The Moneychanger
Daily Commentary
Monday, 28 July a.d. 2014 Browse the commentary archive

No man has a cure for chiggers, but this man has something that will flat kill the itching: lavender oil. You just dab a little of that on the itch, and it disappears for 12 hours. However, like Cinderella, you can set your clock by its return. Also works on wasp stings to stop the itching that comes after the sting. Helps some with pain, but when you get a wasp sting, slap a penny on it. I ken not the chemistry that makes it work, but it helps. Just hold that penny on.

If y'all are wondering how chigger itching cures worked their way to the top of my list, it's because so little happened today in markets. However, if the US keeps picking on Russia, this administration may prove itself moronic enough to start a war & thus create all sorts of action in every market.

Stocks faded about half the day, then climbed enough to get their noses out from under the water. Dow rose, but not enough to brag about, only 22.2 or 0.13% to 16,982.59.

Y'all recall that on Friday the Dow fell out of that latest rising wedge within a rising wedge. That makes it a safe bet it will touch the 50 DMA, nearby at 16,858. Today the uptrend line from the March 2009 low stands at about 16,720. Should the Dow fall through that line, folks on Wall Street will shave their topknots & start fasting & praying to the money god to save them. Indicators all point down, witnessing the fall will fall more, and that Russell 2000 small cap index looks like it's been eating bad meat. Y'all can see a chart at http://bit.ly/1qcyiv7

Get out your microscopes! S&P500 rose 0.57 (0.03%) to 1,978.91. Bottom boundary of the S&P500's trading channel is at 1,964, & below lieth an air pocket. 50 DMA is camped at 1,948.

Dow in Metals offers a slightly confused picture right now. Dow in Gold rose 0.5% to 13.02 oz (G$269.15), & just above at 13.03 (G$269.35) lurks the 50 DMA. Should rise much above that or it will pierce the downtrend line. Dow in silver has risen through three fan lines, hit the 50 DMA above, then backed down. Today it rose 0.98% to 823.60 (S$1,064.86). Pears both of them have completed a correction to their falling trend, but I am patiently awaiting confirmation.

If I get to choose my friends, the US Dollar Index ain't gonna rank among 'em -- too unpredictable & untrustworthy. It's bite the hands of friends and then gnaw 'em off. It backed off two basis points today to 81.12. That's not amazing as it fights to get through the neckline of an upside-down head and shoulders.

Yield on the 10 year treasury note (my proxy for interest rates in general) threatened to free-fall last week, but then slapped itself & mumped up. It has not, however, jumped out of danger's road. Closed at 2.491 today, & needs to close above 2.625 to confirm it has changed its direction to up.

I don't like double closes, or near double closes, where a market closes at X one day then next day closes unchanged. Often it indicates a trend failing. Gold & silver both traded flat today in small ranges. Silver lost 6.2 cents to 2052.6c while gold closed unchanged -- that's right -- at $1,303.30.

Gold's indicators have index fingers pointed toward the earth. Gold needs to close above $1,320 to break upward. If it breaks $1,300 tomorrow it will retest the previous low & 200 DMA at $1,287.

Silver's support from 2050c to 2035c has to hold or silver will fall back to prove itself at 1975c.

I anticipate that by the end of Augusts' first week, lows will have been passed.

I can't find a suitable confirmation, but apparently Prussian King Frederick Wilhelm I on this day in 1717 decreed compulsory education for all those aged 5 to 12. The system's purpose was to instill loyalty to the Crown and train men for the military & bureaucracy. In the 1840s New England Transcendentalists imported the totalitarian Prussian system into the US, and with it the idea of compulsory education. Y'all have heard that praised so much in your lives you've likely never taken a second to think what it really means: snatching children away from their parents' care & nuture to indoctrinate them the way the state wants them indoctrinated. Nothing has damaged the American character worse than compulsory public education.

Don't y'all forget I have a delete key and know how to use it, so don't send me any of those "No poor kids would know how to read without compulsory public education" emails because it's simply not true. About 1802 a DuPont wrote home of his experience in the US that literacy was almost universal. It doesn't matter, though-- teaching people to read at the price of rupturing the holy bond between parent and child is simply too high a price for a free people to pay.

On 28 July 1794 the leader of the Reign of Terror, Robespierre & 22 other leaders were executed in Paris, to the cheers of the mob. In 5 short years the Revolution had gone from eating its own children to eating the children who ate the children.

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
28-Jul-14 Price Change % Change
Gold, $/oz 1,303.30 0.00 0.00%
Silver, $/oz 20.53 -0.06 -0.30%
Gold/Silver Ratio 63.495 0.191 0.30%
Silver/Gold Ratio 0.0157 -0.0000 -0.30%
Platinum 1,489.40 11.80 0.80%
Palladium 879.75 0.95 0.11%
S&P 500 1,978.91 0.57 0.03%
Dow 16,982.59 22.02 0.13%
Dow in GOLD $s 269.36 0.35 0.13%
Dow in GOLD oz 13.03 0.02 0.13%
Dow in SILVER oz 827.37 3.56 0.43%
US Dollar Index 81.12 -0.02 -0.02%
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: 1,305.00      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,333.71 1,350.68 1,350.68
1/2 AE 0.50 665.04 688.39 1,376.78
1/4 AE 0.25 347.19 350.72 1,402.88
1/10 AE 0.10 138.22 143.55 1,435.50
Aust. 100 corona 0.98 1,271.49 1,280.49 1,306.35
British sovereign 0.24 309.04 321.04 1,363.81
French 20 franc 0.19 245.47 248.44 1,330.71
Krugerrand 1.00 1,316.75 1,326.75 1,326.75
Maple Leaf 1.00 1,320.00 1,335.00 1,335.00
1/2 Maple Leaf 0.50 750.38 685.13 1,370.25
1/4 Maple Leaf 0.25 332.78 349.09 1,396.35
1/10 Maple Leaf 0.10 138.33 142.25 1,422.45
Mexican 50 peso 1.21 1,562.29 1,573.29 1,304.88
.9999 bar 1.00 1,309.57 1,321.00 1,321.00
SPOT SILVER: 20.60      
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 14,832.68 15,082.68 21.09
US 40% silver 1/2s 0.30 5,883.78 6,033.78 20.45
100 oz .999 bar 100.00 2,049.50 2,109.50 21.10
10 oz .999 bar 10.00 210.95 211.95 21.20
1 oz .999 round 1.00 20.70 21.20 21.20
Am Eagle, 200 oz Min 1.00 22.35 23.60 23.60
SPOT PLATINUM: 1,489.40      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,514.40 1,554.40 1,554.40
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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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