The Moneychanger
Daily Commentary
Tuesday, 30 December a.d. 2014 Browse the commentary archive

Somebody sent me a picture of a real billboard in Greensboro, North Carolina which advertises for an attorney under the slogan, "Just Because You Did It Doesn't Mean You're Guilty." And y'all wonder why the US Justice system doesn't work?

The trouble in Greece is wearing on the Euro. It closed flat today, well, up 0.01%, at $1.2158. That pot won't stop simmering. Even the Japanese Yen caught a safe haven bid -- the yen, imagine that! -- and rose 0.98% to 83.70 cents to Y100. Meanwhile, in a move that would astonish anybody with more than three brain cells, the US dollar index dropped 24 basis points (0.27%) to 90.29. Why astonishing? Bad as the scrofulous dollar is, the yen is even worse, thanks to recently re-elected Keynesian Abe's determination to depreciate it.

For the second day running something indigestible gave US stocks heartburn. The Dow lost 55.22 (0.31%) to 17,983.01; S&P500 dropped 10.25 (0.49%) to 2,080.34. Stocks are already in Cloud-Cuckoo Land anyhow, so I don't look for much reason there.

In case y'all have missed my overall stock outlook, here 'tis: they are setting up for a gigantic crash, having been levitated to their present altitude by nothing more than a cloud of hot new money.

Much to my gratification, the Dow in Gold fell 1.76% to G$309.66 gold dollars (14.98 troy ounces), continuing to move down from its encounter with the Gator Jaws' overhead boundary. Time to start thinking about the 20 DMA (G$305.94 or 14.80 troy ounces) and how stylish the DiG will look below that mark.

Dow in Silver lost 3.19% to end at S$1,428.53 silver dollars (1,104.88 oz). 20 DMA isn't far away at S$1,412.05 (1,092.13 oz). Eventually the Gator Jaws will snap shut.

Some deep-pocketed buyer stepped up to the New York gold market today about 10:00 with a big order about $1,187.50 and gold immediately traded up to $1,200. It backed off a hair, then shot to $1,210, although it gradually dipped to close at $1,200.20, up $18.50 (1.6%).

Silver followed the same pattern, rocketing from 1590c to 1610c at 10:00 a.m., then made a run for 1649c. Closed Comex up 49.7 cents (3.2%) at 1624c.

What does this action tell us? That sellers under $1,200 are about as rare as sommeliers at a WCTU convention, or, alternatively, butchers at a vegan culinary assembly. Lo, that's an important piece of information, because it implies that gold is running out of sellers altogether at these low prices. True, gold couldn't throw a leg over $1,205 resistance, but that's okay. $18.50 for one day ain't bad.

What caught my eye was silver's outperformance today. The ratio sank from 75.057 yesterday to 73.904 today, down 1.5%. Look, I'm no mor'n a nat'ral born durned fool from Tennessee, but looks to me like there's a diamond pattern in the gold/silver ratio, & that's a topping pattern. a close below 72:1 breaks the ratio down out of that diamond, & today's low was 72.53. A fall out of that diamond would powerfully confirm gold & silver have bottomed. Chart is here,

On a four month chart, gold today broke above its very short term (from the December high) downtrend line. Also closed above its 50 day moving average ($1,195.80) and 20 DMA ($1,199.81). Today's move also fits into my upside-down head & shoulders pattern for gold I discussed yesterday.

Silver's 1624c close remained below its 1632c 50 DMA and 1627c 20DMA. Still, it poked its head above and closed above the downtrend line from the July 2014 high.

Right here at the end of the year we may have seen the turnaround for silver & gold, pivoted on the 1 December lows.

On 30 December 1939 premiered the movie "Of Mice & Men," starring Burgess Meredith and Lon Chaney, Jr., drawn from John Steinbeck's book of the same name. Just about a perfect book, and just about a perfect movie.

On 30 December 1922 Vladimir Lenin proclaimed the Union of Soviet Socialist Republics (USSR). It would consume about 70 million lives before it died 70 years later.

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
30-Dec-14 Price Change % Change
Gold, $/oz 1,200.20 18.50 1.57%
Silver, $/oz 16.24 0.50 3.16%
Gold/Silver Ratio 73.904 -1.158 -1.54%
Silver/Gold Ratio 0.0135 0.0002 1.57%
Platinum 1,218.10 16.40 1.36%
Palladium 804.20 -7.80 -0.96%
S&P 500 2,080.34 -10.23 -0.49%
Dow 17,983.01 -55.22 -0.31%
Dow in GOLD $s 309.73 -5.81 -1.84%
Dow in GOLD oz 14.98 -0.28 -1.84%
Dow in SILVER oz 1,107.33 -38.47 -3.36%
US Dollar Index 90.29 -0.24 -0.27%
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: 1,198.80      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,229.97 1,240.76 1,240.76
1/2 AE 0.50 616.87 632.37 1,264.73
1/4 AE 0.25 308.43 322.18 1,288.71
1/10 AE 0.10 125.77 131.27 1,312.69
Aust. 100 corona 0.98 1,164.49 1,176.49 1,200.25
British sovereign 0.24 283.89 295.89 1,256.97
French 20 franc 0.19 225.49 228.62 1,224.51
Krugerrand 1.00 1,213.19 1,223.19 1,223.19
Maple Leaf 1.00 1,213.80 1,228.80 1,228.80
1/2 Maple Leaf 0.50 689.31 629.37 1,258.74
1/4 Maple Leaf 0.25 305.69 320.68 1,282.72
1/10 Maple Leaf 0.10 127.07 130.67 1,306.69
Mexican 50 peso 1.21 1,438.05 1,462.05 1,212.61
.9999 bar 1.00 1,203.00 1,214.80 1,214.80
SPOT SILVER: 16.17      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 19.50 22.50 29.41
VG+ Peace dollar 0.77 16.50 18.50 24.18
90% silver coin bags 0.72 12,419.55 12,777.05 17.87
US 40% silver 1/2s 0.30 4,578.40 4,728.40 16.03
100 oz .999 bar 100.00 1,607.00 1,667.00 16.67
10 oz .999 bar 10.00 166.70 167.70 16.77
1 oz .999 round 1.00 16.27 16.82 16.82
Am Eagle, 200 oz Min 1.00 17.92 18.57 18.57
SPOT PLATINUM: 1,218.10      
Plat. Platypus 1.00 1,243.10 1,283.10 1,283.10
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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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