The Moneychanger
Weekly Commentary
Monday, 27 October a.d. 2014 Browse the commentary archive
Here's the weekly scorecard:
  17-Oct-14 27-Oct-14 Change % Change
Silver, cents/oz. 1,728.20 1,711.50 -16.70 -1.0
Gold, dollars/oz. 1,238.30 1,229.80 -8.50 -0.7
Gold/silver ratio 71.653 71.855 0.203 0.3
Silver/gold ratio 0.0140 0.0139 -0.0000 -0.3
Dow in Gold Dollars (DIG$) 273.45 282.69 9.24 3.4
Dow in gold ounces 13.23 13.68 0.45 3.4
Dow in Silver ounces 947.83 982.64 34.81 3.7
Dow Industrials 16,380.41 16,817.94 437.53 2.7
S&P500 1,886.76 1,961.63 74.87 4.0
US dollar index 85.29 85.60 0.31 0.4
Platinum 1,262.00 1,256.90 -5.10 -0.4
Palladium 755.85 786.30 30.45 4.0

Since I sent no commentaries four days last week, let's look at the last ten days' trading, that is, since Friday a week ago.

Silver & gold swooned last week when gold failed to penetrate $1,250. More than that I suspect, the rally in stocks sucked wind out of gold's sales. US dollar index also rallied slightly, or at least didn't step through a well cover.

The dollar index pushed up against its trading channel's top boundary, but then faded Friday and today. 85.50 marks support. Once broken, the dollar index will fall further. Considering the hyperbolic rise it showed June - September, it has a while to correct, even if it plans to go higher eventually. I know loads of commentators are calling for a higher dollar, but I am not convinced. Course, what does a nat'ral born durned fool from Tennessee know? Why, we even get daylight later than New York.

Yen had a falling week last week, but began to rally when it hit its 20 day moving average. Uptrend remains unbroken, if wounded. Today it gained 0.31% to 92.79. Euro closed up 0.23% to $1.2699. It fell last week, too, but today climbed back above that 20 DMA. It's a pretty lazy rally.

Y'all go read this article by John Crudele in the NY Post, You'll discover that somebody other than this nat'ral born fool in Tennessee suspects the yankee government's Plunge Protection Team engineered the late stock market rally.

Speaking of rallies, what damage has the stock rally undone? For the Dow it has merely brought it back up to the downtrend line & almost to the 50 DMA. S&P500 has gotten above that downtrend line, but stalled at the 50 DMA. FOMC announcement this meeting, almost regardless of what they say (and they won't say no surprises), will set off a one day rally. After that shot wears off, look for stocks to sink below the surface again.

Dow & S&P500 gainsaid each other today. Dow rose 12.53 (0.07%) to 16,817.94 but the S&P500 dropped 2.95 (0.15%) to 1,961.63. Momentum is petering out -- volume has been dropping all the way up.

Stock markets were driven to ridiculous heights powered by the Fed's money machine, not economics. Now that the Fed has tapered, so will stocks. You are watching the end of the long stock rally.

Bearing witness thereunto are the Dow in Gold & Dow in Silver. All this stock market rallying hath done no more than drive the DiG up to its 20 DMA, recovering about half the ground it had lost, about par for a correction. Rose today 0.56% to 13.73 oz (G$283.82 gold dollars). Remains firmly in a downtrend.

Dow in Silver rose 0.63% to 983.51 oz (S$1,271.61 silver dollars). Correction is a bit higher than gold, typical for silver, and it's above its 20 DMA, but the downtrend abideth.

Gold today lost $2.10 to close Comex at $1,229.10. Silver lost 2.1 cents to 1711.5c. Mercy! What did y'all do the market while I was gone?

'Tain't near as bad as y'all thought. Gold had rallied up to its 50 DMA, then fell back to the 20 DMA. No big deal. Silver did the same with its 20 DMA.

Right THERE is where the problem lies. Silver has dug its heels in and played the sluggard, not yet breaking through 1775c. And it may get worse the next two days waiting for that accursed FOMC meeting outcome, but after that mayhap the skies will clear.

But y'all look at this, keep your eyes on the horizon: in spite of last week's fall, both metals remain in an uptrend, higher highs and higher lows.

Count on it. Next couple of days y'all ought to be buying, not moping around waiting for the yankee government to come around and steal whatever you have left. Some rob you with a six-gun, some with a fountain pen, but most with a printing press.

Bunker Hunt died on 21 October 2014, R.I.P. The New York establishment was so stung when Bunker whupped the tar out of them in silver in 1980 that they spent the next 15 years trying to punish him. Truth is, Bunker never tried to "corner" to silver market. He just advised to all his friends from about 1973 on to buy silver. And he had some VERY rich friends.

But them New York boys weren't about to let any TEXAN step on their shiny, pointy-toe shoes.

Y'all enjoy your evening!

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
27-Oct-14 Price Change % Change
Gold, $/oz 1,229.10 -2.10 -0.2
Silver, $/oz 17.12 -0.02 -0.1
Gold/Silver Ratio 71.814 -0.122 -0.2
Silver/Gold Ratio 0.0139 -0.0000 -0.1
Platinum 1,255.20 3.80 0.3
Palladium 786.30 6.25 0.8
S&P 500 1,961.63 -2.95 -0.2
Dow 16,817.84 12.53 0.1
Dow in GOLD $s 282.85 0.72 0.3
Dow in GOLD oz 13.68 0.03 0.3
Dow in SILVER oz 982.64 1.94 0.2
US Dollar Index 85.60 -0.19 -0.2
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: 1,228.60      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,261.77 1,271.60 1,271.60
1/2 AE 0.50 632.21 648.09 1,296.17
1/4 AE 0.25 316.11 330.19 1,320.75
1/10 AE 0.10 128.90 134.53 1,345.32
Aust. 100 corona 0.98 1,195.84 1,207.84 1,232.24
British sovereign 0.24 290.95 302.95 1,286.95
French 20 franc 0.19 231.10 234.18 1,254.31
Krugerrand 1.00 1,243.34 1,253.34 1,253.34
Maple Leaf 1.00 1,243.60 1,258.60 1,258.60
1/2 Maple Leaf 0.50 706.45 645.02 1,290.03
1/4 Maple Leaf 0.25 313.29 328.65 1,314.60
1/10 Maple Leaf 0.10 130.23 133.92 1,339.17
Mexican 50 peso 1.21 1,467.87 1,491.87 1,237.35
.9999 bar 1.00 1,232.90 1,244.60 1,244.60
SPOT SILVER: 17.10      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 24.00 27.00 35.29
VG+ Peace dollar 0.77 19.00 22.50 29.41
90% silver coin bags 0.72 12,637.63 12,923.63 18.08
US 40% silver 1/2s 0.30 4,851.28 5,001.28 16.95
100 oz .999 bar 100.00 1,699.50 1,759.50 17.60
10 oz .999 bar 10.00 175.95 176.95 17.70
1 oz .999 round 1.00 17.20 17.70 17.70
Am Eagle, 200 oz Min 1.00 18.85 20.10 20.10
SPOT PLATINUM: 1,255.20      
Platinum Platypus 1.00 1,280.20 1,320.20 1,320.20
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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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