.02
Mexican 50 peso 1.21 1,600.78 1,611.78 1,336.80
.9999 bar 1.00 1,340.48 1,351.80 1,351.80
SPOT SILVER: 21.40      
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 15,404.68 15,654.68 21.89
US 40% silver 1/2s 0.30 6,119.78 6,269.78 21.25
100 oz .999 bar 100.00 2,129.50 2,189.50 21.90
10 oz .999 bar 10.00 218.95 219.95 22.00
1 oz .999 round 1.00 21.50 22.00 22.00
Am Eagle, 200 oz Min 1.00 23.15 24.40 24.40
SPOT PLATINUM: 1,516.00      
Plat. Platypus 1.00 1,541.00 1,581.00 1,581.00
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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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