The Moneychanger
Weekly Commentary
Friday, 27 February a.d. 2015 Browse the commentary archive
Here's the weekly scorecard:
  20-Feb-15 27-Feb-15 Change % Change
Silver, cents/oz. 1,626.30 1,651.30 25.00 1.5
Gold, dollars/oz. 1,204.40 1,212.60 8.20 0.7
Gold/silver ratio 74.058 73.433 -0.625 -0.8
Silver/gold ratio 0.0135 0.0136 0.0001 0.9
Dow in Gold Dollars (DIG$) 311.36 223.88 -87.48 -28.1
Dow in gold ounces 15.06 10.83 -4.23 -28.1
Dow in Silver ounces 1,115.44 795.29 -320.15 -28.7
Dow Industrials 18,140.44 13,132.70 -5,007.74 -27.6
S&P500 2,110.30 2,104.50 -5.80 -0.3
US dollar index 94.43 95.32 0.89 0.9
Platinum 1,172.90 1,186.70 13.80 1.2
Palladium 779.20 818.45 39.25 5.0

Whoa! Yesterday's commentary contained a whopping typo. The US $20 gold piece does NOT contain 0.9875 troy ounce fine gold, but 0.9675. I'm going to shoot my proofreader. Y'all don't tell anybody about that. I'll be really embarrassed if that gets out.

Here's a passing strange thing: Dow & S&P500 made new all-time highs this week, but closed the week lower. That don't fit. Somebody's talking out of both sides of the mouth. More, after a week's struggle that threatened to break down existing uptrends, silver & gold dug in their heels & got some traction, enough to close the week higher. So did platinum & palladium. Dollar index also rose, in one of the most bogus levitations in history.

Mark O'Byrne of GoldCore reported today that Greece's central bank reported today a record 12.2 billion euro outflow in January. That's a slow bankrun. The Green central bank also has New Drachma notes designed and ready to print, just in case. Greeks are buying physical gold, especially British sovereigns, traditionally their favorite, according to O'Byrne.

Behold & ponder, O ye Docile Dollar Holders! Why would Greeks buy gold? Because if they leave the money in the bank and Greece exits the euro, they don't know WHAT they might get, or what it might be worth. Better gold by far than taking a chance on a euro without Greece or a New Drachma.

Like Germans, Greeks have been through more than one currency devaluation, depreciation, & change-over. Nobody needs to explain it to them. They get it: gold is better than paper. Let him who has ears, hear! Too late to buy gold once the government springs its surprise party.

Here I am, poor fool from Tennessee, trying to parse these stock indices. All fell across the board today. Dow lost 81.72 (0.45%) to 18,132.70; S&P500 coughed up 6.24 (0.3%) to 2,104.5.

I remain in the meditation, "Is this a breakout or a fakeout?" To reach new highs but close the week lower, well, looks a tad sleazy. It's bad taste. S&P500 closed below its uptrend line.

Dow in gold has turned DOWN from the upper Gator jaw. Made a high at G$313.38 (15.16 oz) gold dollars (15.16 troy oz) and closed today down another 0.81% at G$308.84 (14.94 tr oz). Not out of the woods yet, but considering the long rise, that's likely the end of it. Need confirmation still. Here's a chart, http://scharts.co/1LTqEBF

Dow in silver also wilted when it neared the top Jaw. High was S$1,446.14 silver dollars (1,118.50 tr oz), and today it fell 0.72% to S$1,414.44 (1,093.98 tr oz). http://scharts.co/1vHtAxi

You can see a 5 day dollar index chart at http://quotes.ino.com/charting/?s=NYBOT_DX Soon as you see it, you'll understand what I meant by Bogus. The dollar index chart is trending down, maybe finding a footing, then on Thursday it hockey sticks straight up. After Janet Yellen couldn't get it excited this week, something suddenly goosed it over 200 basis points. I reckon I'm just suspicious, or disgusted with markets so juvenile & fidgety they'll move on a durned old lying government report. Headline today (if it's good news), footnote in two weeks that takes it all back. Hogwash. Folks have the attention span of a gnat, & far too much money to play with, thanks to central banks & their carry trades. Y'all just wait: in a bear market, money returns to its rightful owner.

Euro broke down yesterday, but has not quite matched its last intraday low ($1.1166). Today it did, however, make its lowest close for the move, $1.1196, down 0.03%. Limber up your passports & go to Europe this summer: whole continent's gonna be on sale.

Japanese yen sank 0.2% to 83.59, but it is only moving sideways.

West Texas Intermediate Crude (WTIC) did NOT break down today, but rose 1.23% to $49.52/barrel. It's traced out a trading range between $47.80 and $54.15, & it's the least bit tapering to the right. http://scharts.co/1LTtBSL

Today gold gathered up $3.00 to close at $1,212.60. Silver peeled off 7 cents for a Comex close at 1651.3c.

