The Moneychanger
Daily Commentary
Monday, 3 November a.d. 2014 Browse the commentary archive

Friends, I am trying very hard today to be nice, but, y'all, it just ain't workin'. So I'm gonna bite my lip and now say anything disrespectful to our Masters in Washington & Wall Street. I promise.

US Dollar Index today rose to territory not seen since June 2010. It rose 0.51% (44 basis points) to 87.41. Technical presumption must be that it will rise much further, having broken out of an area where it has been trapped for three years. Fed must be crazy, as a higher dollar will create all sorts of problems, but there it is. And remember: currency exchange rates are ALL manipulated by central banks. This has not happened because the Fed was caught napping.

Rather than make a secret agreement to depreciate its exchange rate, the Japanese just publicly announced they were going to dilute the yen the way a cheap saloon keeper dilutes his whiskey: to the max. Yen today gapped down again and closed at 87.74 cents to 100 yen, a 1.46% drop from Friday.

Euro has all but broken down. Dropped 0.27% today to $1.2486, a new low close for the past 6 months, but not a dramatic waterfall like the yen. Doomed to fall more.

Stocks caught their breath today after last week. Dow inched off 0.14% (24.28) to 17,366.24. S&P500 backed off a tiny 0.24 to 2,017.81.

Now ask yourself how stocks will yet go vastly higher after a five year run? Technically they appear to be topping and this appears a double top, but the central banks are in a tag team match, passing quantitative easing around the globe. Now it's Japan's turn. Figure it out, they're subsidizing a carry trade. Bank of Japan announces it will mightily depreciate the yen, speculators borrow yen at zero percent, sell the yen for dollars and invest in stocks that the inflation is driving up, and cannot lose. The money they borrowed is depreciating, and the depreciation is driving world stock markets higher.

Dad durn! I wish I could get that job.

Dow in gold rose 0.18% to 14.85 oz (G$306.98 gold dollars). Stalled at a resistance line. Dow in silver dropped 0.33% to 1,071.92 oz (S$1,385.92 silver dollars). Is another leg up in its future?

Gold fell $1.80 (0.15%) to $1,169.30 on Comex. Silver "rose" 9.5 cents to 1617.5c.

Looking at the silver & gold charts, the only thought that occurs is, "Bottoms aren't formed this way." Silver & gold are both oversold, but some other progress is needed to point to a bottom. The only SOLID bit of evidence that points to a bottom is the premium on US 90% coin which during this October has risen from 75 cents an ounce over spot at wholesale to 160 cents. That's a very strong move and signals that 90% supply has dried up.

Now the silver & gold markets are comatose. Silver today ranged from 1574c to 1622c. Gold from 1161 to 1173.40. Nothing happening.

For now I can only watch & wait.

You won't see this again: On 3 November 1783, barely two weeks after his victory over the English at Yorktown, General George Washington ordered his Continental Army disbanded.

On 3 November 1839 two British frigates engaged several Chinese junks in the First Opium War. Those staunch advocates of free trade, the British, were offended that the imperial Chinese government wouldn't all them to import opium from India. Of course there were also many fine New England families engaged in that opium trade. They had to find another business after being driven out of the slave trade.

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
3-Nov-14 Price Change % Change
Gold, $/oz 1,169.30 -1.80 -0.15%
Silver, $/oz 16.18 0.10 0.59%
Gold/Silver Ratio 72.291 -0.539 -0.74%
Silver/Gold Ratio 0.0138 0.0001 0.75%
Platinum 1,243.70 7.50 0.61%
Palladium 804.05 12.60 1.59%
S&P 500 2,017.81 -0.24 -0.01%
Dow 17,366.24 -24.28 -0.14%
Dow in GOLD $s 307.01 0.04 0.01%
Dow in GOLD oz 14.85 0.00 0.01%
Dow in SILVER oz 1,073.65 -7.85 -0.73%
US Dollar Index 87.41 0.44 0.51%
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: 1,164.30      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,195.74 1,205.05 1,205.05
1/2 AE 0.50 599.10 614.17 1,228.34
1/4 AE 0.25 299.55 312.91 1,251.62
1/10 AE 0.10 122.15 127.49 1,274.91
Aust. 100 corona 0.98 1,133.26 1,145.26 1,168.39
British sovereign 0.24 275.72 287.72 1,222.26
French 20 franc 0.19 219.01 222.17 1,190.01
Krugerrand 1.00 1,177.11 1,187.11 1,187.11
Maple Leaf 1.00 1,179.30 1,194.30 1,194.30
1/2 Maple Leaf 0.50 669.47 611.26 1,222.52
1/4 Maple Leaf 0.25 296.90 311.45 1,245.80
1/10 Maple Leaf 0.10 123.42 126.91 1,269.09
Mexican 50 peso 1.21 1,392.45 1,416.45 1,174.80
.9999 bar 1.00 1,168.38 1,180.30 1,180.30
SPOT SILVER: 16.09      
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 12,251.53 12,537.53 17.54
US 40% silver 1/2s 0.30 4,553.33 4,703.33 15.94
100 oz .999 bar 100.00 1,598.50 1,658.50 16.59
10 oz .999 bar 10.00 165.85 166.85 16.69
1 oz .999 round 1.00 16.19 16.69 16.69
Am Eagle, 200 oz Min 1.00 17.84 19.09 19.09
SPOT PLATINUM: 1,243.70      
Plat. Platypus 1.00 1,268.70 1,308.70 1,308.70
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© 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.

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