The Moneychanger
Daily Commentary
Tuesday, 30 June a.d. 2015 Browse the commentary archive

Please forgive me for missing a commentary yesterday. My out of town guests arrived before I could write it.

Here's one for y'all to write down in your books, a headline from yesterday: "Why Greek financial crisis won't hurt US economy." Y'all write that down right next to Irwin Fisher's famous statement right before the 1929 crash, "Stocks have reached a permanently high plateau."

Let's catch up first. The Greek government shut down the banks, declaring a six day bank holiday, as well as capital controls. Greeks can withdraw in cash from ATMs only 60 euros a day, with a max of 1600 euros a month. Greeks may not send money out of the country without going through an official board (fat chance).

Just to heap up the plate of Debt Gone Rancid, Puerto Rico announced yesterday it can't pay its $72 billion debt and is days away from collapse.

But markets didn't do what you'd expect, not exactly.

Try to put yourself in the Nice Government Men's place. What would YOU do, faced with their needs? European and US NGM have known for months & months Greece might default, & we know all central banks manipulate exchange rates, so you know they've put their heads together to work out their emergency response. Basic parameters are:

1. No stampede out of the euro

2. No stampede into the dollar

3. No stampede into gold

4. No really nasty stampede out of stocks, but some trampling okay.

Once you understand which stampedes you must stop, you know the manipulations you must make. With that in mind, let us ponder yesterday & today -- philosophically, to keep down the tics & retching & fury.

Against all odds the US dollar index, which overnight had shot up to 96.69, punching into overhead resistance, dropped 70 basis points (0.73%) to close at 94.95, well below its 20 DMA. Right. Sure. Of COURSE the US dollar index, safely-haven of scrofulous fiat currencies, would DROP on the day the euro threatens to come unglued. Sure, yeah, natural as a jet engine. Or it could have been a short squeeze in the euro.

On the same day the Euro, flying apart like a Yugo at high speeds, still manages to rise 0.7% to $1.1246. Call me loony, I don't believe it.

And gold, which had jumped up to $1,187 over the weekend, added only $5.60 to $1,178.50. Silver fell 7.1 cents to 1566.4c. Oh, yeah.

Stocks were allowed some trampling. The Dow Industrials crashed through their 200 DMA (17,681) scraping off 350.33 (1.95%!) to 17,596.35. Whoops! That's about 200 points lower than the Dow closed 2014. Yea, behold a low lower than any since April, below existing support, below water & taking on more at every seam. S&P lost more, 2.09%, to 2,057.64, but floated bare points above its 200 DMA (2,053.90).

Y'all stop & chew on this a moment. The Greek crisis is only a CATALYST, not a cause for this plunge. Did no weakness beforehand exist, no market would plunge. Regardless how Greece is papered over, cascades, Niagaras, IguaƧus are coming in stocks, & soon.

Today stocks traded in a tight range (138 points) and the Dow (or the NGM) managed to add 23.16 (0.13%) to 16,619.51, STILL below the 200 DMA. S&P500 added 5.47 (0.27%) to 2,063.11.

Say, did I mention to y'all that the Shanghai Stock Exchange fell 3.3% yesterday? Or that it as of yesterday's close it had fallen 21.5% since 12 June? I am so forgetful. Never mind European stock markets.

Dow in gold has fallen away from the top Gator Jaw, through the hand-holding 20 & 50 DMAs, and clean down to the uptrend line from August 2013. It is about to break through that. Today it rose 0.77%, just fishhooked up a little, to G$310.70 gold dollars (15.03 troy ounces), nearer the 200 DMA. Take a gander at this chart,

Dow in Silver didn't quite hit its upper Gator Jaw, but has now broken its uptrend. Closed today up 0.71% at S$1,454.25 silver dollars (1,124.77 troy ounces). Chart's right here,

Both indicators are blowing the klaxon: ABANDON STOCKS!

Today the US dollar index rose 71 basis points (0.75%) to 95.66, safely tamed from yesterday's impulse to escape, and above both short term moving averages. If y'all want to see the Invisible Hand at work, here 'tis: Euro lost 0.9% today to $1,1138. Ready to fall off the face of the earth. Yen jumped up today, gapped up yesterday, and has a little rally up out of that pit whereinto it had fallen. Closed up 0.07% at 81.65.

US treasury yields remain high. 10 year treasury note fell below its 20 DMA yesterday, but made up much of that loss today. 30 year bond punched into its uptrend line yesterday, but came back a little today. Overall bonds have been falling & yields rising since 1 February. I hope Janet Yellen has stocked in a good supply of industrial strength anti-perspirant.

