The Moneychanger
Daily Commentary
Monday, 27 July a.d. 2015 Browse the commentary archive

Ever wake up like Rip Van Winkle wiping the cobwebs from you eyes & wondering what on earth got hold of you? I feel that way today, looking at markets. What on earth have I been thinking about? Stocks have rolled over. That May high was most likely the high for the entire bull phase (spawned by the Fed's QE). The present deflationary scare will pass, the dollar will fail & resume its downward progress toward zero, & central banks will surely shoot their only weapon: the inflation gun. And one more thing: the goofs in central banks & governments who believe they are Masters of the Universe, ain't. Gravity still works, truth will avenge itself economically on corrupt politics, and chickens still come home to roost. (What was that stuff those little men gave me to drink while we were bowling?)

Ponder stocks first. No longer can the damage be hidden. The Dow lost another 127.94 (0.73%) today to 17,440.59 & has traced out a gigantic rounding top. Today's close was lower than July's earlier low close (17,466). It is trading way below its 200 day moving average (DMA, 17,750). There's another little internal broadening top traced out since March, & the Dow is about to break down out of that. Owch! I forgot to mention that the Dow is now 384.5 points below its 2014 close, and 871.4 points below its 19 May high.

S&P500 today lost 12.01 (0.58%) to 2,067.64. Skidded to a halt today three points from its 200 DMA (2,064.13). Still 9 points above its 2014 close. After it breaks that 2,039 March low, the fleas will begin jumping off the rats & the rats will be jumping ship.

Wait! Did I forget to mention that in China, where the government now openly buys stocks to support the market, the Shanghai market posted its biggest daily loss since 2007? How did I overlook that?

Dow in gold has retraced nearly all its "throwover" final top. That took it to 16.504 oz but today it closed at 15.91 oz. Working off an oversold RSI, falling Rate of Change, overbought stochastics, & a downturning MACD. Look:

What about the Dow in silver? The throwover there was less than gold's, but it, too, has plunged, from 1,236.37 oz to 1,201.97 today.

US dollar index tumbled again today, right badly, down 73 basis points (0.75%) to 96.61, cutting through its 20 DMA (96.89). Will drop further. Maybe by mid-August its tank will have finally run dry.

Not that the euro offers any more solace or safety. If the US dollar's sorry as a three-legged mule, what about the euro? It's a three-legged twenty-eight-pede! Gained today 1.06% to $1.1090. That is above its 20 DMA, at least, but until the euro crosses $1.1150, it hasn't even begun to rally. Yen gapped up on dollar weakness, too, plus 0.38% to 81.11 cents/Y100 (Y123=US$1).

Gold closed Comex at 1,096.50, $10.90 or 1% higher than Friday. Silver added 11.7 cents (0.8%) for a 1459.4c close.

Remember Friday I was watching the first half of a key reversal in the End of Day chart, but gold did not close the EOD higher today, so that reversal was not completed & verified.

But look at this. Gold's new commitment of traders reports shows large speculators (the dumb money) with historically low long positions & commercials (the smart money) with barely any shorts.

Silver's CoTs look bullish, too. Commercials have few shorts and large speculatorsfew longs. Also bullish.

On the 5 day chart gold shows a rounded bottom with a surge up through $1,090 on Friday, a rise to $1,105 today, then a plunge to test $1,090 support -- a test gold passed, and rose to end the day about $1,095. Unless gold breaks $1,090, Friday was the bottom.

Silver's chart also shows a low Friday, but a V-bottom, a higher high early today with a test of 1455 cents -- also passed. Silver must hold 1440c. (Remember it's much more volatile than gold).

None of reading markets is metrically precise, it's an art. That's why I try to give you a band of prices that both confirms and explodes any forecast. As long as we don't break $1,090 and 1440c, Friday was the low. I already bought on Friday, so I'm set. What about y'all? Bear in mind that when markets turn around, those universally scorned rise all the faster.

Bless his heart! On 27 July 1586 Sir Walter Raleigh brought the first tobacco to England from Virginia. All those self righteous folks who natter about smokers & second hand smoke, yakety-yak, need to put up their feet and light a really fine Dominican cigar & inhale. That'll shut 'em up.

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
27-Jul-15 Price Change % Change
Gold, $/oz 1,096.50 10.90 1.00%
Silver, $/oz 14.59 0.12 0.81%
Gold/Silver Ratio 75.134 0.146 0.19%
Silver/Gold Ratio 0.0133 -0.0000 -0.19%
Platinum 990.50 8.10 0.82%
Palladium 612.10 -9.50 -1.53%
S&P 500 2,067.64 -12.01 -0.58%
Dow 14,440.59 -127.94 -0.88%
Dow in GOLD $s 272.24 -5.17 -1.86%
Dow in GOLD oz 13.17 -0.25 -1.86%
Dow in SILVER oz 989.49 -16.83 -1.67%
US Dollar Index 96.61 -0.73 -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: 1,095.50      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,130.56 1,133.84 1,133.84
1/2 AE 0.50 558.20 577.88 1,155.75
1/4 AE 0.25 281.83 294.42 1,177.66
1/10 AE 0.10 114.92 119.96 1,199.57
Aust. 100 corona 0.98 1,066.29 1,075.29 1,097.01
British sovereign 0.24 259.81 272.81 1,158.94
French 20 franc 0.19 206.06 210.06 1,125.14
Krugerrand 1.00 1,118.51 1,128.51 1,128.51
Maple Leaf 1.00 1,103.50 1,119.50 1,119.50
1/2 Maple Leaf 0.50 629.91 575.14 1,150.28
1/4 Maple Leaf 0.25 279.35 293.05 1,172.19
1/10 Maple Leaf 0.10 116.12 119.41 1,194.10
Mexican 50 peso 1.21 1,314.13 1,325.13 1,099.06
.9999 bar 1.00 1,099.33 1,107.50 1,107.50
SPOT SILVER: 14.60      
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 12,512.50 12,870.00 18.00
US 40% silver 1/2s 0.30 4,115.25 4,265.25 14.46
100 oz .999 bar 100.00 1,450.00 1,500.00 15.00
10 oz .999 bar 10.00 145.00 150.50 15.05
1 oz .999 round 1.00 14.70 15.20 15.20
Am Eagle, 200 oz Min 1.00 16.10 16.95 16.95
SPOT PLATINUM: 990.50      
Plat. Platypus 1.00 1,005.50 1,035.50 1,035.50
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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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