The Moneychanger
Weekly Commentary
Friday, 24 July a.d. 2015 Browse the commentary archive
Here's the weekly scorecard:
  17-Jul-15 24-Jul-15 Change % Change
Silver, cents/oz. 1,482.00 1,447.70 -34.30 -2.3
Gold, dollars/oz. 1,131.80 1,085.60 -46.20 -4.1
Gold/silver ratio 76.370 74.988 -1.382 -1.8
Silver/gold ratio 0.0131 0.0133 0.0002 1.8
Dow in Gold Dollars (DIG$) 330.34 334.54 4.20 1.3
Dow in gold ounces 15.98 16.18 0.20 1.3
Dow in Silver ounces 1,220.41 1,213.55 -6.86 -0.6
Dow Industrials 18,086.45 17,568.53 -517.92 -2.9
S&P500 2,126.64 2,079.65 -46.99 -2.2
US dollar index 97.81 97.35 -0.46 -0.5
Platinum 1,001.00 982.40 -18.60 -1.9
Palladium 618.00 621.60 3.60 0.6

NGM called out Bogusman today. His superpower is painting the gold & silver tape -- more of that later. For the week the Comex closes show silver 2.3% lower and gold 4.1% lower. Look at the end of day chart & you'll see they in fact closed higher this week. Stocks are swimming in deep waters wearing concrete boots. Dow lost 2.9%, S&P500 lost 2.2%. What happened to the Greece- relief rally? It became the no-profits plunge. US dollar index turned down this week, at least for a while.

My grandfather actually said, "I don't mind it when they spit on me, it's when they rub it in that I get mad." That's how I felt watching silver & gold today.

Here's the conundrum: Once upon a time the open outcry market on Comex was the only game in town after the London fixes. Several years ago Comex began offering the computerized Globex market after Comex' meager hours (8:30-1:30 Eastern), & silver & gold trade now around the world 24 hours a day. This year Comex ended the open-outcry floor. These changes make taking one number -- "the Comex settlement price" -- problematical. Does that really reflect the price, or was that where the traders manipulated it for the close? Everybody knows that "somehow" on options expiry day gold & silver prices miraculously slip, relieving options sellers of having to pay off on in the money options by making them out of the money. Ya'll write this down so I can remember it: Comex gold and silver futures contract options expire on four days from the end of the month, unless that's a Friday or before a holiday, when it's moved back a day earlier. That makes next Tuesday options expiry day.

Now this would be a puzzle whether I suspected markets were manipulated or not. Which price is the most representative price, Comex close or End of Day?

Today was a rare example of one gainsaying the other. Silver & gold opened lower in overnight trading. Silver hit a low about 9:00 at 1443c, bounced, then made a slightly lower low at 1433c about 11:30. From there it climbed the rest of the day, but somehow or the other the Comex tape was painted with a LOWER close for silver, down 20.6 cents at 1447.7 and a LOWER close for gold, down $8.40 at 1,085.60.

These ain't minor differences. In the aftermarket gold was trading $15 (yes) higher at 1,100.50. Silver was trading 24.3 cents higher at 1472c.

Well, which is it? Which price is the "right" price?

The mystery deepens. If you take the Comex closes and chart them, it's just another down day and another down day for silver & gold. Hogwash, if you take the aftermarket close. It that case, it was a strong close and a key reversal day. Same for gold, only more so. (Y'all remember that a key reversal day trades into new low ground for the move but ends the day higher. That has to be followed next day by another higher close, and preferably by one more day's higher close. It's a very reliable reversal sign.)

So the end of day (EOD) charts I always show y'all will today plainly reveal key reversals. Here's gold,

Here's what I like about that chart. Not only does it show that first half of a key reversal, it also shows an oversold RSI become LESS oversold, & typically the low price occurs a day or so after the RSI low. The MACD also wants to curve up, and the rotten Rate of Change has turned up. Full stochastics are trying to turn up. Volume rose very strongly today, and was almost as high as that on Monday's plunge.

