The Moneychanger
Daily Commentary
Tuesday, 11 August a.d. 2015 Browse the commentary archive

Not really possible for me to keep my nat'ral born durn fool mouth shut in the face of last two days' events, so I hauled out my kerosene fired computer to send y'all a commentary.

Thinking of the Chinese devaluing their currency two days running, I am reminded of the old moral riddle, "Is it possible to cheat a banker?" It's almost a central banking gentleman's rule that you don't pull two surprise devaluations in a row, but the Chinese did it, cleaning out speculators & spooking central banks around the globe. Total devaluation was 3.5% in two days, and that second one was a killer. Probably will devalue another 10% as the yuan was an estimated 14% overvalued.

Wait, now, y'all do know that devaluing your currency will not make your economy improve as the Keynesians maintain, right? Time it settles out it won't help a fig, but it will trigger a round of currency war devaluations.

The Chinese pulled the rug out from under the dollar, as speculation is that the Fed cannot now raise rates and make the dollar even more attractive after the Chinese have devalued. Dollar plunge was the big but unsung news, down a colossal 104 basis points (1.07%) to 96.29, and below another support level. 93.30, look out, cause the dollar is coming to visit!

Chinese devaluation also roiled stock markets around the world, so much so that in the US the Nice Government Men had to get in there & buy those S&P500 futures and raise it back up. Hanging over the abyss like Dante over the inferno, stocks fell, fell, fell, the Dow down over 275 points, when - Wondrous to tell! -- some deep-pocketed somebody started buying & got the train back up on the tracks. Might have been Bigfoot buying, I dunno. Dow ended down only a third of a point, 0.33 and the S&P500 fell only 1.98 to 2,086.05, after a like performance.

And folks say only the Chinese Communist government buys stocks outright! Why, they can't hold candle to our homegrown Washington communists!

I'm plumb in peril of losing my title as a nat'ral born durn fool here. Jes' like I 'spected, the Dow in Gold has plunged, plummeted, & sunk. That durn high in July WAS a throwover high, too! Dow in gold sank clean through the top gator jaw and through the 50 DMA (15.57) to 15.47 oz. Broke as the US Government! 200 DMA lieth only 0.47 ounce from here at 15.00 oz. Y'all go look,

Dow in silver looks even better. Closed below the 20 DMA (several days ago), then the uptrend line, now the 50 DMA (1,158.56) and hit 1,122.38 oz. The 200 DMA is only 22.38 short ounces from here at 1100.30.

Continuing to confirm its winning streak, gold today rose $19.00 to $1,123.20 while silver jumped 18.4 cents to 1547.3c, right under the critical 1550c where it broke down. Gold/Silver ratio closed 72.591, and has been beneath its 200 day moving average for three days.

Odd, you never know what the trigger for a financial crisis will be --- there are always so many candidates. But here the Chinese set one off without much trouble, and now the West's treasury departments and central banks are trying to figure out how to contain it.

Most interesting is that the dollar isplunging in tandem with stocks & gold is winning the safe haven bid. Can't crow too much because you don't know what will happen next, but the market knows. That Dollar Index topped four days ago, and I almost want to say it knew something bad was coming.

I'm still a nat'ral born durn fool from Tennessee, so I can't resist prognosterkating: you all have SEEN the low in silver & gold for the 2011-2015 bear phase. It won't get no lower than it has been, so if you were planning to buy, you'd better get at it.

Course, I could be wrong.

On 12 August 1687 Charles of Lorraine delivered a crushing defeat to Ottoman Turkish forces at the second Battle of Mohacs ("Mo-hatch") in Hungary. In the first battle on 29 August 1526 the Hungarians were defeated and slaughtered by the Turks, resultin in the partition of Hungary

"The more this changes, the more it stays the same" Department: on 12 August 1480 at the Battle of Otranto Ottoman troops beheaded 800 Christians for refusing to convert to Islam.

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
12-Aug-15 Price Change % Change
Gold, $/oz 1,123.20 19.00 1.72%
Silver, $/oz 15.47 0.18 1.20%
Gold/Silver Ratio 72.591 0.369 0.51%
Silver/Gold Ratio 0.0138 -0.0001 -0.51%
Platinum 988.90 -0.30 -0.03%
Palladium 605.70 16.90 2.87%
S&P 500 2,086.05 1.98 0.10%
Dow 17,402.51 -0.33 -0.00%
Dow in GOLD $s 320.28 -5.52 -1.69%
Dow in GOLD oz 15.49 -0.27 -1.69%
Dow in SILVER oz 1,124.70 -13.56 -1.19%
US Dollar Index 96.29 -1.04 -1.07%
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: 1,122.90      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,156.59 1,162.20 1,162.20
1/2 AE 0.50 572.17 592.33 1,184.66
1/4 AE 0.25 288.89 301.78 1,207.12
1/10 AE 0.10 117.80 122.96 1,229.58
Aust. 100 corona 0.98 1,091.86 1,100.86 1,123.10
British sovereign 0.24 266.31 279.31 1,186.55
French 20 franc 0.19 211.22 215.22 1,152.75
Krugerrand 1.00 1,144.24 1,154.24 1,154.24
Maple Leaf 1.00 1,132.90 1,146.90 1,146.90
1/2 Maple Leaf 0.50 645.67 589.52 1,179.05
1/4 Maple Leaf 0.25 286.34 300.38 1,201.50
1/10 Maple Leaf 0.10 119.03 122.40 1,223.96
Mexican 50 peso 1.21 1,347.00 1,358.00 1,126.32
.9999 bar 1.00 1,126.83 1,134.90 1,134.90
SPOT SILVER: 15.49      
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 13,291.85 13,649.35 19.09
US 40% silver 1/2s 0.30 4,377.80 4,527.80 15.35
100 oz .999 bar 100.00 1,574.00 1,599.00 15.99
10 oz .999 bar 10.00 156.40 161.40 16.14
1 oz .999 round 1.00 15.59 16.05 16.05
Am Eagle, 200 oz Min 1.00 16.99 18.49 18.49
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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