The Moneychanger
Weekly Commentary
Friday, 7 November a.d. 2014 Browse the commentary archive
Here's the weekly scorecard:
  31-Oct-14 7-Nov-14 Change % Change
Silver, cents/oz. 1,607.70 1,569.90 -37.80 -2.4
Gold, dollars/oz. 1,171.10 1,169.70 -1.40 -0.1
Gold/silver ratio 72.843 74.508 1.665 2.3
Silver/gold ratio 0.0137 0.0134 -0.0003 -2.2
Dow in Gold Dollars (DIG$) 306.97 310.58 3.61 1.2
Dow in gold ounces 14.85 15.02 0.17 1.2
Dow in Silver ounces 1,081.70 1,119.43 37.73 3.5
Dow Industrials 17,390.52 17,573.93 183.41 1.1
S&P500 2,018.05 2,031.92 13.87 0.7
US dollar index 86.97 87.63 0.66 0.8
Platinum 1,236.20 1,213.30 -22.90 -1.9
Palladium 791.45 772.20 -19.25 -2.4

Funny how you think you'll never live through a week, but when Friday arrives it doesn't seem so bad after all.

This was the week silver & gold bottomed, at least for a while. This may have been the week stocks reached their ultimate high -- we'll see next week. And it may be the week the US dollar index, for all its strength, turned equatorward.

Dow and S&P500 are both bumping up against an overhead resistance line in place for the last few months. And both have formed broadening tops.

Step back from the Dow or S&P chart, way back, about 20 years and you'll see since 1998 a Megaphone or Broadening Top formation. Right now the Dow is knocking on that line (S&P500 is already through it), so technically, after a 5 year bull run, stocks ought to be meeting impenetrable resistance. I know, I know, with the central bank tag team rolling Quantitative easing around the world, it might go further (newly created Japanese money only funds a carry trade that sends money back to the US to buy more stocks). But technically, I wouldn't bet on it.

Today the Dow hit its third new high in a week, up 19.46 (0.11%) to 17,573.93. Likewise, the S&P500 made a new high at 2,031.92, but I can't tell how much that's up because the numbers on the NASDAQ site don't tally with yesterday's close. No matter, both indices moved up very thinly today, in spite of good news from the official liars at the Labor Department about increasing jobs.

After three weeks of unbroken rise, the Dow in Gold finally fell sharply today. High this week was 15.38 oz or G$317.93 gold dollars, but today it fell 3.07% to 14.91 oz or G$308.22. Ditto for the Dow in silver, which peaked this week at 1,143.15 oz or S$1,478.01 silver dollars. Bothe are excruciatingly overbought, and it catches my eye that the rate of change and full stochastics have turned down. Next move points down.

It would exaggerate some but not too much to state that the source of all sorrow in the last 100 years has been fiat money and central banking. Think about it: without central banks, world wars would be impossible. More, fiat money controls us and everything else. So when I rave & stomp about scabrous, scrofulous, scurvy fiat currencies, I am at least sincere.

The scurvy US dollar index showed forth the first half of a key reversal down today, reaching a new high intraday but closing lower for the day. That must be followed through Monday by another lower close. Preferably, a two day lower close is needed to cinch it. High came at 88.32, close at 87.63, down 58 basis points (0.66%) from yesterday.

Both the euro & Yen closed higher today, but one day maketh not a trendchange. Euro rose 0.65% to $1.2458, not enough to climb above the last low at $1.2501. Sorry as gully dirt. Yen rose 0.54% to 87.26 cents/Y100. Looks sorrIER than gully dirt.

Before we look at silver & gold, I want y'all to think about Signs of a Bottom. This is near universal revulsion with a market, including especially newspaper headlines in newspapers that normally don't headline such things. I can't imagine a much more universal scorn for silver & gold right now & the paper in Eugene, Oregon ran one of those "Gold is dead" headlines today.

Another sign of a bottom is that old bulls throw in the towel. That is, they did well on the way up, and have held on a long time in anticipation of another ride, but at last they give up. I have been witnessing old bulls selling out.

Another sign is that new buyers enter the market. I've been seeing those, too.

Gold today rose $27.30 (2.39%) to $1,169.60. Silver rode right alongside, rising 30.7 cents (2%) to 1569.9c. Both metals posted the first day of a key reversal up with a break to new low ground and a higher close. After a five day waterfall, that surely marks the end of the plunge and beginning of some rally.

But what kind of rally? Can we say that this week's lows were THE lows of the 2011-2014 bear move? Not yet. Gold needs to climb above $1,255.60, the last high, before I would venture that. Silver needs to rise above 1782c. In any event, we ought to see a sharp rally from here, especially if stocks fall next week, as they may.

Meanwhile all the indicators I watch are turning up, so next week ought to float metals higher.

Gold silver ratio today closed at 74.502, highest close yet. That also suggests a bottom. It also suggests it's high time to swap gold for silver and wait for the ratio to drop to 30.

I won't be writing on 9 November, but remember that on 9 November 1989 the Berlin Wall came down after splitting Berlin and Germany for 28 years. When I was studying in Berlin in 1972 the East Germans actually installed photoelectric cells connected to machine guns because the guards couldn't be trusted to shoot every single time.

On 7 November 1912 the Deutsche Opera opened in the Charlottenburg neighborhood of Berlin. Susan & I lived down the street and got in on cheap student tickets -- in 1972, not 1912.

On 7 November 1967 President Landslide Lyndon Johnson singed a bill establishing the Corporation for Public Broadcasting, better known as Radio Stamps for Lefties or the Voice of the Socialist Internationale or Gramschi's Gramophone.

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
7-Nov-14 Price Change % Change
Gold, $/oz 1,169.60 27.30 2.4
Silver, $/oz 15.70 0.31 2.0
Gold/Silver Ratio 74.502 1.725 2.4
Silver/Gold Ratio 0.0134 0.0003 2.0
Platinum 1,213.30 15.30 1.3
Palladium 772.20 19.95 2.7
S&P 500 2,031.92 0.71 0.0
Dow 17,573.93 19.46 0.1
Dow in GOLD $s 310.61 -7.04 -2.2
Dow in GOLD oz 15.03 -0.34 -2.2
Dow in SILVER oz 1,119.43 -21.06 -1.8
US Dollar Index 87.63 -0.58 -0.7
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SPOT GOLD: 1,178.50      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,206.78 1,219.75 1,219.75
1/2 AE 0.50 606.41 621.66 1,243.32
1/4 AE 0.25 303.21 316.72 1,266.89
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Aust. 100 corona 0.98 1,147.08 1,159.08 1,182.49
British sovereign 0.24 279.08 291.08 1,236.55
French 20 franc 0.19 221.68 224.83 1,204.21
Krugerrand 1.00 1,192.64 1,202.64 1,202.64
Maple Leaf 1.00 1,193.50 1,208.50 1,208.50
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Mexican 50 peso 1.21 1,409.43 1,433.43 1,188.88
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US 40% silver 1/2s 0.30 4,467.78 4,617.78 15.65
100 oz .999 bar 100.00 1,569.50 1,629.50 16.30
10 oz .999 bar 10.00 162.95 163.95 16.40
1 oz .999 round 1.00 15.90 16.40 16.40
Am Eagle, 200 oz Min 1.00 17.55 18.55 18.55
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Platinum Platypus 1.00 1,238.30 1,278.30 1,278.30
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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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