The Moneychanger
Daily Commentary
Thursday, 21 August a.d. 2014 Browse the commentary archive

Today the S&P500 closed at a new all time high, up 5.86 (0.29%) to 1,992.37. Dow did not make a new high but closed above 17,000, higher by 60.36 (0.36%) at 17,039.49.

Depending on how long the mania continues, S&P500 could easily reach 2000, even tomorrow.

Why am I always so negative on stocks? Because I have seen these tops before, and when they happen you can't find a radioactive bear with a Geiger counter, because everybody but everybody is bullish. But think about it: when everybody is bullish, everybody has bought, and one bright day you run out of buyers. This is playing out much like the July - August 2011 gold top. People say they can set a target, but I don't have much faith in that. Dow could reach -- not now, but later this year -- over 18,000. I just watch for the signal that it's turned.

In the past few days both the Dow in Gold and Dow in silver have fundamentally changed their chart's appearances. Can't call it a correction any longer because it looks like another advance. Most likely target would be the June tops, which would paint double tops on the chart. those June tops are at 892.99 oz (S$1,154.57 silver dollars) and 13.53 oz (G$279.69 gold dollars). Today the Dow in Gold finished up 1.7% at 13.36 oz (G$276.18) and the Dow in silver closed at 872.96 oz (S$1,128.68).

US dollar index backed off 8 basis points (-0.13%) to 82.21 today. Caution is that the dollar index made a new high for the move but closed lower than yesterday, and that's the first half of a key reversal. Euro clawed back 0.17% to $1.3282, still rotting and brown around the edges. Lower euro a-coming. Yen lost another 0,1% to 96.30. Sick, sick.

Bad day for gold, good day for gold buyers. Gold dropped $19.70 (1.55%) to $1,273.70 while silver dropped only 8.2 cents (0.242%) to 1939c.

Where does that put gold? It fell through its 200 day moving average, but as I have been mooting some time, it fell nearly to the uptrend line from the December low, which today is near $1,270. Today's low hit $1,273.40. If gold doesn't catch around here, or tomorrow above $1,270, we're dealing with another thing. Also, a cyclical low is due between the 21st or 22nd. Tomorrow will tell us.

Y'all notice how silver drops here much more reluctantly than gold? That's because down around that 1930 area (low today came at 1928c) buyers are waiting. There is lateral support there (call it 1925c), but silver also managed to close just above that downtrend line from August 2013.

Either silver & gold turn around at/near these prices, or they'll take another big drop. Watch closely tomorrow. A jump up would be very positive, a lackluster performance negative.

On 21 August 1864 Major General Nathan B Forrest led a raid on Memphis in which he liberated the prisoners held by Yankees and on the way out of town fought a personal, single-handed battle with a yankee colonel who had bragged he'd show Forrest a thing or two. Forrest charged him horseback with a sword and with one hand literally lifted him out of his saddle and dispatched him. Memphis had been Forrest's home before the war.

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
21-Aug-14 Price Change % Change
Gold, $/oz 1,273.70 -19.70 -1.52%
Silver, $/oz 19.39 -0.08 -0.42%
Gold/Silver Ratio 65.688 -0.735 -1.11%
Silver/Gold Ratio 0.0152 0.0002 1.12%
Platinum 1,419.30 -8.40 -0.59%
Palladium 880.40 11.45 1.32%
S&P 500 1,992.37 5.86 0.29%
Dow 17,039.49 60.36 0.36%
Dow in GOLD $s 276.55 5.18 1.91%
Dow in GOLD oz 13.38 0.25 1.91%
Dow in SILVER oz 878.78 6.80 0.78%
US Dollar Index 82.21 -0.08 -0.10%
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: 1,276.80      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,307.44 1,321.49 1,321.49
1/2 AE 0.50 657.04 673.51 1,347.02
1/4 AE 0.25 328.52 343.14 1,372.56
1/10 AE 0.10 133.96 139.81 1,398.10
Aust. 100 corona 0.98 1,245.26 1,254.26 1,279.60
British sovereign 0.24 302.36 314.36 1,335.44
French 20 franc 0.19 240.17 243.18 1,302.51
Krugerrand 1.00 1,289.57 1,299.57 1,299.57
Maple Leaf 1.00 1,291.80 1,306.80 1,306.80
1/2 Maple Leaf 0.50 734.16 670.32 1,340.64
1/4 Maple Leaf 0.25 325.58 341.54 1,366.18
1/10 Maple Leaf 0.10 135.34 139.17 1,391.71
Mexican 50 peso 1.21 1,531.61 1,542.61 1,279.43
.9999 bar 1.00 1,281.27 1,292.80 1,292.80
SPOT SILVER: 19.43      
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 13,999.70 14,285.70 19.98
US 40% silver 1/2s 0.30 5,540.10 5,690.10 19.29
100 oz .999 bar 100.00 1,933.00 1,993.00 19.93
10 oz .999 bar 10.00 199.30 200.30 20.03
1 oz .999 round 1.00 19.53 20.03 20.03
Am Eagle, 200 oz Min 1.00 21.18 22.43 22.43
SPOT PLATINUM: 1,419.30      
Plat. Platypus 1.00 1,444.30 1,484.30 1,484.30
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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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