The Moneychanger
Daily Commentary
Thursday, 25 September a.d. 2014 Browse the commentary archive

Sorry, dear readers, you may get two copies of this today. The first I sent neglected to update prices to today's. Please forgive my error.

Occasionally I read an article so apt, so pointed, that I want to share it with y'all. Go read Mark Lundeen's article, Monetary Inflation & the Stock Market on, I quote, "[T]he one factor that has impacted share prices more than any other is usually ignored: monetary inflation flowing from the Federal Reserve." Read the whole article -- his numbers run back to 1920.

Speaking of the stock market, it dove off a cliff today. Dow lost 264.26 (1.54%) and ended at 16,945.80. S&P500 lost 32.31 (1.62%) & closed at 1,965.99.

A few footnotes: Monday was the aftermath of the Alibaba IPO which became the world's largest -- sure sign of a top. The last four days have seen three digit moves in stocks, down, down, up, down. That extreme volatility characterizes topping markets. That turns the current trend unarguably down.

(First a note about the RSI. Relative Strength indicator measures speed and change of price, and oscillates between zero & 100. However, it's overbought when above 70 and oversold when below 30.)

Look inside. The Dow sliced through its 20 DMA (17,100.57) and fell nearly to its 50 DMA (16,936.47). RSI fell below 50 (momentum is downward). MACD turned down. Gravity is wholly engaged & operational.

Inside the S&P500 looks even worse. It opened at the 20 DMA & plummeted through the 50 DMA (1976) and just kept on sinking. RSI reads 41.26, MACD dropping. The S&P500 is approaching the uptrend line that has held it up since mid 2013, and today it fell through its last low.

Dow in gold zagged down again, losing 1.91% and closing at 13.87 oz (G$286.72 gold dollars). First tripwire confirming a downward reversal is the 20 DMA at 13.74 oz (G$284.03). RSI is plunging, down from 78.90 a few days ago to 57.08 today. MACD MA has turned down, & the rate of change has double peaked and turned down.

Dow in silver hooked down, but only 0.25% to 971.77 oz (S$1,256.43 silver dollars). Remains grossly oversold with the RSI at 78.77, but won't stay there long with stocks dropping like a piano out of a third story window.

Gold/silver ratio today hit a new high at 70.269. This takes it back about to where the great drop began in 2010. This is either the very BEST place in the world to swap gold for silver, or the very worst. I am inclined strongly to think it is the best. What would make it the worst? For gold to stop and rally here while silver keeps on sinking. Highly unlikely. How might that occur? Another 2008 style financial panic.

The US dollar index is monstrously overbought (RSI at 77.25) but still rose 19 basis points (0.23%) to 85.35. Euro dropped to a new low for the move at $1.2746, down 0.26%. Yen is showing some sign of life, rose 0.29% to 91.98 today. MACD trying to turn up.

Ten year treasury yield fell today, probably cutting off that embryonic desire to rally. Scared money flooding out of stocks into treasuries would have driven their price up and the yield down. Looks set to drop further.

Gold rose $2.60 today on Comex and ended at $1,221.20. Silver dropped 26.4 cents to 1737.9c, taking the ratio to 70.269 (swap gold for silver time).

Silver is egregiously oversold; RSI stands at 14.95. Yet silver also stands just above its 13 year uptrend line, which ought to catch and hold it. Silver tentatively has made a double bottom around 1730c. Watch that number.

Other metals are beaten down as well. Palladium broke below its 200 DMA today after seven months above it, yet its not nearly as oversold as silver. Now platinum, it's as oversold as silver, but hasn't broken to a new low for the correction, as silver has.

Gold has established a two-legged bottom Monday and Thursday, and it climbed back over $1,220 today -- on rising volume. RSI has climbed above 30 and out of overbought-land (now 32.67), MACD is straining to turn up, Rate of Change has turned up but remains negative.

Meanwhile the whole galaxy plus a couple of planets in other galaxies are negative on silver & gold. Frankly, that's the best thing that could happen, because it would mean we have run out of sellers.

Watch for a sharp upward reversal in silver. That will be your signal to buy.

On 25 September 1975 "scientists" first reported that Freon gas from aerosol spray were destroying the ozone layer. Forty years later, after billions of dollars spent to convert from efficient Freon to less efficient refrigerants, the ozone layer is still there and nobody has died of sunburn. Funny, they don't talk about the ozone layer anymore. For more on the wonders of the environmental movement, order the expose I wrote with Larry Abraham 20 years ago, The Greening. You'll never understand what a hoax the environmental movement really is until you read this.

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
25-Sep-14 Price Change % Change
Gold, $/oz 1,221.20 2.60 0.21%
Silver, $/oz 17.38 -0.26 -1.50%
Gold/Silver Ratio 70.269 1.199 1.74%
Silver/Gold Ratio 0.0142 -0.0002 -1.71%
Platinum 1,315.70 -5.20 -0.39%
Palladium 802.20 -17.30 -2.11%
S&P 500 1,965.99 -32.31 -1.62%
Dow 16,945.80 -264.26 -1.54%
Dow in GOLD $s 286.85 -5.09 -1.75%
Dow in GOLD oz 13.88 -0.25 -1.75%
Dow in SILVER oz 975.07 -0.39 -0.04%
US Dollar Index 85.15 0.36 0.42%
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SPOT GOLD: 1,222.50      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,251.84 1,265.29 1,265.29
1/2 AE 0.50 629.07 644.87 1,289.74
1/4 AE 0.25 314.54 328.55 1,314.19
1/10 AE 0.10 128.26 133.86 1,338.64
Aust. 100 corona 0.98 1,187.51 1,196.51 1,220.68
British sovereign 0.24 289.50 301.50 1,280.81
French 20 franc 0.19 229.95 233.04 1,248.21
Krugerrand 1.00 1,235.95 1,245.95 1,245.95
Maple Leaf 1.00 1,237.50 1,252.50 1,252.50
1/2 Maple Leaf 0.50 702.94 641.81 1,283.63
1/4 Maple Leaf 0.25 311.74 327.02 1,308.08
1/10 Maple Leaf 0.10 129.59 133.25 1,332.53
Mexican 50 peso 1.21 1,462.06 1,473.06 1,221.74
.9999 bar 1.00 1,226.78 1,238.50 1,238.50
SPOT SILVER: 17.55      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 24.00 27.00 35.29
VG+ Peace dollar 0.77 19.00 22.50 29.41
90% silver coin bags 0.72 12,473.18 12,902.18 18.05
US 40% silver 1/2s 0.30 4,984.03 5,134.03 17.40
100 oz .999 bar 100.00 1,744.50 1,804.50 18.05
10 oz .999 bar 10.00 180.45 181.45 18.15
1 oz .999 round 1.00 17.65 18.15 18.15
Am Eagle, 200 oz Min 1.00 19.30 20.55 20.55
SPOT PLATINUM: 1,315.70      
Plat. Platypus 1.00 1,340.70 1,380.70 1,380.70
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© 2015 Little Mountain Corporation, d.b.a. The Moneychanger. All rights reserved. May not be republished in any form, including electronically, without our express permission.

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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