The Moneychanger
Daily Commentary
Monday, 24 August a.d. 2015 Browse the commentary archive

This is not a dip, it's a disaster.

Dow opened down & quickly fell 1,089.42 points. That's not a typo, 1,089.42 Only barely did it manage to close above the October 2014 low (15,855), and that only after climbing 588.4 points off the low.

Broken beyond repair.

Note that crash cycles last six to eight weeks. That popping sound y'all hear are just the corks coming out of the jugs -- party is just starting.

Dow fell 588.4 or 3.57% to 15,871.35. S&P500 lost 77.68 or 3.9$% to 1,893.21. Investors had all weekend to stew over Friday's losses & you can bet the sell orders were stacked higher than they hung Haman this morning. Market opened & there just wasn't room for everybody to get through the door at the same time.

Dow in gold fell 3.1% or G$9.10 gold dollars to G$284.23 (13.75 oz), now in shooting distance of the uptrend from the 2011 low. Go look, y'all will seldom see a chart like this,

Dow in silver did nothing because of silver's loss today, but is still broken & destined to fall much further. Ended at S$1,390.27 (1,075.29 troy ounces).

More shocking even that stocks' performance today was the US dollar index Early in the day it simply tanked, falling 248 basis points (2.61%) to a low at 92.62. Ended down only 145 basis points (1.53%) at 93.56. Chart is here,

Dollar index SMASHED its 200 day moving average and only barely closed above the June low (93.30), ending at 93.56.

If this happens in the green tree, what will happen in the dry? This took place IN SPITE OF millions flowing into US Treasuries, witnessed by the 2.78% fall in yields.

Euro rose 1.89% to $1.1604. Who in his right mind would look upon the euro as a "safe haven"? Nuts. Gapped up and over the 200 DMA. Headed higher as surely as the US dollar is headed lower.

Most shocking is the yen, up 3.05%. Gapped clean over its 200 DMA and closed at 84.42. Pushed it up to way overbought on RSI.

This dollar fall presents the today's biggest question. Normally a stock market crash does not take down a national currency. If anything, just the opposite as investors rush to cash for safety. This is a right bad sign.

Gold lost 6.20 (0.53%) to 1476.2while silver fell 53.9 cents (3.5%) to 1476.2.

That sent the ratio up to 78.133, following the pattern of the ratio in 2008. Most obvious explanation is that Gold is catching the flight-to-safety money but silver is not. I'm still trying to fit this together with the dollar's plunge. Look at the chart here,

Plainly I misjudged gold's strength on Friday, and its ability to punch through the resistance from $1,155 to $1,190. Will gold be sucked down with stocks? That's not what the Dow in gold says, but now we have to wonder about silver.

Shades of 2008! Premium on US 90% silver climbed another 45 cents an ounce today, about offsetting the drop in price. During 2008 the premium on all physical silver rose well above 50%. Paper price dropped, but physical refused.

More choices: maybe gold is merely correcting the vertical rally that brought it to the top channel line. About all that's sure is more turmoil. No matter whether silver & gold are pulled down in the maelstrom of stocks crashing, the aftermath will see them soar. Already you are better off to have swapped stocks for either gold OR silver than to have held on to stocks.

Silver's drop today shouldn't surprise us. It ain't gold, after all, but gold's little brother. Still, both today and Friday behaved much the same, with a sudden drop and just as sudden recovery. Toward day's end, however, silver looked tired and began inching down.

White metals were knocked down today. Platinum lost $35.60 (3.45) & palladium crumpled $29.40 (4.9%).

It's a panic. If you've ever lived through a house or forest fire you know what that means, the fear that grips and the confusion what to do next.

All in all, no matter how this panic rolls out, I'd rather be holding silver or gold in my hands than dollars. Call me paranoid. 'Twon't hurt my feelings a-tall. I ain't no more'n a nat'ral born durn fool from Tennessee anyway -- but I didn't own no stocks, remember.

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-Aug-15 Price Change % Change
Gold, $/oz 1,153.40 -6.20 -0.53%
Silver, $/oz 14.76 -0.54 -3.52%
Gold/Silver Ratio 78.133 2.347 3.10%
Silver/Gold Ratio 0.0128 -0.0004 -3.00%
Platinum 990.90 -35.60 -3.47%
Palladium 574.75 -29.40 -4.87%
S&P 500 1,893.21 77.68 4.28%
Dow 15,871.35 -588.40 -3.57%
Dow in GOLD $s 284.45 -8.97 -3.06%
Dow in GOLD oz 13.76 -0.43 -3.06%
Dow in SILVER oz 1,075.15 -0.58 -0.05%
US Dollar Index 93.56 -1.45 -1.53%
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: 1,154.40      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,186.15 1,194.80 1,194.80
1/2 AE 0.50 588.23 608.95 1,217.89
1/4 AE 0.25 297.00 310.25 1,240.98
1/10 AE 0.10 121.11 126.41 1,264.07
Aust. 100 corona 0.98 1,122.49 1,131.49 1,154.35
British sovereign 0.24 273.78 286.78 1,218.28
French 20 franc 0.19 217.14 221.14 1,184.48
Krugerrand 1.00 1,174.02 1,184.02 1,184.02
Maple Leaf 1.00 1,164.40 1,178.40 1,178.40
1/2 Maple Leaf 0.50 663.78 606.06 1,212.12
1/4 Maple Leaf 0.25 294.37 308.80 1,235.21
1/10 Maple Leaf 0.10 122.37 125.83 1,258.30
Mexican 50 peso 1.21 1,384.79 1,395.79 1,157.66
.9999 bar 1.00 1,158.44 1,166.40 1,166.40
SPOT SILVER: 14.75      
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 13,223.93 13,623.93 19.05
US 40% silver 1/2s 0.30 4,158.03 4,308.03 14.60
100 oz .999 bar 100.00 1,499.50 1,524.50 15.25
10 oz .999 bar 10.00 148.95 153.95 15.40
1 oz .999 round 1.00 14.85 15.31 15.31
Am Eagle, 200 oz Min 1.00 16.25 17.75 17.75
SPOT PLATINUM: 990.90      
Plat. Platypus 1.00 1,005.90 1,035.90 1,035.90
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© 2015 Little Mountain Corporation, d.b.a. The Moneychanger. All rights reserved. May not be republished in any form, including electronically, without our express permission.

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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