The Moneychanger
Daily Commentary
Tuesday, 14 July a.d. 2015 Browse the commentary archive

To understand the world's present financial & government system, you must understand the concept "harvesting." Harvesting occurs when the Tapeworm (the economy & government run by governments and central banks for the banks & their owners) slowly consumes its victims, bleeding them bit by bit until consumed. Think of a vampire keeping its victim alive to make the meal longer & more thorough, or a spider slowly sucking the life juices out of the enwebbed fly.

For instance, the United States imprisons more people than any other country. Keeping prisoners has been turned into an industry that pays the criminal justice system & the prison industry (a lot of it privatized, remember, & contracted) and provides jobs for all those folks. Inmates are slowly consumed as they travel through the revolving door of prison and outside, until finally, having squeezed all possible juice out of them, the system discards them.

I don't know all the details, but part of Greece's surrender requires them to escrow 50 billion euros in a liquidation fund. Europresident Jeroen Dijsselbloem said, "It still is going to be an independent fund, valued at 50 billion euros which can be airplanes, airports, infrastructure, and most certainly banks. . . They will be brought in with the target to privatize those in coming years, but we will take our time for that."

I'm only a durned nat'ral born fool from Tennessee, but I've seen "privatization" before. It is a type of "harvesting" where state owned assets are sold off to Insiders at bargain basement, nickel-on-the-dollar prices, under cover of "freeing" the market. Yes, that's right, it's a corporate takeover. The Euros are asset-stripping Greece. Having enslaved it by debt, they are now "harvesting" the country entire, asset stripping it. And y'all thought slavery was dead -- now they're enslaving whole countries. There really is no limit to Our Masters' gall.

Oh, mercy! After I wrote the above this morning, a Greek friend sent me this article from describing the bailout, It's all far worse than I thought. The Euros have literally seized control of the country & its government. They've re-poed the whole country.

Now, today's markets:

It really frustrates me to see market after market behaving abnormally. They break out, then utterly refuse to carry through. Take, for example, the US dollar index.

The Dollar index broke out topside of an even-sided triangle on 7 July, strong breakout, influenced by the Greek drama. Next day it tucks tail & runs back into the triangle. It breaks out again. Tucks tail again. Breaks out again, even on news of a Greek settlement, then breaks down today.

Now maybe that's nature working, but doesn't seem so when it plays out against the backdrop of a long, strong rise, making the last 4 months look like a consolidation in an uptrend. I'm not saying this is the explanation, but it would exactly that same way if the central bank NGM were manipulating the dollar's exchange rate downward.

But the same failure to follow through has also happened in stocks & in silver & gold. Maybe the confusion and indecision is so widespread that no market (except sometimes stocks) can build much momentum.

Makes me want to throw up my hands and shout, "It's all bogus!"

Today the US dollar index made a key reversal's first half, trading into new territory for the move but closing lower than yesterday. That would have to be followed by a lower close tomorrow to confirm the reversal. Dollar index lost 21 basis points (0.22%) to 96.78.

Euro rose a miniscule 0.5% to $1.1011. Couldn't rally if you filled its tank with jet fuel. Properly chastened for attempting to rally, the yen is cowering under its 20 DMA. Lost 0.07% today to 81.04.

US ten year note yield has retraced its steps to the downtrend line from 2007. 'Twould be hernias & kidney stones for the Fed if the yield breaks above that and bursts the bond bubble.

Oil (WTIC) is another market that broke down and has refused to carry through. Today it peeked its greasy head above the downtrend line. Copper made a V-bottom but can't decide to rise.

In this best of all possible worlds, as Candide would say, stocks are a-blowin' & a-goin'. Dow crawled over 18,000 again, rising 75.9 points (0.42%) to end at 18,053.58. Not to be outdone, the S&P500 rose 9.35 (0.45%) to 2,108.95. The pattern? Broadening tops within broadening tops, emphasizing and re-emphasizing that stocks are rolling over.

