The Moneychanger
Daily Commentary
Wednesday, 25 June a.d. 2014 Browse the commentary archive

Rotten day for the US dollar index. It lost 12 basis points to close 80.28, then in aftermarket trading has lost another 7 basis points. The Commerce Department said US gross domestic product fell at an annualized 2.9% in 1Q14, instead of 1% as reported last month. Worst performance in five years. That leaves investors expecting more money printing from the Fed, and hence a lower dollar.

Dollar has broken twice-verified support at 80.20, and traded back up to it, with a low today at 80.09. Messy, messy. Fell below internal resistance line about 80.25, and tried to plunge through the 50 DMA (80.17). All systems set to crash, so somebody better call for the Nice Government men to bail out the dollar.

Euro rose again by 0.17% to $1.3630, but remains beneath its 200 DMA ($1.3630). Crossing above that would confirm it means to rally a while.

Big action came in the yen today, up 0.07% to 98.17, enough to fracture the downtrend line and stretch a hand toward the 200 DMA (98.52). Since February yen has ranged from 99.24 to 96.05, sliding slightly down. A close above 99.24 brings the yen to escape velocity.

The 10 year Treasury Note Yield (a proxy for US interest rates) fell 1.04% to 2.559%. It had traded plumb up to its downtrend line, poked its head through last Friday, but has fallen back below the 20 DMA. Not yet. Interest rates aren't ready -- or able -- to rise just yet.

Stocks stopped at old resistance boundaries they threw over in June, & right near 20 day moving averages. Doesn't say much. Dow bounced up 49.38 (0.29%) to 16,867.51 and the S&P500 scratched up 9.55 (0.49%) to 1,959.53. See S&P500 chart here,, & Dow here,

Both markets have been forming a bearish rising wedge since March, and both threw over the top line of that wedge in June. Now they have traded back to the apex of the wedge, so if they close much below today's low, they will break down & plunge.

Dow in silver kept on falling today while the Dow in Gold went flat. DiS scraped off 0.66% (5.32 oz) to end at 798.80 oz (S$1,032.79 silver dollars). 200 day moving average lies a bare eight ounces lower at 790.87 (S$1,022.54). Dow in Silver is becoming right overbought, a warning sign it might turn and correct.

Gold inched up another $1.30 (0.1%) to $1,322.20but stalled still at the $1,226.50 point, as it did yesterday. Silver made good its escape from 2100c by adding 7.3 cents (0.35%) to close Comex at 2111.1c.

I won't be at peace with silver's chart until it resolves that flag formation by a higher close. Otherwise it might be a bearish flag, because it slants up. Another long-legged rise tomorrow removes that cavil. With gold's chart I raise the same quibble.

Ideally gold would race tomorrow and pierce $1,331.40 resistance, while silver punches through 2150c, better yet, 2180c.

About 12:00 a.m. eastern time, which I calculate about 6:00 a.m. London, while not a lot of folks are trading, some mad dog seller forced silver down instantaneously to 2081c and gold to $1,311. Considering both came roaring back from that body-blow, silver & gold performed quite strongly today.

There's another leg up before this rally-ette corrects, I expect.

On 25 June 1867 Lucien B. Smith of Ohio patented barbed wire, which more than the Colt revolver, tamed the West.

On 25 June 1876 General George Armstrong Custer, invading Indian territory, unwisely divided his troops in the face of the enemy and got most of the 7th Calvary killed by Sioux and Cheyenne.

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
25-Jun-14 Price Change % Change
Gold, $/oz 1,322.20 1.30 0.10%
Silver, $/oz 21.11 0.07 0.35%
Gold/Silver Ratio 62.631 -0.156 -0.25%
Silver/Gold Ratio 0.0160 0.0000 0.25%
Platinum 1,475.20 1.30 0.09%
Palladium 834.25 2.45 0.29%
S&P 500 1,959.53 9.55 0.49%
Dow 16,867.51 49.38 0.29%
Dow in GOLD $s 263.71 0.51 0.20%
Dow in GOLD oz 12.76 0.02 0.20%
Dow in SILVER oz 798.99 -0.43 -0.05%
US Dollar Index 80.28 -0.12 -0.15%
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GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,354.11 1,365.99 1,365.99
1/2 AE 0.50 672.59 696.19 1,392.39
1/4 AE 0.25 351.13 354.70 1,418.79
1/10 AE 0.10 139.79 145.18 1,451.78
Aust. 100 corona 0.98 1,287.20 1,296.20 1,322.38
British sovereign 0.24 312.55 324.55 1,378.70
French 20 franc 0.19 248.25 251.21 1,345.51
Krugerrand 1.00 1,334.32 1,344.32 1,344.32
Maple Leaf 1.00 1,334.80 1,349.80 1,349.80
1/2 Maple Leaf 0.50 758.89 692.90 1,385.79
1/4 Maple Leaf 0.25 336.55 353.05 1,412.19
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Mexican 50 peso 1.21 1,583.20 1,594.20 1,322.22
.9999 bar 1.00 1,324.42 1,335.80 1,335.80
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SILVER Fine Tr.Oz. BID ASK $/oz
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VG+ Peace dollar 0.77 22.00 24.25 31.70
90% silver coin bags 0.72 15,601.30 15,956.30 22.32
US 40% silver 1/2s 0.30 6,023.90 6,173.90 20.93
100 oz .999 bar 100.00 2,097.00 2,157.00 21.57
10 oz .999 bar 10.00 215.70 216.70 21.67
1 oz .999 round 1.00 21.17 21.67 21.67
Am Eagle, 200 oz Min 1.00 22.82 24.07 24.07
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Plat. Platypus 1.00 1,500.20 1,540.20 1,540.20
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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.
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  • 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.
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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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