Dad blast it, I disremembered something else! Anent Puerto Rico, do y'all think that's the only governmental entity in the US with debt problems? Jefferson County Alabama (Birmingham) sank in the largest municipal bankruptcy in history, Detroit is in bankruptcy, Chicago is teetering, California (I will bet small money without looking) ain't in great shape, and how many others are hiding in the woodwork? Don't it just make you tingle with joy to know you are surrounded by such magnificent examples of financial management?

Today gold lost $7.00 (yeah, sure) to $1,171.50 & silver lost 11.3 cents to 1555.1c.

First, the Gold/Silver Ratio. It closed yesterday at 75.236, today at 75.333, a new high for the move. Good (don't drop yore teeth, Granma!), I say. Ratio needs to top before silver & gold will turn. Remember that I expect the window for the seasonal silver & gold low will shut by 10 July or sooner. Don't overlook that footnote.

Since Sunday gold has been steadily backing up, and was pressured again all day today. About 12:15 Eastern time it hit a low at $1,165.40, shot up to $1,180, but was forced back again. Lay aside for a moment all my comments about the Nice Government Men & just look at the chart. Gold keeps on holding up around that $1,168 mark. WHY? Only one reason a market stops dropping: people start buying. I don't know about the rest of the world, but we have been HOPPING. Customers I haven't seen in years are coming back for another round with silver & gold, and new customers, too. Serious ones.

Looking at support areas, there are previous lows at $1,162 and $1,141 & $1,130. Maybe on the announcement of whatever rat -- whoa, sorry, make that "rabbit" -- the Euros will pull out of their hat, gold spikes down. If so, I am guessing not further than $1,140, although it's looking less & less like that will happen.

Things don't look much different for silver. This 1550 cent area has been what I expect to hold, but it could spike to 1500 or even 1450c. Probably tomorrow will tell the tale. Any good news for Greece & Europe will be bad news for safe haven gold and silver, so the maximum damage will come with that first blow. Watch closely.

Without judging the justification or lack thereof for their suspicions, several people a day call me saying something like, "I just don't trust the dollar, the market, the financial system." Whatever the central banks have sown, distrust & fear are coming up.

I bought some gold and silver today. If it drops tomorrow, I will buy more. We are right now watching the last lows for the year.

But don't take my word for it! I ain't no mor'n a nat'ral born durned fool from Tennessee! But I know this: if the whole doldurned fynanshul system & almighty US dollar to boot go belly up, I can buy me a tin bill & peck in the dirt with the chickens & still make a livin'. Some other folks may go hungry, Lord have mercy on 'em.

On 30 June 1936 Margaret Mitchell's novel, Gone with the Wind, was published.

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
30-Jun-15 Price Change % Change
Gold, $/oz 1,171.50 -7.00 -0.59%
Silver, $/oz 15.55 -0.11 -0.72%
Gold/Silver Ratio 75.333 0.097 0.13%
Silver/Gold Ratio 0.0133 -0.0000 -0.13%
Platinum 1,078.60 -2.80 -0.26%
Palladium 671.65 6.20 0.93%
S&P 500 2,063.11 5.47 0.27%
Dow 17,619.51 23.16 0.13%
Dow in GOLD $s 310.91 2.25 0.73%
Dow in GOLD oz 15.04 0.11 0.73%
Dow in SILVER oz 1,133.01 9.65 0.86%
US Dollar Index 95.66 0.71 0.75%
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: 1,171.80      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,204.61 1,212.81 1,212.81
1/2 AE 0.50 597.11 618.12 1,236.25
1/4 AE 0.25 301.48 314.92 1,259.69
1/10 AE 0.10 122.93 128.31 1,283.12
Aust. 100 corona 0.98 1,142.86 1,151.86 1,175.12
British sovereign 0.24 277.91 290.91 1,235.81
French 20 franc 0.19 220.42 224.42 1,202.01
Krugerrand 1.00 1,187.03 1,197.03 1,197.03
Maple Leaf 1.00 1,179.80 1,195.80 1,195.80
1/2 Maple Leaf 0.50 673.79 615.20 1,230.39
1/4 Maple Leaf 0.25 298.81 313.46 1,253.83
1/10 Maple Leaf 0.10 124.21 127.73 1,277.26
Mexican 50 peso 1.21 1,405.66 1,416.66 1,174.97
.9999 bar 1.00 1,175.90 1,183.80 1,183.80
SPOT SILVER: 15.64      
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 12,394.53 12,752.03 17.84
US 40% silver 1/2s 0.30 4,420.58 4,570.58 15.49
100 oz .999 bar 100.00 1,553.50 1,603.50 16.04
10 oz .999 bar 10.00 155.35 160.85 16.09
1 oz .999 round 1.00 15.74 16.24 16.24
Am Eagle, 200 oz Min 1.00 17.14 17.99 17.99
SPOT PLATINUM: 1,078.60      
Plat. Platypus 1.00 1,093.60 1,123.60 1,123.60
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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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