Now look at the silver chart,

There's that first half key reversal today. Volume shot up nearly to Monday's level. The RSI was oversold only one day (20 July) and has crept up since. MACD needs only one good up day to turn it up. Rate of Change has already turned up, & full stochastics want to.

Is all that an ironclad case for a price reversal? Not at all, but it does resemble previous big reversals. Price will tell on Monday whether that's the right interpretation or not.

What about the Gold/Silver Ratio? Rose 0.64% to 74.988, but remained below the 20 day moving average and the uptrend line from the April 2011 low. All indicators point to a lower ratio.

Stocks opened the day bleeding & it turned out during the day it was an artery. Dow lost 163.39 (0.92%) to 17,568.53. Where does that put it? In negative territory for 215 by 415 points. Below the March, April, May, & June lows, but not yet July's (17,466). Below the 200 DMA (17,568.53), not to mention the 20 & 50 DMAs. MACD & RSI have turned down. All waypointers point down, & a close below 17,400 adds jet fuel to the fall. Y'all look for yourselves,

S&P500 shaved off 22.50 (1.07%) to 2,079.65. It hasn't crumpled as badly as the Dow; it remains 20.75 above where it ended 2014, but has plunged below its 50 & 20 DMAs and pointed toward its 200 DMA (2,064). Chart's here,

I'd say they've turned down, but the S&P500 needs to cut through its 200 DMA to confirm that.

I ain't a bit ashamed or embarrassed to show the Dow in Gold & Dow in Silver charts. DiG shot up in response to Greece-relief, and has shot down just as fast. Closed the week at G$330.54 (15.99 oz) and falling.

Dow in Silver fell this week to S$1,544.18 silver dollars (1,194.33 oz). Indicators have turned down.

US dollar index rose 12 basis points to 97.35. Correcting the previous rise. Might start rising again next week, but indicators are trying to turn down after it fell out of a rising wedge this week.

Euro flaked again today, down 0.8% to $1.0978 on its way to par with the dollar. Yen rose 0.05% (does that really qualify as a rise?) to 80.76 cents/Y100 (Y123.82 = US$1). Is anybody watching?

On 24 July 2015 John Scopes was found guilty of teaching evolution in Dayton, Tennessee and fined $100 and costs. All sides managed to turn the trial into a circus.

Y'all enjoy your weekend.

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
24-Jul-15 Price Change % Change
Gold, $/oz 1,085.60 -8.40 -0.8
Silver, $/oz 14.48 -0.21 -1.4
Gold/Silver Ratio 74.988 -0.569 -0.8
Silver/Gold Ratio 0.0133 -0.0002 -1.4
Platinum 982.40 -0.40 -0.0
Palladium 621.60 4.75 0.8
S&P 500 2,079.65 -22.50 -1.1
Dow 17,568.53 -163.39 -0.9
Dow in GOLD $s 334.54 -0.48 -0.1
Dow in GOLD oz 16.18 -0.02 -0.1
Dow in SILVER oz 1,213.55 5.90 0.5
US Dollar Index 97.35 0.12 0.1
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GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,134.62 1,139.02 1,139.02
1/2 AE 0.50 560.75 580.51 1,161.03
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Aust. 100 corona 0.98 1,071.16 1,080.16 1,101.98
British sovereign 0.24 261.00 274.00 1,163.98
French 20 franc 0.19 207.00 211.00 1,130.18
Krugerrand 1.00 1,120.31 1,130.31 1,130.31
Maple Leaf 1.00 1,108.50 1,124.50 1,124.50
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US 40% silver 1/2s 0.30 4,150.65 4,300.65 14.58
100 oz .999 bar 100.00 1,462.00 1,512.00 15.12
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Am Eagle, 200 oz Min 1.00 16.22 17.07 17.07
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Platinum Platypus 1.00 997.40 1,027.40 1,027.40
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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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