The Moneychanger
Daily Commentary
Wednesday, 6 August a.d. 2014 Browse the commentary archive

With mild surprise I saw that gold was up about $20 this morning, doped up on increasing tensions over Ukraine. Putin put his own sanctions on the EU & other countries, showing two can play the sanction game. One wonders if the boobs in the US regime really are stupid enough to throw the whole world into war. They certainly want one, as their propaganda machine has shifted into high gear, and never mind waiting for facts, lies will work even better.

My suspicious nature says the Nice Government Men went into high gear today, too, to make sure markets didn't run away on the bad noises out of Ukraine. Stock indices rose toward noon, then eroded the rest of the day, but closed "up". Dow gained an minute 13.87 (0.08%) to close at 16,443.34. S&P500 rose an infinitesimal 0.03 (0.00%) to 1,920.24.

With a 16,369.55 low yesterday, the Dow scared its 200 DMA (16,338.50) to death. Surely a bull market nearing its 200 DMA ought to attract buyers aplenty, but today's Dow gain doesn't look too stout. RSI has fallen to areas where it ought to rebound, but MACD gives no token of turning up.

The S&P500's 200 DMA lies far below at 1,861, but the 100 DMA is at 1,913, a line the S&P500 punched at its 1,911.45 low today. Logically stocks ought to stage some sort of little rally from here, but the plunge has not yet ended.

Whoa! Dow in gold sliced clean through its 200 DMA (12.71 oz or G$262.74 gold dollars), falling 1.24% to 12.58 oz (G$260.05). Y'all recall that the DiG topped on 9 June & fell hard until mid-July, when it began a countertrend rally. It has now (1) crossed below the 200 DMA AND (2) closed below the last low (12.645 oz or G$261.39) oz). Mark: the uptrend line from the August 2011 will stand tomorrow at 12.40 oz (G$256.33). Crossing that line will give the next confirmation that the long trend of stocks rising against gold, which began with the gold top in August 2011, had ENDED.

Silver acted a little lethargic today,. Dow in silver dropped only 1.24% to 820.32 oz (S$1,060.62 silver dollars). This remains equivocal, with the 20 DMA below at 815.24 oz (S$1,054.05) and the 200 DMA at 807.51 oz (S$1,044.05). Conceivably the DiS could knife through those tomorrow, but it hasn't done so yet.

I don't know a durned thing, but had I been the Nice Government Men today I'd a-been selling that dollar hard, to keep it from running away upside during a crisis. But maybe it was nacheral forces drove the dollar index down ten basis points to 81.50. And it is more overbought than Liberace albums at an old ladies' convention.

Euro wriggled & showed slight signs of life, rising 0.04% to $1.3380. Yen rose a sizeable 0.52% to 97.99. That sliced into (but closed not above) all its clustered 200, 50, & 20 DMAs, and closed the gaps left behind by the fall. That likely invalidates the sell signal the yen gave when it fell out of that long narrow triangle.

Gold sprang $22.70 (1.8%) to clear resistance at $1,295 & $1,300 and closed at $1,306.70. Silver jumped 0.95% (19.1 cents) to close Comex at 1998.5. That close is like a bug in your orange juice: it looks great, but you're afraid to drink it. Should have closed over 2000c, but maybe I'm just a picky smellfungus.

That jump carried gold through its 20 DMA ($1,304.94) almost to the downtrend line from October 2012, which has been the stout barrier to gold's rise in the last 2 months. Tomorrow that line stands at $1,313.75, so any STRONG close above that would constitute a breakout. On the other hand, I am haunted by remembering that these crisis-inspired runs usually fade and hand back all the gains.

Silver yesterday came right to the downtrend line from the August 2013 high, skidded to a stop, & reversed higher today.

Gold silver ratio has worked strongly higher in the last three days, from 63.90 to 64.868 yesterday to 65.38 today. Very much overbought, & ought to fall back soon.

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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
6-Aug-14 Price Change % Change
Gold, $/oz 1,306.70 22.70 1.77%
Silver, $/oz 19.99 0.19 0.96%
Gold/Silver Ratio 65.384 0.516 0.80%
Silver/Gold Ratio 0.0153 -0.0001 -0.79%
Platinum 1,466.70 9.30 0.64%
Palladium 849.40 0.15 0.02%
S&P 500 1,920.24 0.03 0.00%
Dow 16,443.34 13.87 0.08%
Dow in GOLD $s 260.13 -4.38 -1.65%
Dow in GOLD oz 12.58 -0.21 -1.65%
Dow in SILVER oz 822.78 -7.24 -0.87%
US Dollar Index 81.50 -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: 1,307.50      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,344.11 1,353.26 1,353.26
1/2 AE 0.50 666.32 689.71 1,379.41
1/4 AE 0.25 347.86 351.39 1,405.56
1/10 AE 0.10 138.49 143.83 1,438.25
Aust. 100 corona 0.98 1,275.20 1,284.20 1,310.14
British sovereign 0.24 309.63 321.63 1,366.32
French 20 franc 0.19 245.94 248.91 1,333.21
Krugerrand 1.00 1,319.27 1,329.27 1,329.27
Maple Leaf 1.00 1,322.50 1,337.50 1,337.50
1/2 Maple Leaf 0.50 751.81 686.44 1,372.88
1/4 Maple Leaf 0.25 333.41 349.76 1,399.03
1/10 Maple Leaf 0.10 138.60 142.52 1,425.18
Mexican 50 peso 1.21 1,562.14 1,573.14 1,304.75
.9999 bar 1.00 1,312.08 1,323.50 1,323.50
SPOT SILVER: 20.03      
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 14,353.63 14,603.63 20.42
US 40% silver 1/2s 0.30 5,715.63 5,865.63 19.88
100 oz .999 bar 100.00 1,992.50 2,052.50 20.53
10 oz .999 bar 10.00 205.25 206.25 20.63
1 oz .999 round 1.00 20.13 20.63 20.63
Am Eagle, 200 oz Min 1.00 21.78 23.03 23.03
SPOT PLATINUM: 1,466.70      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,491.70 1,531.70 1,531.70
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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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