The Moneychanger
Daily Commentary
Thursday, 5 June a.d. 2014 Browse the commentary archive

Today the European Criminal Bank announced it was trimming its main lending rate from 0.25% to 01.5%. It also instituted a CHARGE (but called a "negative deposit rate") on bank reserves parked at the central bank, lowering that rate from zero to -.1%. On its marginal lending facility the ECB cut the rate from 0.75% to 0.40%. Charging banks for parking reserves with the ECB is supposed to flush them out of the bushes and make them lend. We'll see, as no other central bank has tried this trick. Other technical measures will also add to euro inflation.

On a huge trading range (1.2%, from $1.3503 to $1.3670) the euro shot up 0.46% to $1.3663. That close took it above its 200 day moving average and left it not far below its 20 Dma (1.3676). The shorts got caught short.

This action shows how loony, how goofy, these central bank denominated markets have become. Now think: interest rates chiefly determine currency exchange rates, along with inflation expectations: higher the rates, more desirable the currency; lower the inflation, more desirable the currency. The ECB just CUT its interest rate to inflate the currency more, & the euro rose. Give the euro a week or two, then gravity will reassert itself.

The European criminals are taking the same path Bernanke & the US criminals have taken, guaranteeing perpetually rising stock markets by keeping the new money flowing. This will end in tears, wailing, and gnashing of teeth. But who knows? I'm only a nacheral born fool from Tennessee. Maybe in Europe pigs do have wings and anvils can fly.

Some 56% or so of the US Dollar Index is made up of the euro, so big gains in the euro translate to big losses in the US dollar index. Dollar hit a high of 81.07 before turning and sinking to close at 80.39, down 33 basis points (0.42%). From 8:00 Eastern Time until the ECB announcement about 8:30 the dollar was climbing, then commenced dropping & kept on dropping all day. Yen rose 0.32% to 97.66, which didn't paint much of a splash on the chart. On the other hand, today could end the dollar's promise of a rally.

Yield on the US 10 year treasury note fell 0.84% to close at 2.584%. That means that both bonds AND stocks rose today, a right rare occurrence.

Stocks went hog wild at the prospect of money printing spreading around the globe. Dow made a new all time high, up 98.35 (0.6%) to 16,835.88. S&P500 made its seventh new high in eight days, rising 12.54 (0.65%) to 1,940.42.

Folks, when the thought that crosses your mind is "It don't get no better than this," it probably won't.

Now here's an odd and intriguing observation. While the Dow & S&P500 have been making new highs, the Dow in Gold & Dow in Silver have turned down. Oh, nothing dispositively certainyet, but still down.

Dow in silver hit its overhead resistance line at 892.99 oz (S$1,154.57 silver dollars) on 1 June and bounced down. Today it dropped 0.98% to 882.26 oz (S$1,140.70). Chart is right here, RSI, MACD, Rate of Change, & full stochastic are all rolling over. But I'd like to see confirmation with a close below the 20 DMA at 864.84 oz (S$1,118.18). My maximum upside target has been and remains 912 oz (S$1,179.15).

Dow in gold chart can be seen here, Since June 1 it has stalled, but only sideways. Today dropped 0.18% to 13,43 oz (G$277.62 gold dollars). Indicators are trying to roll over but no strong confirmation yet.

Gold climbed $9.00 (0.72%) today to $1,253.00. Silver rose also, 28.9 cents (1.54%) to 1905.5c, over 1900c for the first time in five days.

Silver's volume rose strongly, but silver has passed no milestones. 20 DMA stands above at 1922c. Indicators are moving toward the upside, but no proof yet.

Gold's RSI is coming up from a very overbought reading. Full stochastics are scraping bottom, ready to rise. MACD might be ready to rise.

So we have silver and gold higher today, but without any solid confirmation that they have indeed reversed. I've been suckered so many times that I want some proof.

But do watch out. Silver can move with blinding speed when it turns. By fall silver & gold at these prices will seem absurd.

On 5 June 1863 the Confederate Raider CSS Alabama captured the Talisman in mid-Atlantic.

On 5 June 1912 US marines invaded Cuba for the third time. The Cubans were planning to invade North Dakota & take it back to Cuba.

Now I'm confused. I thought The Boathouse in Chattanooga was the best restaurant in the Western World, but last night Susan & I ate at the Canyon Grill on Lookout Mountain. And Lawton Haygood surprised me. I knew he was an exceptional chef and restaurateur, but how can he look at a steak and tell you how it's cooked? Completely unashamed, we shared one of every dessert on the menu.

Did y'all enjoy your peanut butter & jelly sandwich?

Argentum et aurum comparanda sunt —
Silver and gold must be bought.

— Franklin Sanders, The Moneychanger

Your source for gold and silver. Read our latest reviews and testimonials.
Market Snapshot See more charts and market data
5-Jun-14 Price Change % Change
Gold, $/oz 1,253.00 9.00 0.72%
Silver, $/oz 19.06 0.29 1.54%
Gold/Silver Ratio 65.757 -0.533 -0.80%
Silver/Gold Ratio 0.0152 0.0001 0.81%
Platinum 1,447.10 11.90 0.83%
Palladium 838.85 2.20 0.26%
S&P 500 1,940.42 12.54 0.65%
Dow 16,835.88 98.35 0.59%
Dow in GOLD $s 277.76 -0.38 -0.13%
Dow in GOLD oz 13.44 -0.02 -0.13%
Dow in SILVER oz 883.54 -8.37 -0.94%
US Dollar Index 80.60 -0.08 -0.10%
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: 1,253.30      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,289.65 1,297.17 1,297.17
1/2 AE 0.50 638.67 660.18 1,320.35
1/4 AE 0.25 319.34 336.35 1,345.42
1/10 AE 0.10 131.49 137.24 1,372.36
Aust. 100 corona 0.98 1,222.34 1,231.34 1,256.22
British sovereign 0.24 297.24 301.99 1,282.88
French 20 franc 0.19 235.75 238.84 1,279.28
Krugerrand 1.00 1,268.34 1,278.34 1,278.34
Maple Leaf 1.00 1,268.30 1,283.30 1,283.30
1/2 Maple Leaf 0.50 720.65 657.98 1,315.97
1/4 Maple Leaf 0.25 319.59 335.26 1,341.03
1/10 Maple Leaf 0.10 132.85 136.61 1,366.10
Mexican 50 peso 1.21 1,503.42 1,514.42 1,256.05
.9999 bar 1.00 1,257.69 1,272.30 1,272.30
SPOT SILVER: 19.00      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 26.50 28.50 37.25
VG+ Peace dollar 0.77 22.50 23.75 31.05
90% silver coin bags 0.72 14,510.93 14,760.93 20.64
US 40% silver 1/2s 0.30 5,411.78 5,561.78 18.85
100 oz .999 bar 100.00 1,904.50 1,954.50 19.55
10 oz .999 bar 10.00 190.45 195.45 19.55
1 oz .999 round 1.00 19.10 19.60 19.60
Am Eagle, 200 oz Min 1.00 20.85 21.25 21.25
SPOT PLATINUM: 1,447.10      
Plat. Platypus 1.00 1,462.10 1,479.10 1,479.10
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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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