The Moneychanger
Daily Commentary
Monday, 28 September a.d. 2015 Browse the commentary archive

You have to wonder what sort of lunacy the Federal Reserve is pursuing. They're firing the blarney cannon till it's glowing red hot. Yellen spoke last Thursday dribbling about raising interest rates later in the year, trying to re-capture the Fed's lost credibility, I reckon. Today New York Fed Chairman Wm Dudley spoke in the morning, Chicago Chairman Charles Evans this afternoon, & this evening John Williams of the San Francisco Fed will speak. Nine more are scheduled for this week, including Yellen again. It's a blarney blitzkrieg.

I'm having trouble graspin' what they are doing. At first I thought they might be trying to talk the dollar up, but if so it didn't work today. Are they determined to tank stocks? Two out of three who spoke today leaned toward raising rates. Are they trying to talk the rate rise graveyard dead, so everybody will get so plumb dog-tired of hearing them natter & drool about it they'll accept anything, just don't torture us anymore driveling about interest rates!

Well, I'm just a nat'ral born durn fool from Tennessee, and can't imagine what them biggety central bankers might be thinking. But you know, you can sometimes overthink your enemy. I mean, you can puzzle and puzzle about what your enemy is plotting, and in the end he ain't plotting a durned thing: he's jes' stupid as a ball-peen hammer. Course, it's always unwise & perilous to assume your enemy's stupid until you have eliminated all other possibilities. In the Fed's case, that might be easy, though.

Today's markets:

US dollar index, as I suspected, fell back through its 50 day moving average. Lost 23 basis points (0.24%) today to 96.20. This beating doesn't satisfy me atall. I want to see it below 96 and the 20 DMA (now 95.81) again. Then if it sinks like a double-bitted axe in a cow pond, I won't care a bit. Dollar index is presently pointed up, but tenuously and indifferently.

Mercy, ain't y'all glad you didn't own stocks today! Dow fell 312.78 (1.92%) to 16,001.89, and it 'bout ruptured disks in the Nice Government Men's backs to get it to close that 1.89 above 16,000. What WILL they do tomorrow? Chart:

S&P500 fared worse than the Dow, vomiting up 49.57 (2.57%) to 1,881.77. It looks far sicker than the Dow. Below 1,867 panic take over. Look:

Silver & gold were walking down the street doing fine, arm in arm, about 3:00 a.m. New York time when somebody dropped a piano on their heads. Between then and 10:00, gold fell as low at 1,127.30 & silver to 1460c. Silver later reached 1447c.

On Comex gold dropped $14 or 1.2% and closed $1,132.00. Silver lost a mouth-lolling 56.8 cents (3.8%) to 1453.8c. What happened? (I will forbear spinning an answer out of "conspiracy to suppress," but that notion sure does pop quickly to mind.)

The dollar index was actually falling at 3:00 a.m., but after 6:00 began rising to its high for the day about 9:00 a.m. After that it fell as straight as silver & gold, dropping to an 11:30 low at 95.90. Oddly enough, that big dollar drop doesn't really damage the chart. It stopped above the 20 DMA, and it was, after all, at the downtrend line from the January high. Uptrend, however remains intact. Go look at the chart,

Silver doesn't look as nice. Today's big fall sliced through the 50 & 20 DMAs (1491 & 1475), but stopped within the 1425 - 1495c range that has trapped silver since July. Believe it or not, silver has put in a series of higher highs & higher lows since the August low, and that still defines an uptrend. Today silver hit that uptrend line. Trouble for silver comes with a break below 1425c. Otherwise, it's okay.

Now step back from those charts and look. Both metals are coiling up in even-sided triangles, coiling for a breakout. Trouble is, and even-sided triangle doesn't tell us which way they will break out, only that they will.

On 28 September William the Conqueror, a.k.a. William the Bastard, invaded England, trying to make good his claim to the English throne. If he had lost at Hastings a little later, the English language would be far, far different. You'd eat swine-chops instead of pork chops, cowroast instead of beef, sheep instead of mutton, and you'd probably drink a lot more ale instead of that hoity-toity wine.

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
28-Sep-15 Price Change % Change
Gold, $/oz 1,132.00 -14.00 -1.22%
Silver, $/oz 14.54 -0.57 -3.76%
Gold/Silver Ratio 77.865 2.001 2.64%
Silver/Gold Ratio 0.0128 -0.0003 -2.57%
Platinum 926.10 -25.10 -2.64%
Palladium 651.25 -16.30 -2.44%
S&P 500 1,881.77 -49.57 -2.57%
Dow 16,001.89 -312.78 -1.92%
Dow in GOLD $s 292.22 -2.07 -0.70%
Dow in GOLD oz 14.14 -0.10 -0.70%
Dow in SILVER oz 1,100.69 20.68 1.91%
US Dollar Index 96.20 -0.23 -0.24%
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: 1,132.90      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,163.49 1,172.55 1,172.55
1/2 AE 0.50 577.27 597.60 1,195.21
1/4 AE 0.25 291.46 304.47 1,217.87
1/10 AE 0.10 118.85 124.05 1,240.53
Aust. 100 corona 0.98 1,103.81 1,112.81 1,135.28
British sovereign 0.24 268.68 281.68 1,196.62
French 20 franc 0.19 213.10 217.10 1,162.82
Krugerrand 1.00 1,151.03 1,161.03 1,161.03
Maple Leaf 1.00 1,142.90 1,156.90 1,156.90
1/2 Maple Leaf 0.50 651.42 594.77 1,189.55
1/4 Maple Leaf 0.25 288.89 303.05 1,212.20
1/10 Maple Leaf 0.10 120.09 123.49 1,234.86
Mexican 50 peso 1.21 1,356.26 1,367.26 1,134.00
.9999 bar 1.00 1,136.87 1,144.90 1,144.90
SPOT SILVER: 14.56      
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 13,270.40 13,627.90 19.06
US 40% silver 1/2s 0.30 4,103.45 4,353.45 14.76
100 oz .999 bar 100.00 1,481.00 1,506.00 15.06
10 oz .999 bar 10.00 147.10 152.10 15.21
1 oz .999 round 1.00 14.66 15.12 15.12
Am Eagle, 200 oz Min 1.00 16.06 17.56 17.56
SPOT PLATINUM: 926.10      
Plat. Platypus 1.00 941.10 971.10 971.10
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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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