The Moneychanger
Daily Commentary
Wednesday, 10 June a.d. 2015 Browse the commentary archive

Sorry I missed y'all last night, but I had to take a night off.

Today markets were loony as ever, & waxing loonier all the time. Stocks spiked up on news that the Germans had come to an agreement with the Greeks on how the Greek taxpayers are going to pay to bail out the German & European banks. That's what we're talking about, after all, since the banks own most of the Greek debt. That news goosed stocks (The millennium has arrived! 40 acres & a mule for everybody!). But Bonds tanked as investors dumped them, whether to ride stocks (nuts) or because the bond bubble is bursting is not clear. Gold rose modestly, silver remains comatose. US dollar index stumbled to a new low for the move.

However, about 30 minutes ago Standard & Poor rating service downgraded Greece's bond rating to junk status & said it's likely the country will default in a year if it can't make a deal with creditors. They waited until after markets closed to release that little tidbit.

Dow rose 236.36 (1.33%) to 18,000.40, just as barely above the morale-busting 18,000 mark as it could squeeze (makes me think of Nice Government Men). S&P500 rose 25.05 (1.38%) to 2,105.2.

I don't want to hurt anybody's itty feelings, but all that gigantical move did was take the S&P500 (but not the Dow) through its 50 dma. Last two days the S&P500 broke through and stayed under the bottom trading channel line from March. Industrials punched into but closed not above the 50DMA.

May rally & rally, even to a new high, but 'tis doomed.

US dollar index lost 57 basis points (0.6%) to 94.60, a new low for the move. Closed lower than the last low, & made a new intraday low. Will drop further, especially after today's news.

Oddly, the euro didn't suck much advantage out of the dollar's tumble. It rose 0.36% to $1.1322. Remains trapped beneath $1.1470.

Japanese yen rose 1.33% to 81.51c/Y100 (Y122.68=US$1). Gapped up like it was bending over & somebody hit it with hot jumper cables, clean to the 20 DMA.

Volatility: it's the gift of central banks for EVERY market.

10 year T-note yield hit its highest level since October, but also did something waaay more important: closed ABOVE the downtrend line from 2007. Has plainly broken out to the upside.

Remember prices run opposite to yields, so today's yield jump to 2.478% took the note's price down nearly to the bottom boundary of an uptrend line that goes back to end-2013. Bond bubble is threatening to explode.

30 year bond yield rose to 3.209 but threatens no technical line like the 10 year yield. However, the bond price is also below its 200 DMA (like the 10 year) and drawing near its 18 month uptrend line. Buzzards roostin' in the trees.

Gold rose $4.80 (.75%) to $1,186.10 while silver gained an invisible 3/10 cent to end at 1595.2c.

Sellers at 1600c & higher are stopping silver like a stone wall. It rose well overnight & by 8 a.m. reached 1624c. That's when the selling hit, which after a struggle until 10 a.m. drove silver back below 1600c. Same selling hit gold about the same time, but the buyers were more determined.

We are in the same still waters, becalmed. Yes, today was quite nice & made gold folks feel good and strain their triceps patting themselves on the back, but no milestone was crossed. Gold remains below its 50 & 20 moving averages, and the 200 day is up at $1,210.80. Till gold throws a leg over that fence at $1,200, nothing has happened.

Oh, there are little whispers. Volume rose the last three days on rising prices. RSI has hooked up, & MACD is trying to. Last Thursday gold hit its 2-standard deviation bottom Bollinger Band & has since rallied. But until gold o'erleaps that $1,200 fence, nothing has happened.

Silver lies in much the same bed as gold, but without the signs of waking up. Minimum necessary life that must be shown is a close over 1600c, then 1640c, & I don't mean waiting a week to do it.

Silver always loses more than gold in a downward correction, & that pushes the gold/silver ratio up. At 74.354 ounces of silver ot one ounce of gold today, it has risen again above that uptrend line from the April 2011 low. Once again, this is no man's land. The ratio could rise up to 76.42 without signaling danger of a new and serious drop in silver & gold.

All the same, I bought a little gold today, and probably ought to have bought silver, too. If the Greek crisis is resolved without the European banks re-po'ing all the antiquities in Greece & their children, silver & gold may take a hit. Let's see what effect that S&P downgrade has on tomorrow's trading.

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-Jun-15 Price Change % Change
Gold, $/oz 1,186.10 8.80 0.75%
Silver, $/oz 15.95 0.00 0.02%
Gold/Silver Ratio 74.354 0.538 0.73%
Silver/Gold Ratio 0.0134 -0.0001 -0.72%
Platinum 1,114.70 6.90 0.62%
Palladium 743.00 3.60 0.49%
S&P 500 2,105.20 25.05 1.20%
Dow 18,000.40 236.36 1.33%
Dow in GOLD $s 313.72 1.81 0.58%
Dow in GOLD oz 15.18 0.09 0.58%
Dow in SILVER oz 1,128.41 14.61 1.31%
US Dollar Index 94.60 -0.57 -0.60%
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: 1,184.90      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,216.89 1,226.37 1,226.37
1/2 AE 0.50 603.79 625.03 1,250.07
1/4 AE 0.25 304.85 318.44 1,273.77
1/10 AE 0.10 124.31 129.75 1,297.47
Aust. 100 corona 0.98 1,155.63 1,164.63 1,188.16
British sovereign 0.24 281.02 294.02 1,249.01
French 20 franc 0.19 222.88 226.88 1,215.21
Krugerrand 1.00 1,199.12 1,209.12 1,209.12
Maple Leaf 1.00 1,192.90 1,208.90 1,208.90
1/2 Maple Leaf 0.50 681.32 622.07 1,244.15
1/4 Maple Leaf 0.25 302.15 316.96 1,267.84
1/10 Maple Leaf 0.10 125.60 129.15 1,291.54
Mexican 50 peso 1.21 1,417.09 1,428.09 1,184.45
.9999 bar 1.00 1,189.05 1,196.90 1,196.90
SPOT SILVER: 15.70      
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 11,936.93 12,294.43 17.20
US 40% silver 1/2s 0.30 4,438.28 4,588.28 15.55
100 oz .999 bar 100.00 1,559.50 1,609.50 16.10
10 oz .999 bar 10.00 155.95 161.45 16.15
1 oz .999 round 1.00 15.80 16.30 16.30
Am Eagle, 200 oz Min 1.00 17.20 18.05 18.05
SPOT PLATINUM: 1,114.70      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,129.70 1,159.70 1,159.70
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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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