Oh, my goodness. Dow in Gold rose 0.66% today to a new high since the 2011 low. Put away your flask, I don't need a drink. I am perfectly calm and this is all in order. High since these gator jaws (broadening top) began forming last November has been 15.58 oz, which at 15.64 oz today was bested by 0.4%, a rounding error. Might go higher. Look at this chart, I re-drew the top gator jaw to take in that March high. Today's high was no place near that line, about 15.80.

Dow in silver rose 1.27% to 1176.51 oz. Same picture as with gold:

Silver & gold dropped again today, silver by 14.1 cents to 1529.5c & gold by $1.90 to $1,153.30.

All the same, gold has formed a bullish falling triangle: I say "bullish" because these triangles usually resolve upwards. A close tomorrow above $1,160 breaks gold out of that wedge. A fall through $1,130 would, too.

In the days since silver's 7 July low it has formed an even-sided triangle. Silver is trying to turn up, but what happened today? Tomorrow will literally push silver out of that triangle, one way or the other. Today's close below the 1550c support was not encouraging.

My operating theory in the teeth of all the calls for gold at $750 & silver at 800 cents remains that you are now witnessing, or have just witnessed, the intersection of several cycles with the seasonal lows in silver & gold. This ought to mark the lows in the bear phase that seized silver & gold after the 2011 highs. I may be left looking stupid, but I won't lack an opinion.

On 13 July 1821 (anniversary yesterday) was born Nathan Bedford Forrest, in Chapel Hill, Tennessee. Without military training or experience, he was acknowledged by friend and foe alike to be the greatest soldier of the War for Southern Independence. I won't bother to address the many lies presently circulated about him, I will only refer y'all to the most complete biography, That Devil Forrest, by Dr. John Allan Wyeth. I will tell y'all, though, that I live on the old Natchez Trace, & Bedford Forrest rode to war in West Tennessee over that road. Sometimes at night I think I can hear hoof beats, riding, riding.

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
14-Jul-15 Price Change % Change
Gold, $/oz 1,153.30 -1.90 -0.16%
Silver, $/oz 15.30 -0.14 -0.91%
Gold/Silver Ratio 75.404 0.566 0.76%
Silver/Gold Ratio 0.0133 -0.0001 -0.75%
Platinum 1,027.90 -8.10 -0.78%
Palladium 656.10 -1.85 -0.28%
S&P 500 2,108.95 9.35 0.45%
Dow 18,053.58 75.90 0.42%
Dow in GOLD $s 323.59 1.89 0.59%
Dow in GOLD oz 15.65 0.09 0.59%
Dow in SILVER oz 1,180.36 15.70 1.35%
US Dollar Index 96.78 -0.21 -0.22%
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SPOT GOLD: 1,157.00      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,192.87 1,197.50 1,197.50
1/2 AE 0.50 589.56 610.32 1,220.64
1/4 AE 0.25 297.67 310.94 1,243.78
1/10 AE 0.10 121.38 126.69 1,266.92
Aust. 100 corona 0.98 1,128.42 1,137.42 1,160.40
British sovereign 0.24 274.40 287.40 1,220.90
French 20 franc 0.19 217.63 221.63 1,187.10
Krugerrand 1.00 1,176.67 1,186.67 1,186.67
Maple Leaf 1.00 1,165.00 1,181.00 1,181.00
1/2 Maple Leaf 0.50 665.28 607.43 1,214.85
1/4 Maple Leaf 0.25 295.04 309.50 1,237.99
1/10 Maple Leaf 0.10 122.64 126.11 1,261.13
Mexican 50 peso 1.21 1,387.90 1,398.90 1,160.24
.9999 bar 1.00 1,161.05 1,169.00 1,169.00
SPOT SILVER: 15.40      
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 13,048.75 13,406.25 18.75
US 40% silver 1/2s 0.30 4,351.25 4,501.25 15.26
100 oz .999 bar 100.00 1,530.00 1,580.00 15.80
10 oz .999 bar 10.00 153.00 158.50 15.85
1 oz .999 round 1.00 15.50 16.00 16.00
Am Eagle, 200 oz Min 1.00 16.90 17.75 17.75
SPOT PLATINUM: 1,027.90      
Plat. Platypus 1.00 1,042.90 1,072.90 1,072.90
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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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