The Moneychanger
Daily Commentary
Monday, 22 September a.d. 2014 Browse the commentary archive

First, a couple of thoughts. British Prime Minister David Cameron said after the Scottish independence referendum the question wouldn't come up again for "a generation." Boy, did he miss the mark. Secession will come up again in Scotland before the decade ends, not to mention cropping up all over Europe.

Second, Alibaba. It was the largest US listed IPO ever, over $25 billion counting the options exercised today. Folks, the "biggest" anything does not happen in a market destined to continue along an upward path, whether the biggest real estate development, the tallest building, or the biggest IPO. It signals a top. Read David Stockman's insightful article at

Now to markets today:

Back in early July 2013 the US dollar index hit a high of 84.96, and was nothing like as bloatedly overbought as it is today. It's high today was 84.97, so that resistance threw it back for the time being. US dollar index dropped seven basis points or 0.8%.

Today the Criminal-in-Charge at the European central bank, Mario "Bags under the Eyes" Draghi testified before a EU parliamentary committee. He complained that the European economy is slowing down, which fuels speculation that the ECB will soon metastasize into a bond buying program like the US Fed's Quantitative Easing.

Anyhow, the Euro took heart and lifted 0.26% to $1.2849. MACD is trying to turn up.

Also as excruciatingly oversold as the euro, the Japanese Yen rose 0.2% to 91.89. In this waterfall there are two breakaway gaps and what appears to be an exhaustion gap three days ago. All that argues for at least a temporary turnaround.

US Ten Year treasury note yield fell today for the second day, down to 2.547%. It bounced off the 200 DMA three days ago.

The Dow gave back 107.06 (0.62%) today to land at 17,172.68. The S&P500 felt even worse, and coughed up 16.11 (0.8%) to end below 2000 at 1,994.29.

S&P500 closed below its 20 day moving average (1,998.80), although the Dow didn't quite drop that far. Both have put in that rocket nose cone sort of top, where a single high day is sandwiched between days below but of more or less the same range. Nasdaq, N-100, Russell 2000 all look the same, but closed further below their 20 DMAs today. Looking a mite peak├ęd.

Dow in gold hooked sharply down to 14.10 oz (G$291.47 gold dollars), down 0.7%.. Is the move completed? It needs to close below the 20 DMA at 13.65 oz (G$282.17) to give a first signal. RSI shows the DiG at an overbought level only seen in the last four years, most of those in the rally since 2011 -- but this is overboughter still.

Even though silver dropped a little today, stocks dropped more. Dow in Silver hooked down 0.53% to 966.17 oz. (S$1,249.19 silver dollars). The 20 DMA awaits below at 905.12. Dow in Silver is also at its most overbought level in 15 years, with few exceptions.

Gold gained $1.50 to $1,216.80 while silver lost 8.2 cents to 1769.9c.

Gold's range was $1,208.80 to $1,221. Silver ranged from 1733c to 1786c. Gold silver ratio ended at 68.750:1.

Silver has started another and predictable waterfall after it broke 1860c support. It is badly oversold, but rising volume hints it hasn't stopped yet.

Gold remains above its June 2013 and December 2013 $1,180 lows, unlike silver. Yet there is no sign, other than its severely oversold condition, that it has turned up or won't drop to that $1,180 level. The big long positions in the Commitments of Traders has been worked off, and that's a first harbinger they may turn.

One other little cloud on the horizon: silver put in what might have been a V-bottom on the daily chart. Happened in the night between Sunday & Monday US time.

In spite of the negative charts I can't get over the impression we are watching a peak in stocks and the dollar and low in silver & gold, although it may take until next week to work out. It will happen fast.

On 22 September1692 in Massachusetts the last 8 people were hanged for witchcraft. In all 20 were hanged.

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
22-Sep-14 Price Change % Change
Gold, $/oz 1,216.80 1.50 0.12%
Silver, $/oz 17.70 -0.08 -0.46%
Gold/Silver Ratio 68.750 0.401 0.59%
Silver/Gold Ratio 0.0145 -0.0001 -0.58%
Platinum 1,331.70 -7.10 -0.53%
Palladium 802.90 -9.45 -1.16%
S&P 500 1,994.29 -16.11 -0.80%
Dow 17,172.68 -107.06 -0.62%
Dow in GOLD $s 291.74 -2.18 -0.74%
Dow in GOLD oz 14.11 -0.11 -0.74%
Dow in SILVER oz 970.26 -1.55 -0.16%
US Dollar Index 84.79 -0.07 -0.08%
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: 1,215.00      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,244.16 1,257.53 1,257.53
1/2 AE 0.50 625.21 640.91 1,281.83
1/4 AE 0.25 312.61 326.53 1,306.13
1/10 AE 0.10 127.47 133.04 1,330.43
Aust. 100 corona 0.98 1,180.22 1,189.22 1,213.25
British sovereign 0.24 287.73 299.73 1,273.27
French 20 franc 0.19 228.54 231.64 1,240.71
Krugerrand 1.00 1,228.37 1,238.37 1,238.37
Maple Leaf 1.00 1,230.00 1,245.00 1,245.00
1/2 Maple Leaf 0.50 698.63 637.88 1,275.75
1/4 Maple Leaf 0.25 309.83 325.01 1,300.05
1/10 Maple Leaf 0.10 128.79 132.44 1,324.35
Mexican 50 peso 1.21 1,453.09 1,464.09 1,214.30
.9999 bar 1.00 1,219.25 1,231.00 1,231.00
SPOT SILVER: 17.76      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 26.00 28.50 37.25
VG+ Peace dollar 0.77 22.00 24.00 31.37
90% silver coin bags 0.72 12,626.90 13,055.90 18.26
US 40% silver 1/2s 0.30 5,047.45 5,197.45 17.62
100 oz .999 bar 100.00 1,766.00 1,826.00 18.26
10 oz .999 bar 10.00 182.60 183.60 18.36
1 oz .999 round 1.00 17.86 18.36 18.36
Am Eagle, 200 oz Min 1.00 19.51 20.76 20.76
SPOT PLATINUM: 1,331.70      
Plat. Platypus 1.00 1,356.70 1,396.70 1,396.70
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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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