The Moneychanger
Daily Commentary
Thursday, 28 May a.d. 2015 Browse the commentary archive

Today settled nothing, explained nothing.

I laid before y'all yesterday my bumfuzzlement over the state of the US dollar index and silver & gold. I hear analysts who I'm sure have forgotten more than I'll ever know calling for lower metals' prices, but here's what I see:

The US dollar index rallied 10 months, from last July into this May, & a lot who rode that camel expected it to run forever. Didn't. Dropped dead at 100.27 in May. Of course, that's what investors and even sophisticated ones do, they project whatever trend runs currently out into the future forever, world without end.

Dollar index dropped to 93.15 by Mid-May, forming a falling wedge on the way. Broke out of that upwards on 19 May, then surged straight up (not coincidentally, the fast move characteristic of a bear market rally when shorts get caught), rallied up to the 61.8% retracement level, 97.88, then stopped. Yesterday it fell back 3 basis points, today 32 to 97.15. If this were only a corrective rally in a longer downtrend, that's how it would act. However, if it turns around and surges through 97.88, it will rise through the old high. My guess is that most of this dollar enthusiasm is being fueled by euro DIS-enthusiasm because of Greece. When that evaporates, the dollar will resume falling.

I can't be dogmatic about any of this, because the smoke still fills the air & I need confirmation.

Likewise, silver & gold formed even sided triangles from November forward, then broke out of those triangles upward in Mid May. Both have since traded back to the top triangle boundary, typical "final kiss good-bye after a breakout."

I think both will hold here. At least, until they break through 1655c and $1,175 I have to stick with that.

If I am wrong, they will trade down at least to the bottom triangle boundary ($1,150 & 1600c). Who knows? If they break that line they could fall further.

Today gold rose $2.50 to $1,188.10 and silver rose 2.5 cents to 1665.3c.

These piddling moves announce nothing, except the metals' refusal to drop. (As I said above, using so lavishly many words).

Stocks continue to roll over. Dow today lost 36.87 (0.2%) to 18,126.12 while the S&P shaved off 2.69 (0.13%) to 2,120.79. Stocks are acting more and more manic depressive, high one day, low the next, but without any net gain. Keep your eye on that net gain. When a car keeps spinning its wheels in the mud, eventually it mires down and sinks.

Okay, now y'all know everything I know. All these markets are waiting for something to break, something to erupt, to bust through their uneasy equilibrium.

On 28 May 1916 was born Southern writer Walker Percy, author of Love in the Ruins. Y'all know what would be in an American Literature book if you left out the Southern writers? Blank pages.

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
28-May-15 Price Change % Change
Gold, $/oz 1,188.10 2.50 0.21%
Silver, $/oz 16.65 0.03 0.15%
Gold/Silver Ratio 71.345 0.043 0.06%
Silver/Gold Ratio 0.0140 -0.0000 -0.06%
Platinum 1,116.80 -2.70 -0.24%
Palladium 784.80 -0.20 -0.03%
S&P 500 2,120.79 -2.69 -0.13%
Dow 18,126.12 -36.87 -0.20%
Dow in GOLD $s 315.38 -1.31 -0.41%
Dow in GOLD oz 15.26 -0.06 -0.41%
Dow in SILVER oz 1,088.46 -3.85 -0.35%
US Dollar Index 97.15 -0.32 -0.33%
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: 1,188.00      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,214.14 1,229.58 1,229.58
1/2 AE 0.50 605.37 626.67 1,253.34
1/4 AE 0.25 305.65 319.28 1,277.10
1/10 AE 0.10 124.64 130.09 1,300.86
Aust. 100 corona 0.98 1,155.16 1,164.16 1,187.68
British sovereign 0.24 281.75 294.75 1,252.14
French 20 franc 0.19 223.46 227.46 1,218.33
Krugerrand 1.00 1,199.88 1,209.88 1,209.88
Maple Leaf 1.00 1,196.00 1,212.00 1,212.00
1/2 Maple Leaf 0.50 683.10 623.70 1,247.40
1/4 Maple Leaf 0.25 302.94 317.79 1,271.16
1/10 Maple Leaf 0.10 125.93 129.49 1,294.92
Mexican 50 peso 1.21 1,422.23 1,433.23 1,188.71
.9999 bar 1.00 1,192.16 1,200.00 1,200.00
SPOT SILVER: 16.66      
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 12,519.65 12,877.15 18.01
US 40% silver 1/2s 0.30 4,722.95 4,872.95 16.52
100 oz .999 bar 100.00 1,656.00 1,706.00 17.06
10 oz .999 bar 10.00 165.60 171.10 17.11
1 oz .999 round 1.00 16.76 17.26 17.26
Am Eagle, 200 oz Min 1.00 18.16 19.01 19.01
SPOT PLATINUM: 1,116.80      
Plat. Platypus 1.00 1,131.80 1,161.80 1,161.80
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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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