Silver's five day chart has no direction, but shows the mark to beat: 1690c. This week silver tumbled to a new low for the move, 1604c, and appeared ready to pierce the last support, that from a line drawn across the shoulders of the Head & Shoulders formation. Silver has also traced out a falling wedge. Y'all will see on this chart, http://scharts.co/1vHxKVX that silver moved away from that low and closed the week higher, although it couldn't close the week above its 20 & 50 DMAs. MACD is striving to turn heavenward, but volume has dried up. Overall, I have to call the week a "good save."

Gold's five day chart shows a steady but not particularly pretty advance. Is that a forward move, or merely a correction of a downward move?

The week's action was encouraging. Gold dropped through the uptrend line to a low at $1,190 and looked ready to sink to the earth's molten core. It didn't. Turned around and rose away from the line. However, it hasn't done anything yet to reveal its mind. It must best resistance at $1,220 and $1,240, with $1,230 a nasty swamp inbetween.

A chilling thought choked me this evening: maybe I am hurting y'all more than I am helping. Maybe poring over charts every day gives you a utopian, perfectionist mindset. In other words, the will o' the wisp of picking a bottom perfectly.

That's a deadly delusion. Sivler & gold probably bottomed in November, but even if they didn't the downside risk probably isn't $70 for gold from here, or a dollar for silver.

Today those look like big distances, a year from now they won't. I remember when gold finally reached $340. I chewed ten penny nails and sweat bullets over whether to buy there or wait for the "inevitable" correction to $320. Wadn't I a durned ole nat'ral born fool from Tennessee! Why that $340 gold would look pretty well bought today, wouldn't it? Oh, no, I had to wait for perfection, and watch it punch through $340 and fly away.

Anyhow, the Greeks buying sovereigns reminded me of something else. With bank deposits & bonds not paying any interest, and actually costing you money when you figure in inflation, I'd a sight rather have my money in gold where at least there's SOME chance of appreciation, instead of a guaranteed loss in paper money. And what if there was another financial panic or bank closure? Way too late to buy gold then, like waiting till the tavern fight breaks out to shop for a Bowie knife.

Sound like I'm trying to persuade y'all of something? Well, I am. My life's work has been to point people to the fatal perils of fiat money & the safety of metals. Making money on gold and silver as an investment is just cream cheese icing on that cake of safety.

Y'all enjoy your weekend.

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
27-Feb-15 Price Change % Change
Gold, $/oz 1,212.60 3.00 0.2
Silver, $/oz 16.51 -0.07 -0.4
Gold/Silver Ratio 73.433 0.185 0.3
Silver/Gold Ratio 0.0136 -0.0001 -0.4
Platinum 1,186.70 12.00 1.0
Palladium 818.45 8.20 1.0
S&P 500 2,104.50 -6.24 -0.3
Dow 18,132.70 -81.72 -0.4
Dow in GOLD $s 309.12 -2.13 -0.7
Dow in GOLD oz 14.95 -0.10 -0.7
Dow in SILVER oz 1,098.09 -0.29 -0.0
US Dollar Index 95.32 -0.03 -0.0
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: 1,211.90      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,242.20 1,254.32 1,254.32
1/2 AE 0.50 623.61 639.28 1,278.55
1/4 AE 0.25 311.81 325.70 1,302.79
1/10 AE 0.10 127.14 132.70 1,327.03
Aust. 100 corona 0.98 1,178.40 1,187.40 1,211.39
British sovereign 0.24 287.42 292.42 1,242.23
French 20 franc 0.19 227.96 231.96 1,242.41
Krugerrand 1.00 1,227.65 1,237.65 1,237.65
Maple Leaf 1.00 1,219.90 1,236.90 1,236.90
1/2 Maple Leaf 0.50 696.84 636.25 1,272.50
1/4 Maple Leaf 0.25 309.03 324.18 1,296.73
1/10 Maple Leaf 0.10 128.46 132.10 1,320.97
Mexican 50 peso 1.21 1,450.84 1,461.84 1,212.44
.9999 bar 1.00 1,216.14 1,227.90 1,227.90
SPOT SILVER: 16.54      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 23.00 26.00 33.99
VG+ Peace dollar 0.77 19.00 22.00 28.76
90% silver coin bags 0.72 12,573.28 12,930.78 18.09
US 40% silver 1/2s 0.30 4,686.08 4,836.08 16.39
100 oz .999 bar 100.00 1,643.50 1,703.50 17.04
10 oz .999 bar 10.00 170.35 171.35 17.14
1 oz .999 round 1.00 16.64 17.14 17.14
Am Eagle, 200 oz Min 1.00 18.04 18.84 18.84
SPOT PLATINUM: 1,186.70      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Platinum Platypus 1.00 1,201.70 1,231.70 1,231.70
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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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