The Moneychanger
Weekly Commentary
Friday, 5 September a.d. 2014 Browse the commentary archive
Here's the weekly scorecard:
  29-Aug-14 5-Sep-14 Change % Change
Silver, cents/oz. 1,939.80 1,908.20 -31.60 -1.6
Gold, dollars/oz. 1,285.80 1,265.80 -20.00 -1.6
Gold/silver ratio 66.285 66.335 0.050 0.1
Silver/gold ratio 0.0151 0.0151 -0.0000 -0.1
Dow in Gold Dollars (DIG$) 274.89 279.87 4.98 1.8
Dow in gold ounces 13.30 13.54 0.24 1.8
Dow in Silver ounces 881.45 898.09 16.64 1.9
Dow Industrials 17,098.45 17,137.36 38.91 0.2
S&P500 2,003.37 2,006.81 3.44 0.2
US dollar index 82.72 83.79 1.07 1.3
Platinum 1,426.70 1,412.50 -14.20 -1.0
Palladium 908.65 891.00 -17.65 -1.9

Back in 1993 when James Blanchard of New Orleans asked me to write and edit the book SILVER BONANZA, I'd had a gutful of silver. After a 13 year bear market, I didn't even want to hear the word "silver." Researching that book, however, permanently changed my mind and taught me why silver will outperform gold.

Yet precisely the history that enables you to understand why silver behaves as it does was killed by the New York publisher when they picked up the book. Thankfully, Blanchard had already published SILVER BONANZA privately in the whole, unexpurgated form.

THAT is the edition I have permission to reprint in PDF format. Originally published at $75, I sell it on my website for $39. But at you can buy the PDF version at a $20 discount, for only $19 if when you check out you enter the special offer code "MC0903".

And you'll find that our forecast for silver has come true, in greater terms that we could imagine. Only thing we missed was silver in photography. We underestimated how rapidly digital would improve, but our conclusion was correct: it didn't make a bit of difference to the silver bull market, which roared ahead anyway. But y'all go check it out for yourselves.

Now to markets.

'Twas not a kind week for silver or gold, which both lost 1.6%. Nor did platinum or palladium fare better. The scrofulous US dollar index rampaged after the European Central Bank's surprise party. Stocks, in spite of the S&P500's new highs, barely held their own.

The week's big news was the European Central Bank's announcement they will further obliterate their currency with inflation. ECB lowered its rediscount interest rate from 0.15% to 0.05%, began charging banks 0.2% to hold reserves, and announced a quantitative easing program of US$691 billion over three years (US$230 bn/year or US$20 bn a month).

That announcement threw the euro over the cliff and sent people jumping onto the US dollar, the only horse in the corral not lame in two feet. Dollar index gained 1.12% while the euro lost 1.59%. Today the Dollar index closed off one basis point at 83.79, and that probably marks the move's limit. Euro rose slightly, 0.9%, to $1.2951. Yen rose 0.21% to 95.17. The dollar is so overbought, and the yen and euro so oversold, that they need at least a relief correction to work that off.

S&P500 today made a new high at 2006.68, up 9.16 or 0.46%. Dow added 67.75 (0.4%) to close at 17,137.36, not quite equal to 16 July's high at 17,138.20.

The S&P500 had posted a key reversal on Wednesday & Thursday, but cancelled that today with a higher close. It still appears to be rolling over. Dow, also, looks gravity bound. A close below 17,000 or 1990 would drag down stocks like wearing concrete overshoes swimming off Long Island.

Throw your eye on the Dow in Gold chart here,

The Dow in Gold made a high at December's end at 13.80 oz (G$285.27 gold dollars). It dropped into March to 11.62 ox ($240.21) , then climbed to an early June high at 13.53 oz (G$279.69). From that June high it fell into early August to 12.45 oz (G$257.36). From there it climbed again to 13.53 oz today. Question here is, Can it climb higher or will resistance here stop the DiGs? Indicators whisper that it is topping.

Now go look at the chart for the Dow in Silver,

Dow in silver painted a rising wedge from June 2013 through June 2014 when it topped at 892.99 oz (S$1,154.57 silver dollars). In June the DiS dropped out of that rising wedge, then predictably dropped to 787.85 oz (S$1,108.63), below the 200 DMA. It rallied from mid-July to 894.40 oz (S$1,156.40) yesterday, a new high.

