The Moneychanger
Daily Commentary
Monday, 10 August a.d. 2015 Browse the commentary archive

Everything has a fishhook. There's always a catch. Catch in today's silver & gold rally is that it might be only a rally in a continuing fall. Therefore it needs continuing higher confirmation. Personally I believe the long bear phase that began four years ago for silver & gold has ended. We saw a double bottom in silver last week as well as gold. Today they followed with strong breaks through resistance. Well, gold was the least bit ambiguous by not closing plumb through $1,105, but I reckon the Nice Government Men had to pull just a little bacon off the plate, to mess up the look of the rest.

Gold today rose $1.10 (0.9%) & closed Comex at $1,104.20. Silver gained 47.3 cents (3.2%) to 1528.9c. The gold/silver ratio fell a weighty 2% to 72.222. Silver's high reached 1538c, gold's $1.108.50.

This strong rally is the sign silver & gold have turned up. Gold broke out of an even- sided triangle and closed right above its 20 DMA ($1,103.28), first tripwire of a rally. This occurred in tandem with the MACD turning up, full stochastics, rate of change, & Relative Strength Index. Look at the chart here,

Silver broke out of a rectangular range whose bottom boundary at 1433c has been twice tested and verified. Friday Silver closed right at its 20 DMA , today it opened there and never looked back. Sliced through the top rectangle boundary & reached for the 50 DMA (1545c) but couldn't quite reach it. All the same indicators have turned up for silver, but notice it gained three times as much as gold today.

Gold/Silver Ratio fell through the 200 DMA leaving a gap behind. Beautiful & dramatic. Here all the indicators point down, as we desire, because the ratio usually falls during silver & gold rallies. Y'all have to see this,

Friends, you buy the breakouts, and this is one.

Stocks had a big day which can be technically explained by the Dow bouncing up after penetrating its lower support boundary, and the S&P500 bouncing off its 200 DMA. One Reuters report had the astonishingly blockheaded sentence, "Disappointing economic data in China boosted hopes for additional stimulus from Beijing, lifting Chinese stocks." Let's see, things are getting better because the worse they get the closer China comes to government stimulus, which, as we always know, works like a square wheel. I pass over as too obvious for a gentleman to comment on, that Chinese government data, economic or otherwise, can be trusted like you can trust a heroin addict with your wallet.

Dow rose 241.79 (1.39%) to 17,615.17 & the S&P500 jumped 26.61 (1.28%) to 2,104.18.

In dollars, that is. If you measure the Dow in gold or silver, it all looks different. Dow in Silver today FELL 1.38% to 1,159.27 troy ounces. Dow in gold rose 0.44% to 15.96 oz. Both indicators have broken down through their 20 day moving averages and their uptrend lines. Evidence is piling up that the July new highs were indeed what I suspected, throwovers that mark a top.

Day wouldn't be complete without picking up a set of tongs and examining the moldy, scrofulous fiat currencies. Witnesses continue to testify that the US dollar index has posted its double top at 98.32/98.43. Dollar index lost another 42 basis points today (0.43%) & ended at 97.20, well below its 97.49 20 DMA. Momentum indicators have turned down. Scabby euro added 0.44% to $1.1021, while the Yen oozed off 0.31% to 80.26 c/Y100.

Please remember y'all won't be hearing from this nat'ral born durn Tennessee fool for the rest of this week because he will be in Virginia, annoying the folks up there. However, the picture right now is so clear even somebody with a Ph.D. working in Washington, DC, for the US Post Office or State Department could figure it out: silver & gold made their bottom last week and it's time to buy.

On this day in a.d. 70 Romans under Titus captured Jerusalem after a seven month siege and destroyed the second temple. The Jewish historian Josephus, who fought with and for the Romans, estimated that 1.1 million people died, mostly Jews, and another 97,000 were sold into slavery. He said there were so many killed that the furious Romans had to climb over heaps of bodies to kill more. When they finished Titus ordered the city levelled, and they dug out the walls down to the foundations, so that, according to Josephus, a stranger could not tell a city had ever been there. Jesus had foretold the destruction of Jerusalem before "this generation" passed.

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-Aug-15 Price Change % Change
Gold, $/oz 1,104.20 10.10 0.92%
Silver, $/oz 15.29 0.47 3.19%
Gold/Silver Ratio 72.222 -1.624 -2.20%
Silver/Gold Ratio 0.0138 0.0003 2.25%
Platinum 988.90 27.10 2.82%
Palladium 605.70 9.30 1.56%
S&P 500 2,104.18 26.61 1.28%
Dow 17,615.17 241.79 1.39%
Dow in GOLD $s 329.77 1.52 0.46%
Dow in GOLD oz 15.95 0.07 0.46%
Dow in SILVER oz 1,152.15 -20.46 -1.75%
US Dollar Index 97.20 -0.42 -0.43%
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: 1,104.00      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,126.08 1,142.64 1,142.64
1/2 AE 0.50 562.53 582.36 1,164.72
1/4 AE 0.25 284.02 296.70 1,186.80
1/10 AE 0.10 115.82 120.89 1,208.88
Aust. 100 corona 0.98 1,073.48 1,082.48 1,104.35
British sovereign 0.24 261.83 274.83 1,167.51
French 20 franc 0.19 207.66 211.66 1,133.70
Krugerrand 1.00 1,124.98 1,134.98 1,134.98
Maple Leaf 1.00 1,114.00 1,128.00 1,128.00
1/2 Maple Leaf 0.50 634.80 579.60 1,159.20
1/4 Maple Leaf 0.25 281.52 295.32 1,181.28
1/10 Maple Leaf 0.10 117.02 120.34 1,203.36
Mexican 50 peso 1.21 1,324.33 1,335.33 1,107.51
.9999 bar 1.00 1,107.86 1,116.00 1,116.00
SPOT SILVER: 15.24      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 25.00 27.00 35.29
VG+ Peace dollar 0.77 20.00 22.00 28.76
90% silver coin bags 0.72 13,002.28 13,359.78 18.69
US 40% silver 1/2s 0.30 4,302.58 4,452.58 15.09
100 oz .999 bar 100.00 1,548.50 1,573.50 15.74
10 oz .999 bar 10.00 153.85 158.85 15.89
1 oz .999 round 1.00 15.34 15.80 15.80
Am Eagle, 200 oz Min 1.00 16.74 18.24 18.24
SPOT PLATINUM: 988.90      
Plat. Platypus 1.00 1,003.90 1,033.90 1,033.90
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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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