The Moneychanger
Daily Commentary
Wednesday, 15 April a.d. 2015 Browse the commentary archive

Always a good mind to keep in mind the context of a market, the broad backdrop against which it's trading. If you only look at a 3 month chart & see a strong rally, you may draw the wrong conclusion if you fail to place that rally against a 4 year down trend. And vice versa.

Just as stocks are faltering in a long-toothed uptrend, showing more sharp ups & downs, failing to gain much on good news, inching out an advance, and most of all, failing to make new highs, so silver & gold are acting just the opposite. Yesterday's apparent breakdown was reversed today. So just as a market failing at tops implies an uptrend is fizzling, so a market failing to fall further implies a downtrend turning up.

The US dollar index, king of the fiat currency leper colony, continued sliding today. Bear in mind these moves above 30 or so basis points are fairly big, moves above 50 scarce, and moves above 100 rare. Today it lost 42 basis points (0.42%) to close at 98.53, reinforcing yesterday's fall with another today. Dollar Index fell through that channel midline I've been watching, but not below the tripwire for further drops, the 20 DMA (98.31). That 100.27 we saw two days ago might have been no more than the top of a B-wave reaction, and upmove in a downtrend. So far the downtrend holds with lower highs, but needs a lower low below 96.32 to confirm.

My meditation yesterday about rationalizers & linearly projecting current trends was meant to leave you doubting whether the dollar will continue the rise that began last July. Hear me, "Doubt," I said. Here's a chart, See what you can make of it.

Why, that there euro is just al-bustin' out the top of its barrel. Rose a big 0.3% today to end at $1.0688. Has sketched out a kind of double-bottomy thing, but shows little inclination to improve on that. Won't show any muscle at all until it crosses $1.1037. Yen is trying to rise & in fact has exceeded its 20 & 50 DMAs, but is tightly and shamefully rangebound still. Rose 0.23% today to 83.93. Below 84.50 it says nothing.

Stocks added a little today. The Russell 2000 did make an new all time high, but that's a small cap index. Market proverbs holds that "Cats & dogs fly last." In Southern that means, "Small cap stocks of contemptible standing rise at the last of an advance."

Dow rose 75.91 (0.42%) to 18,112.61 & S&P500 followed right along, up 10.79 (0.51%) to 2,106.63. Dow punched into but closed below its upper channel boundary, & the S&P500 did likewise. Old bulls die hard, but at last they die.

Dow in Gold & Dow in Silver fishhooked down today, but without much change. Dow in gold dropped 0.36% to G$311.73 gold dollars (15.08 troy oz.). Dow in silver lost 0.53% to $1,446.21 silver dollars (1,118.55 troy oz). No change, still rolling over out of the gator jaws into the mud at the bayou bottom.

Whoa! Look at that crude oil today! Spread its wings and flew! Rose 4.7% to close at $55.95 a barrel, way above the $54.15 top boundary. That also takes it above the longer term downtrend. Don't I remember them rationalizers & linear projectors saying oil was going to $20? Yeah, I do. Look for yourself,

It struck my little nat'ral born durned fool's mind that it might be instructive to look at gold and silver valued in the US dollar index, give us a view of metal's progress against an index of the biggest currencies. It presents a different picture than gold in US dollars. In fact, it has traded into an even-sided triangle & is fixin' to break out, one way or t'other.

Against the US dollar on Comex today gold gained $8.70 (0.73%) to $1,201.50 while silver gained exactly the same percentage, 0.73%, by rising 11.8 cents to 1626.9. I will forgo conspiratorial animadversions.

These repeated failures to break down when offered every opportunity makes me examine again the gold chart with more attention to that uptrend from the March low. Shucks, gold closed above its 50 DMA today ($1,199.77) & ended the day $10 bucks higher than yesterday. Like a basketball under water, it doesn't want to stay below $1,200.

But leadership is shifting to gold from silver, which since December had been stronger. That you can see in the rising ratio. Also, the premium on US 90% has been $1.50 to $1.25 over spot at wholesale, has dipped to $1.10 today. In a market intending to rise, you'd expect that premium to rise, too.

This up & down can't last, but must resolve shortly by a clean, lasting break up or down. For gold, that means clearing not merely $1,210 but $1,225. Silver needs to o'erleap 1700c. Closes below this week's lows will pull both down.

On 15 April 1738 the bottle opener was invented. People had been standing around for centuries, looking at full bottles and wondering what to do besides break 'em off at the neck.

On 15 April 1865 Abraham Lincoln mobilized 75,000 soldiers to invade the Southern states and thereby ruptured the constitutional compact that had existed since 1789.

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
15-Apr-15 Price Change % Change
Gold, $/oz 1,201.50 8.70 0.73%
Silver, $/oz 16.27 0.12 0.73%
Gold/Silver Ratio 73.852 -0.001 -0.00%
Silver/Gold Ratio 0.0135 0.0000 0.00%
Platinum 1,155.90 2.20 0.19%
Palladium 766.80 4.60 0.60%
S&P 500 2,106.63 10.79 0.51%
Dow 18,112.61 75.91 0.42%
Dow in GOLD $s 311.63 -0.96 -0.31%
Dow in GOLD oz 15.07 -0.05 -0.31%
Dow in SILVER oz 1,113.32 -3.43 -0.31%
US Dollar Index 98.58 -0.42 -0.42%
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SPOT GOLD: 1,202.50      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,227.75 1,244.59 1,244.59
1/2 AE 0.50 612.77 634.32 1,268.64
1/4 AE 0.25 309.39 323.17 1,292.69
1/10 AE 0.10 126.16 131.67 1,316.74
Aust. 100 corona 0.98 1,172.80 1,181.80 1,205.67
British sovereign 0.24 285.19 298.19 1,266.74
French 20 franc 0.19 226.19 230.19 1,232.94
Krugerrand 1.00 1,214.53 1,224.53 1,224.53
Maple Leaf 1.00 1,210.50 1,226.50 1,226.50
1/2 Maple Leaf 0.50 691.44 631.31 1,262.63
1/4 Maple Leaf 0.25 306.64 321.67 1,286.68
1/10 Maple Leaf 0.10 127.47 131.07 1,310.73
Mexican 50 peso 1.21 1,438.14 1,449.14 1,201.90
.9999 bar 1.00 1,206.71 1,214.50 1,214.50
SPOT SILVER: 16.29      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 23.00 26.00 33.99
VG+ Peace dollar 0.77 18.50 21.00 27.45
90% silver coin bags 0.72 12,076.35 12,433.85 17.39
US 40% silver 1/2s 0.30 4,613.80 4,763.80 16.15
100 oz .999 bar 100.00 1,619.00 1,684.00 16.84
10 oz .999 bar 10.00 161.90 168.40 16.84
1 oz .999 round 1.00 16.39 16.89 16.89
Am Eagle, 200 oz Min 1.00 17.29 18.64 18.64
SPOT PLATINUM: 1,155.90      
Plat. Platypus 1.00 1,170.90 1,200.90 1,200.90
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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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