The Moneychanger
Weekly Commentary
Friday, 29 August a.d. 2014 Browse the commentary archive
Here's the weekly scorecard:
  22-Aug-14 29-Aug-14 Change % Change
Silver, cents/oz. 1,936.10 1,939.80 3.70 0.2
Gold, dollars/oz. 1,278.60 1,285.80 7.20 0.6
Gold/silver ratio 66.040 66.285 0.245 0.4
Silver/gold ratio 0.0151 0.0151 -0.0001 -0.4
Dow in Gold Dollars (DIG$) 274.87 274.89 0.02 0.0
Dow in gold ounces 13.30 13.30 0.00 0.0
Dow in Silver ounces 878.12 881.45 3.34 0.4
Dow Industrials 17,001.22 17,098.45 97.23 0.6
S&P500 1,988.40 2,003.37 14.97 0.8
US dollar index 82.39 82.72 0.33 0.4
Platinum 1,420.50 1,426.70 6.20 0.4
Palladium 888.00 908.65 20.65 2.3

By the narrowest of margins silver & gold rose this week, as did platinum. Palladium, however was strong as a garlic milkshake. Stocks inched to new highs, & the US dollar index closed at a new high for the move. Appearances may deceive.

By closing higher for the month the Dow invalidated the Key Reversal it seemed to be flashing as August began. In fact, it closed higher this month and barely inside the uptrend line from the March 2009 low.

Today the Dow added another 18.88 (0.11%) to close at 17,098.45. S&P chimed in with a 6.63 (0.33%) rise to another new high at 2,003.37. Lawsy mercy, along here sometime soon will come a BAD drop. Meanwhile if the S&P500 pushes to the top of the trading channel it would hit about 2020, Dow maybe 17,400.

Everybody loves to buy a rising market. Whoops! Everybody don't get rich, do he?

Dow in Gold and Dow in Silver both jiggled up this week, but without contradicting what appears to be the top posted this week.

Dow in silver today clumb 0.21% to 879.39 oz ($1,136.99 silver dollars). Dow in gold edged up 0.27% to 13.28 oz (G$274.52 gold dollars). Both appear to have topped this week, but must drop further to confirm. View charts at http://scharts.co/VWhHSI and http://scharts.co/1AYnK98

Although the US dollar index made a new high close for the move at 82.72, up 22 basis points, I think the weakness the scrofulous dollar has already shown & its acutely overbought condition will pull it down next week.

Also arguing for that is the painfully oversold euro. It has been dropping now since May, and even if it aims to drop to $1.2755, it needs a little corrective rally here. Adding strength to that viewpoint are the two gaps the euro left behind during August. That looks like a completed move -- very completed (as if "completed" were capable of augmentation.) Euro lost 0.39% to end at $1.3133. A European Vacation is getting cheaper.

Not to mention a trip to Japan. Your sushi became 0.34% cheaper today because you now need only 96.08 pennies to buy 100 yen. Oversold, but no sign of life. Wake that thing up, somebody!

US ten year treasury note yield resolved nothing up or down this week. It broke down the first of August, but hasn't wildly followed through. Ended at 2.343%. If that rate rises suddenly, it will turn Mother Yanet Yellum's hair gray, by Yiminy!

It don't change my mind a bit that silver fell 13.6$ (0.7%) to 1939.8c on Comex, or that Gold coughed up $2.90 (0.23%) to $1,285.80. I still believe you will see stellar September gians.

On a monthly chart gold closed higher, but not by much. On the weekly chart gold is above the after-August-2011 downtrend line and trying to punch through its 18 & 50 week moving averages.

Monthly chart shows silver lower for the second month running, but above the downtrend line from April 2013 -- not, however, above the downtrend line from the April 2011 high. Friendly weekly chart shows silver higher for the week and touching but not crossing the 20 week moving average (1997c).

Gold's indicators are hovering around turning up. All is in place for a September rally. But first, gold must climb above $1,305. Look for that next week.

Silver fell back today, bouncing off its 20 DMA (1967c). MACD turned up today, yahoo! Other momentum indicators are turning or pointing upward. Next move is up. Silver must cross above 2000 cents and the 200 DMA at 2007c. For y'all who know only this long post-2011 correction, you will be flabbergasted to see how fast silver can rally.

Today in a.d. 70 the Temple in Jerusalem burnt after a nine month Roman siege. The people in Jerusalem were their own worst enemies, with two different sects of Zealots fighting each other while the Romans surrounded all. Both sects would kill anyone not rich enough to bribe his way out, and if they did get out the Roman soldiers, operating on a rumor they had swallowed their money, ripped them open. Not a stone was left standing on another, although the Roman commander Titus had forbidden burning the Temple.

On 29 August 1526 the Hungarian nobility was nearly wiped out in the Battle of Mohacs (MO-hatch) trying to stop the advancing Ottoman Turks. They stopped the Turks, but at a steep & bloody price.

On 29 August 1862 the US Bureau of Engraving & Printing began operation. Until Lincoln needed fiat money to fight his war against the South, the US government had never issued any paper money so needed no such bureau.

On 29 August 1842 the British and the Chinese signed one of the most shameful treaties in history, the Treaty of Nanking. It ended the first Opium War and gave Hong Kong to the British. The Chinese empire had wisely forbidden the importation of opium which was destroying its subjects, but the British had opium grown in their Indian empire they wanted to sell, so they forced it on the Chinese by war. New England merchants, including the forebears of the Bushes, also waxed fat and wealthy on the opium trade. I reckon once you've been rich long enough, the stink fades off the money.

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
29-Aug-14 Price Change % Change
Gold, $/oz 1,285.80 -2.90 -0.2
Silver, $/oz 19.40 -0.14 -0.7
Gold/Silver Ratio 66.285 -0.145 -0.2
Silver/Gold Ratio 0.0151 -0.0001 -0.7
Platinum 1,426.70 -0.50 -0.0
Palladium 908.65 11.45 1.3
S&P 500 2,003.37 6.63 0.3
Dow 17,098.45 18.88 0.1
Dow in GOLD $s 274.89 0.95 0.3
Dow in GOLD oz 13.30 0.05 0.3
Dow in SILVER oz 881.45 7.10 0.8
US Dollar Index 85.72 0.22 0.3
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: 1,286.30      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,315.88 1,331.32 1,331.32
1/2 AE 0.50 661.93 678.52 1,357.05
1/4 AE 0.25 330.96 345.69 1,382.77
1/10 AE 0.10 134.96 140.85 1,408.50
Aust. 100 corona 0.98 1,252.01 1,261.01 1,286.48
British sovereign 0.24 304.61 316.61 1,344.99
French 20 franc 0.19 241.95 244.95 1,312.01
Krugerrand 1.00 1,297.88 1,307.88 1,307.88
Maple Leaf 1.00 1,301.30 1,316.30 1,316.30
1/2 Maple Leaf 0.50 739.62 675.31 1,350.62
1/4 Maple Leaf 0.25 328.01 344.09 1,376.34
1/10 Maple Leaf 0.10 136.35 140.21 1,402.07
Mexican 50 peso 1.21 1,541.46 1,552.46 1,287.60
.9999 bar 1.00 1,290.80 1,302.30 1,302.30
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 13,924.63 14,210.63 19.88
US 40% silver 1/2s 0.30 5,538.63 5,688.63 19.28
100 oz .999 bar 100.00 1,932.50 1,992.50 19.93
10 oz .999 bar 10.00 199.25 200.25 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: 1,426.70      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Platinum Platypus 1.00 1,451.70 1,491.70 1,491.70
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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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