The Moneychanger
Weekly Commentary
Friday, 15 August a.d. 2014 Browse the commentary archive
Here's the weekly scorecard:
  8-Aug-14 15-Aug-14 Change % Change
Silver, cents/oz. 1,990.20 1,949.00 -41.20 -2.1
Gold, dollars/oz. 1,308.90 1,304.50 -4.40 -0.3
Gold/silver ratio 65.767 66.932 1.165 1.8
Silver/gold ratio 0.0152 0.0149 -0.0003 -1.7
Dow in Gold Dollars (DIG$) 261.44 264.05 2.61 1.0
Dow in gold ounces 12.65 12.77 0.13 1.0
Dow in Silver ounces 831.77 854.95 23.17 2.8
Dow Industrials 16,553.93 16,662.91 108.98 0.7
S&P500 1,931.59 1,955.06 23.47 1.2
US dollar index 81.46 81.46 0.00 0.0
Platinum 1,481.30 1,458.20 -23.10 -1.6
Palladium 861.00 895.00 34.00 3.9

At I just posted a list of supplements for the heart. Susan & I discovered these (with Dr. Wright's help) when she was undergoing heart surgeries. This list shows what everyone's heart needs.

Scoreboard above makes it appear a sorry week for silver & gold, but closer examination will reveal something quite different. Likewise, stocks seemed gainers this week, but probably reached the limit of an upward correction today. Dollar index flatlined.

Put everything I say about stocks against the backdrop of the Dow's weekly chart. That weekly chart shows that the week of 28 July the Dow broke down through an uptrend line stretching back to March 2009. It closed below the 20 week moving average, rallied a little last week and this, but couldn't quite close above the 20 DMA this week (now 16,670).

The daily chart shows the Dow topped 17 July, then fell off steeply on 30 & 31 July, breaking through the Uptrend from March 2009. On 7 August it punched into the 200 DMA with a low at 16,333.70. The Dow then entered a rally correcting part of that fall, and today reached the 50% mark at 16,743, ran past it to 16,775, then collapsed to close down 50.67 (-0.3%) at 16,662.91. That may mark the correction's upward limit, preparing the way for another leg down next week. Note the word "may" carefully.

In similar fashion the S&P500 was pushing toward its 61.8% correction level at 1,958, which it hit -- and promptly fainted. It did close above its 20 DMA (1,951.67) but ended the day 0.12 (0.01%) lower at 1,955.06.

Currencies ended the week about where they were last week, only more so. US dollar index lost 18 basis points today, but that doesn't take it below the tight range it has been trading in. Euro closed $1.3397, up 0.22% and the yen up 0.13% at 97.73.

Silver & gold behaved just about perfectly today. "WHAT! Moneychanger, have you lost your mind. They both dropped today! You've lost what precious little mind you ever had."

Nope. Y'all think about it. Gold was driven down -- by a wave of selling, which wavers will remained unnamed -- down to $1,293. That started about 8:00 in New York (where they take no prisoners but many wallets), but look a-here: it traded sideways there about an hour, then shot straight up to close down only $9.40 at $1,304.50.

"Goofy," y'all will no doubt rejoin, "gold closed down on the day." That's not the point. Rather, gold was driven down through two support levels and bounced right back, leaving behind a big V on the chart, a spike low AND it closed above its 20 & 50 DMAs. Wait, wait, I'm overlooking something, It also closed back above that downtrend line from October 2012. Friends, this action is strong as a garlic milkshake.

Durn, I keep on forgetting stuff. On its drop today gold approached the unbroken uptrend line from the June low -- approached, then bounced off.

A spike low like that is just what the doctor ordered to scare off those inclined to scorn and short gold. It's a show that confirms gold's tenacious strength here.

Now to the "just about perfect" part: silver. Silver lost 38.1 cents to close Comex at 1949c. That close is a gnat's eyebrow above the downtrend line from the August 2013 downtrend line. This is either the very best place in the world to buy silver, or a bad one. Good, because this will be the low if silver catches here. Bad because if silver catcheth not there, it will drop down to 1860c.

Because of gold's performance today, and because gold has lately been leading the metals, I'm guessing silver will turn up from here. I guessing that downtrend line from August 2013 will hold.

So I may be crazy as a betsy bug, but I ain't moving a peg off that opinion -- until the market hits me over the head.

On 15 August 1864 the Confederate raider CSS Tallahassee captured six (6) federal ships off New England.

ON 15 August 1969 over 400,000 young people attended a weekend rock festival at Woodstock, New York. 'Nuff said about that.

On 15 August 1911, a day that will live forever in infamy, Procter & Gamble Company introduced Crisco hydrogenated vegetable shortening. This was vegetable oil stiffened by hydrogenating and masquerading as lard. However, the merest sniff, not to mention a taste, would discover the imposter. Unhappily the same lying technology was later marketed in margarine, and thus were Americans robbed of healthy fats in their diets and made to eat sheap, shoddy chemical monstrosities. If you think that helped their health, just glance around you next time you go to Wal-Mart.

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
14-Aug-14 Price Change % Change
Gold, $/oz 1,313.90 1.10 0.1
Silver, $/oz 19.87 0.06 0.3
Gold/Silver Ratio 66.121 0.053 0.1
Silver/Gold Ratio 0.0151 0.0000 0.3
Platinum 1,470.20 -12.00 -0.8
Palladium 886.65 8.35 1.0
S&P 500 1,955.18 8.46 0.4
Dow 16,713.58 61.78 0.4
Dow in GOLD $s 262.96 0.78 0.3
Dow in GOLD oz 12.72 0.04 0.3
Dow in SILVER oz 841.10 0.53 0.1
US Dollar Index 81.64 -0.04 -0.0
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: 1,312.60      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,341.48 1,358.54 1,358.54
1/2 AE 0.50 675.47 692.40 1,384.79
1/4 AE 0.25 337.74 352.76 1,411.05
1/10 AE 0.10 137.72 143.73 1,437.30
Aust. 100 corona 0.98 1,280.18 1,289.18 1,315.22
British sovereign 0.24 310.84 322.84 1,371.45
French 20 franc 0.19 246.90 249.86 1,338.31
Krugerrand 1.00 1,327.04 1,337.04 1,337.04
Maple Leaf 1.00 1,327.60 1,342.60 1,342.60
1/2 Maple Leaf 0.50 754.75 689.12 1,378.23
1/4 Maple Leaf 0.25 334.71 351.12 1,404.48
1/10 Maple Leaf 0.10 139.14 143.07 1,430.73
Mexican 50 peso 1.21 1,574.56 1,585.56 1,315.05
.9999 bar 1.00 1,317.19 1,328.60 1,328.60
SPOT SILVER: 19.85      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 26.00 28.50 37.25
VG+ Peace dollar 0.77 22.00 24.00 31.37
90% silver coin bags 0.72 14,010.43 14,260.43 19.94
US 40% silver 1/2s 0.30 5,662.53 5,812.53 19.70
100 oz .999 bar 100.00 1,974.50 2,034.50 20.35
10 oz .999 bar 10.00 203.45 204.45 20.45
1 oz .999 round 1.00 19.95 20.45 20.45
Am Eagle, 200 oz Min 1.00 21.60 22.85 22.85
SPOT PLATINUM: 1,470.20      
Platinum Platypus 1.00 1,495.20 1,535.20 1,535.20
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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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