The Moneychanger
Daily Commentary
Monday, 8 June a.d. 2015 Browse the commentary archive

At the G-7 meeting some French reporter claimed that Barack Obama had said something about the US dollar as a "problem." The Great Prevaricator speedily denied the comment, but it threw the US dollar index into turmoil. Lesson to be drawn -- and underlined -- from that is markets are SPOOKY. That must be very hot money to raise and drop markets so fast. That suggests that a world of hurt looms somewhere in the future, when the rumor cannot be denied.

US dollar index lost a massive 115 basis points (1.19%) to 95.21. Just refreshing y'all on the recent past, the DX fell 160 basis points on 2 June, another 51 on 3 June, then on Friday, 5 June rose 87 bps. In markets where 50 basis point moves are big, these represent HUGE volatility, which in turn mirrors huge instability and uncertainty in currencies.

The dollar now stands firmly below its 50 & 200 day moving averages. Lower prices are coming.

Euro gained 1.7% to $1.1289. Still not the sort of chart you dream of owning, but at least it's above its 20 DMA, although miles away from its 200 DMA at $1.1829. Yen pulled back from annihilation to climb 0.88% to 80.36c/Y100 (US$1=Y124.44) Scabby thing's at its lowest price since 2002. What can anybody say? Spit, & say "Fiat!"

Oooooo. Today's one of those days I'm glad I don't own stocks. Both the Dow and the S&P500 closed below support lines, & of course they're trading below their moving averages. Dow started out below its recent (last 2 months) trading channel boundary & kept dropping all day, 82.91 (0.46%) to 17,766.55. The 200 DMA stands at 17,612. Early May's low at 17,738 lies near. More important is March's 17,579 low. Finally, the December/January twin lows at 17,067 & 17,037 are the place where the panic button is plugged in.

S&P500 pierced a bottom trading channel in place since March, losing 13.55 (0.65%) to 2,079.28. Canary in the coal mine is the last low, 2068. Below that a close under 2,039 will encourage group-pukes in wastebaskets, more since the 200 DMA is at 2,046.

Silver lost 2 cents today to 1595.1c. Gold added $5.40 to $1,173.20. Disagreement amounts to confusion.

In the past two days both gold and silver have bumped against their lower 2-standard deviation Bollinger Band. Naught says they can't keep on skidding down that line, but often they turn & stage at least a lettle oversold bounce from there.

When I am reduced to saying stuff like, "Well, even though it dropped today the volume didn't rise," I know metals are in a hard place. I see people calling for silver at $10 and gold at $850, & others calling for huge rallies right here before the world ends in tee-tiny shards. What's a nat'ral born durn fool to think? I hadn't even worked out shoelaces yet, what do I make of all this grand imaginin' and specurlashun?

Not a thaing. I only know that the seasonal silver & gold charts call for a relative low at the end of June, which could mean anytime from the mid-June to mid-July. And I see stocks crumbling and the US dollar apparently minded to visit some deep place in the earth. And the mess in Greece could blow up taking the euro with it and sending the dollar up, and US interest rates are already rising in anticipation of our Wise Fed Masters raising rates. It's enough to make a fool dizzy, but I can guess with the best of 'em.

My guess is silver & gold will erode into the end of June, but without making new lows, then begin the long climb back to the sky. Now y'all have my opinion. Y'all can take that & a new, crisp $2 bill and buy yourself a cup of coffee -- or a scratch & sniff lottery ticket.

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
8-Jun-15 Price Change % Change
Gold, $/oz 1,173.20 5.40 0.46%
Silver, $/oz 15.95 -0.02 -0.13%
Gold/Silver Ratio 73.550 0.430 0.59%
Silver/Gold Ratio 0.0136 -0.0001 -0.58%
Platinum 1,100.50 9.20 0.84%
Palladium 743.10 -7.30 -0.97%
S&P 500 2,079.28 -13.55 -0.65%
Dow 17,766.55 -82.91 -0.46%
Dow in GOLD $s 313.05 -2.92 -0.92%
Dow in GOLD oz 15.14 -0.14 -0.92%
Dow in SILVER oz 1,113.82 -3.80 -0.34%
US Dollar Index 95.21 -1.15 -1.19%
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: 1,173.00      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,205.84 1,214.06 1,214.06
1/2 AE 0.50 597.72 618.76 1,237.52
1/4 AE 0.25 301.79 315.24 1,260.98
1/10 AE 0.10 123.06 128.44 1,284.44
Aust. 100 corona 0.98 1,144.03 1,153.03 1,176.32
British sovereign 0.24 278.20 291.20 1,237.02
French 20 franc 0.19 220.64 224.64 1,203.22
Krugerrand 1.00 1,187.08 1,197.08 1,197.08
Maple Leaf 1.00 1,181.00 1,197.00 1,197.00
1/2 Maple Leaf 0.50 674.48 615.83 1,231.65
1/4 Maple Leaf 0.25 299.12 313.78 1,255.11
1/10 Maple Leaf 0.10 124.34 127.86 1,278.57
Mexican 50 peso 1.21 1,402.86 1,413.86 1,172.64
.9999 bar 1.00 1,177.11 1,185.00 1,185.00
SPOT SILVER: 15.96      
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 12,019.15 12,376.65 17.31
US 40% silver 1/2s 0.30 4,516.45 4,666.45 15.82
100 oz .999 bar 100.00 1,586.00 1,636.00 16.36
10 oz .999 bar 10.00 158.60 164.10 16.41
1 oz .999 round 1.00 16.06 16.56 16.56
Am Eagle, 200 oz Min 1.00 17.46 18.31 18.31
SPOT PLATINUM: 1,100.50      
Plat. Platypus 1.00 1,115.50 1,145.50 1,145.50
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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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