The Moneychanger
Daily Commentary
Wednesday, 20 August a.d. 2014 Browse the commentary archive

I promise I will be nice today, and I will not say anything slighting about any of the clowns in power.

The Fed FOMC committee minutes from July were published today at 2:00 p.m., and stock markets interpreted their impenetrable remarks as positive for stocks. Of course, they'd have interpreted the landing of aliens in a space ship the size of New Jersey as a positive for stocks, too. Apparently a few of the persons quoted in the minutes seemed to think the Fed would need to possibly, maybe, perhaps, sometime raise interest rates sooner rather than wait for the end of the world.

Stocks were trepedatious all day long, & even after those FOMC minutes were published at 2:00 p.m. weren't sure which way to jump. At the last they jumped up (a trend in motion stays in motion, etc.), but not enough to bother writing your mama about. Dow rose 59.54 (0.35%) to 16,979.13. a long ways from the 17,138 high close. S&P500 gained 4.91 (0.25%) to close at 1,986.51, not far from the 24 July high close at 1,987.98.

Dow in gold & Dow in silver changed little. DiG rose 0.43% to 13.11 oz (G$271.01 gold dollars). DiS hooked down a tiny 0.12% to 870.86 oz (S$1,125.96 silver dollars).

Dollar lapped up the FOMC minutes. US dollar index rose 36 basis points (0.45%) to 82.29. That makes good yesterday's close above the 81.75 resistance, and points the dollars scrofulous snout at 82.75. This might happen soon, as the dollar index is more overbought than ptomaine at a carnival food alley.

Dollar's rise left the yen and euro puking sick. Euro gapped down and lost 0.45% to $1.3255, targeting $1.3100, maybe $1.2755. But the euro looked sturdy compared to the yen, which gapped much further down and slid and slid and slid, down 0.85 to 96.39, a new low for the move since July. Bottom of trading range stands at about 95.50, which it could hit tomorrow at the present rate of descent.

I went to the gold chart expecting to see a great cleft at 2:00 p.m, but twarn't there. In fact, gold traded very tightly most of the day between $1,299.30 and $1,291.10. It closed comes down $1.60 (0.12%) at $1,293.50, Then in the aftermarket gold panicked and fell to $1,289 although it later recovered to $1,290+.

Silver gained 8.5 cents (+0.44%) to 1947.2c.

Silver & gold have done nothing even to whisper a reversal, but I have to wonder why they haven't fallen further, either. Both seem determined to hold on here, which suggests buyers come in at lower prices. In the last two days gold has lost its advantages, closed below its 20 & 50 day moving averages, and closed again below the downtrend line for the October 2012 high. Gold has established a range between $1,281 and $1,325. Nothing happens until it breaks out of that prison.

Silver's low yesterday prompted a rally-ette today. Silver remains barely above the downtrend form the August 2013 high, and has been sliding down that line most of August. Support awaits at 1920c, then further down at 1861c. RSI is approaching oversold.

As I said, most hope here for silver & gold investors is that neither metal has fallen off. That makes those lows -- $1,281 & 1936c -- just that much more important lines to hold.

On 20 August 1940 Josef Stalin's long arm reached Leon Trotsky in exile in Mexico. Stalin's agent assassinated Trotsky with an mountaineer's ice ax. The revolution always eats her children.

On 20 August 1667 John Milton, blind and impoverished, published his blank verse epic poem, Paradise Lost.

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
20-Aug-14 Price Change % Change
Gold, $/oz 1,293.50 -1.60 -0.12%
Silver, $/oz 19.47 0.09 0.44%
Gold/Silver Ratio 66.429 -0.374 -0.56%
Silver/Gold Ratio 0.0151 0.0001 0.56%
Platinum 1,427.70 -9.98 -0.69%
Palladium 868.95 -12.35 -1.40%
S&P 500 1,986.51 4.91 0.25%
Dow 16,979.13 59.54 0.35%
Dow in GOLD $s 271.35 1.29 0.48%
Dow in GOLD oz 13.13 0.06 0.48%
Dow in SILVER oz 871.98 -0.75 -0.09%
US Dollar Index 82.29 0.36 0.44%
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: 1,290.80      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,321.78 1,335.98 1,335.98
1/2 AE 0.50 664.25 680.90 1,361.79
1/4 AE 0.25 332.12 346.90 1,387.61
1/10 AE 0.10 135.43 141.34 1,413.43
Aust. 100 corona 0.98 1,258.92 1,267.92 1,293.53
British sovereign 0.24 305.68 317.68 1,349.52
French 20 franc 0.19 242.80 245.79 1,316.51
Krugerrand 1.00 1,305.00 1,315.00 1,315.00
Maple Leaf 1.00 1,305.80 1,320.80 1,320.80
1/2 Maple Leaf 0.50 742.21 677.67 1,355.34
1/4 Maple Leaf 0.25 329.15 345.29 1,381.16
1/10 Maple Leaf 0.10 136.82 140.70 1,406.97
Mexican 50 peso 1.21 1,548.41 1,559.41 1,293.36
.9999 bar 1.00 1,295.32 1,306.80 1,306.80
SPOT SILVER: 19.44      
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 13,967.53 14,253.53 19.94
US 40% silver 1/2s 0.30 5,541.58 5,691.58 19.29
100 oz .999 bar 100.00 1,933.50 1,993.50 19.94
10 oz .999 bar 10.00 199.35 200.35 20.04
1 oz .999 round 1.00 19.54 20.04 20.04
Am Eagle, 200 oz Min 1.00 21.19 22.44 22.44
SPOT PLATINUM: 1,427.70      
Plat. Platypus 1.00 1,452.70 1,492.70 1,492.70
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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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