The Moneychanger
Daily Commentary
Tuesday, 10 March a.d. 2015 Browse the commentary archive

There is some kind of drunken knife fight behind the US dollar index's rise. Today it jumped another 97 basis points (00.99%) to 98.60. If you wan to try to understand it, or just haven't suffered your migraine yet today, go read That's an article from Zero Hedge that David Stockman reprinted on his website. Bottom line is that the Fed's relatively (!) high US interest rates & no QE versus QE and negative rates from the European Central Bank & Bank of Japan have created a shortage of dollars which is driving up the dollar's exchange rate.

You know, here 'tis again. Central bankers are like cockroaches: it's not so much what they steal and carry off as what they fall into and foul up. They're nastier than dermodectic mange, & about as appetizing.

Dollar's jump sent the once proud euro now to a new low, $1.0700 (-1.39%), & has inspired talk of the dollar & euro at par. Yen actually rose today 0.02% to 82.54.

Dollar is in a paroxysm or climax blow off. That does NOT mean its rise will end tomorrow or next day, only that it's in the grip of a buying panic driven by forces outside the market. No telling how long it can last or how high it will go. However, if it goes on long enough it will scare the fed into "doing something," & whatever that is will surely, surely be exactly the wrong thing.

Meanwhile not really connected to the dollar's rise -- wait a minute. Maybe stocks' fall IS connected to the dollar's rise, it that rise really does reflect a short of dollars that's choking off the carry trades around the world that have been funneling risk-free, nearly costless money into the stock market for speculators.

Anyhow, stocks took a beating with a tire iron today, or, as we say, a "tar ahrn." Mercy, Dow lost 332.78 (1.85%) to 17,662.94. S&P500 didn't lag far behind. It lost 32.27 (1.7%) to 2,044.16. To my way of thinking that breaks the back of any stock rally and whispers loudly that we have seen the last & ultimate top in stocks. Just whispers, doesn't shout yet. Both indices broke their 50 Day Moving Averages.

Right on cue the Dow in Gold & Dow in Silver hit the top gator jaw & reversed. This needs confirmation, of course, but if the formations really have been gator jaws (broadening tops), then they should reverse right here.

Dow in gold hit a new high yesterday (remember gold's big drop Friday) at G$318.97 (15.43 oz) & punched barely into the top gator jaw. That's no surprise or cause for alarm, since broadening tops often do that. Main thing is it has dropped back today to G$314.42 (15.21). Chart's at

Dow in silver hit three previous tops nearly exactly yesterday at S$1,479.16 silver dollars (1,144.04 troy ounces).

If I'm right, both ought to drop sharply from here.

West Texas Intermediate Crude lost 3.48% today & closed at $48.29, but, y'all won't believe this, remains in the same sidewise range. Hasn't broken down. That implies underlying strength on a day when the dollar gained so strongly.

Same might be said for silver and gold, but it's a lot like passing the compliment, "He don't sweat much for a fat boy." Don't say a whole lot good, & hints that there ain't much good to say.

Gold lost $6.30 today and closed Comex at $1,160.10. Silver coughed up 14.2 cents to 1561.3c. Gold/silver ratio ended Comex at 74.303:1.

Gold/Silver ratio poked its head above the downtrend line but doesn't want to close above it. Still a near thing, though. Much higher ratio would imply silver & gold mean to dive.

Gold hovereth yet right at that 3-standard deviation Bollinger Band line, and at the bottom of its trading channel flowing down from the January high. Today it also tapped at the support line drawn across the shoulders of that upside-down head & shoulders.

I see analysts who have a clear head calling for much lower silver & gold prices, but I can't board that train. Maybe we'll see a trip back to the November low at $1,130.40, but shouldn't go further.

Silver remains in a falling wedge anchored on the January high, & is bumping along the bottom boundary. If it breaks that line it could sink to that November low at 1504c.

Something unpleasant & dark is slinking through the world. Oh, I don't mean only the Nice Government men who are always slinking somewhere, but I mean some sort of financial panic. Dollar shooting up does not smack of stability & order. Has the lingering taste of 2008.

Y'all must never forget that central banks and their scabrous, scrofulous fiat currencies have the whole world living on the edge of a volcano. Just because it didn't blow today doesn't mean it won't blow tomorrow.

On 10 March 2000 the Nasdaq Composite stock index peaked at 5,132.52. That ended the dot com bubble. Same index peaked on 2 March 2015 at 5,008.57.

On 10 March 1893 New Mexico State University cancelled its first graduation ceremony because the only graduate had been robbed & killed the night before. (Is that really true?)

On 10 march 1629 England's King Charles I prorogued Parliament & did not recall it for 11 years. When they got back, boy! Were they mad!

On 10 March 49 B.C. Julius Caesar crossed the Rubicon and invaded Italy, aiming to overthrow the Roman republic. He is alleged to have said when he crossed, "Alea jacta est!" I've thrown the dice.

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
10-Mar-15 Price Change % Change
Gold, $/oz 1,160.10 -6.30 -0.54%
Silver, $/oz 15.61 -0.14 -0.90%
Gold/Silver Ratio 74.303 0.270 0.36%
Silver/Gold Ratio 0.0135 -0.0000 -0.36%
Platinum 1,130.50 -19.20 -1.67%
Palladium 803.75 -18.85 -2.29%
S&P 500 2,044.16 -35.27 -1.70%
Dow 17,662.94 -332.78 -1.85%
Dow in GOLD $s 314.74 -4.20 -1.32%
Dow in GOLD oz 15.23 -0.20 -1.32%
Dow in SILVER oz 1,131.30 -10.93 -0.96%
US Dollar Index 98.60 0.97 0.99%
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: 1,160.00      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,189.00 1,200.60 1,200.60
1/2 AE 0.50 596.89 611.90 1,223.80
1/4 AE 0.25 298.44 311.75 1,247.00
1/10 AE 0.10 121.70 127.02 1,270.20
Aust. 100 corona 0.98 1,127.94 1,136.94 1,159.90
British sovereign 0.24 275.11 280.11 1,189.94
French 20 franc 0.19 218.20 222.20 1,190.12
Krugerrand 1.00 1,173.92 1,183.92 1,183.92
Maple Leaf 1.00 1,168.00 1,185.00 1,185.00
1/2 Maple Leaf 0.50 667.00 609.00 1,218.00
1/4 Maple Leaf 0.25 295.80 310.30 1,241.20
1/10 Maple Leaf 0.10 122.96 126.44 1,264.40
Mexican 50 peso 1.21 1,388.71 1,399.71 1,160.91
.9999 bar 1.00 1,164.06 1,176.00 1,176.00
SPOT SILVER: 15.62      
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 11,919.05 12,276.55 17.17
US 40% silver 1/2s 0.30 4,416.15 4,566.15 15.48
100 oz .999 bar 100.00 1,552.00 1,612.00 16.12
10 oz .999 bar 10.00 161.20 162.20 16.22
1 oz .999 round 1.00 15.72 16.22 16.22
Am Eagle, 200 oz Min 1.00 17.12 17.92 17.92
SPOT PLATINUM: 1,130.50      
Plat. Platypus 1.00 1,145.50 1,175.50 1,175.50
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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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