Both these charts appear to be forming double tops. Dow in silver could climb as high as 912 oz (S$1,179.15). Gold must not rise higher than 2% above the 13.80 top or 14.08.

Why am I wasting your time with this? Because these indicators must turn down before silver & gold can turn up. Until they turn down, the Federal Reserve's paper money scam is working.

Gold grew today by -- are y'all ready for this? -- seventy cents to $1,265.80. Silver took out her tweezers and plucked 1.8 cents from somewhere, rising to 1908.2c.

A five day chart shows that gold yesterday made a V-bottom overnight at $1,258. Good, but gold must hold above $1,262 to verify that.

Silver's five day chart resembles gold's, with a V-bottom yesterday. Must hold above 1900c.

Considering the ECB's surprise party this week and the dollar's rise, silver & gold held up pretty well. In spite of dollar strength, they held on. That's the best thing I can say for them right now.

Wait, Moneychanger! Are you giving up on metals? Not on your life, but this will play out until a docile, gullible, a and public-school-educated public catches on to the Federal Reserve's printing scam. Or until yet another financial crisis blows up.

Nothing has changed. Nothing has been reformed. No heads have rolled. If the cause (inflation) hasn't changed, then the result (the gold & silver bull market) won't change, either. Be patient, be patient. Now is the time to buy, not jump overboard.

I remind y'all that I will be vacationing 8-12 September, and so won't be publishing daily commentaries. Our office will be open to help you buy silver or gold, however.

On 5 September 1836 Sam Houston was elected president of the Republic of Texas. Y'all know he was from Tennessee, right? Wasn't for Tennesseans, Texans would probably still be paying taxes to Santa Anna.

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
5-Sep-14 Price Change % Change
Gold, $/oz 1,265.80 0.70 0.1
Silver, $/oz 19.08 0.02 0.1
Gold/Silver Ratio 66.335 0.036 0.1
Silver/Gold Ratio 0.0151 0.0000 0.1
Platinum 1,412.50 2.70 0.2
Palladium 891.00 0.60 0.1
S&P 500 2,006.81 9.16 0.5
Dow 17,137.36 67.78 0.4
Dow in GOLD $s 279.87 0.98 0.4
Dow in GOLD oz 13.54 0.05 0.4
Dow in SILVER oz 898.09 2.71 0.3
US Dollar Index 83.79 0.01 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: 1,268.00      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,299.70 1,312.38 1,312.38
1/2 AE 0.50 652.51 668.87 1,337.74
1/4 AE 0.25 326.25 340.78 1,363.10
1/10 AE 0.10 133.04 138.85 1,388.46
Aust. 100 corona 0.98 1,232.95 1,241.95 1,267.04
British sovereign 0.24 300.28 312.28 1,326.59
French 20 franc 0.19 238.51 241.54 1,293.71
Krugerrand 1.00 1,280.68 1,290.68 1,290.68
Maple Leaf 1.00 1,283.00 1,298.00 1,298.00
1/2 Maple Leaf 0.50 729.10 665.70 1,331.40
1/4 Maple Leaf 0.25 323.34 339.19 1,356.76
1/10 Maple Leaf 0.10 134.41 138.21 1,382.12
Mexican 50 peso 1.21 1,514.94 1,525.94 1,265.61
.9999 bar 1.00 1,272.44 1,284.00 1,284.00
SPOT SILVER: 19.15      
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 13,724.43 14,010.43 19.60
US 40% silver 1/2s 0.30 5,456.03 5,606.03 19.00
100 oz .999 bar 100.00 1,904.50 1,964.50 19.65
10 oz .999 bar 10.00 196.45 197.45 19.75
1 oz .999 round 1.00 19.25 19.75 19.75
Am Eagle, 200 oz Min 1.00 20.90 22.15 22.15
SPOT PLATINUM: 1,412.50      
Platinum Platypus 1.00 1,437.50 1,477.50 1,477.50
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Copyright Notice

© 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.

Other Important Information

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