The Moneychanger
Daily Commentary
Thursday, 8 October a.d. 2015 Browse the commentary archive

Did y'all hear about the drunk that came out of a tavern walking home one cold January night? Passing through a graveyard, he fell into a freshly dug grave. He hollered himself hoarse, but nobody could hear him. Finally another drunk left the tavern and heard him hollering. He walked up to the edge of the grave and the first drunk yelled up to him, "Help me! I'm freezing to death down here!"

"Why, no wonder," said the second drunk, "You done kicked off all your dirt!"

Today's markets:

'Tain't ever easy. Markets like to torture you. Bull market wants to shake off all riders, bear markets want to maul everybody. Just got to live with the annoyances.

Take today, for instance. Stocks shot up and the Dow passed, by a smidgen, its September rebound high (17,050.75 against 16,739.95). Why, if this was your first picture show that'd be liable to scare you out of your seat. But then you glance at the news & see the Fed Open Market Committee released minutes (surely not doctored!!) of its last meeting, the one where it blinked & swallered but didn't raise no interest rates. Turns out the Fed geniuses sounded plumb scairt to raise rates, maybe even till some time in 2016, the later the better suits them.

That news came out at 12:30, and right then stocks, which had been underwater, shot up at the thought of another six months of Fed subsidy. Now that might make stock prices rise -- today -- but that don't make them no more valuable. So you might want to factor that in while you're watching the stock market. If stocks need cheap tricks like that to rise, well, they ain't just prime healthy.

Dow rose 138.46 (0.82%) to 17,050.75 while the S&P500 added 17.6 (0.88%) to 2,013.43. Just like a nat'ral born durn fool climbing out on a limb with a saw in hand, I'm gonna say here that either today or tomorrow will mark the top of stock's rise.

Maybe that US dollar index is even sicker that I give it credit for. Dropped 17 basis points (0.18%) to 95.41 -- was as low as 95.04 at one point. Hath now fallen through the support at 94.50.

More, I am bold to say that I believe there hath formed a rising wedge on that US dollar index chart, and today it punctured the bottom boundary. If so, that whispers that the dollar's parachute is about to fail to open. Chart's at

Euro rose 0.31% to $1.1272. It's above its 20 DMA, and has broken out of the very tip of an even-sided triangle, but sure doesn't seem in any hurry to rise. Yen rose 0.09% to 83.39. Chart looks much the same as the euro, breaking out upside from an even sided triangle, but with no take-off. Look here,

US treasury 10 year note yield rose today, but why, with the FOMC minutes showing confusion & reluctance to raise rates? Because the dollar fell. I reckon.

Y'all remember that a few days ago Catalonia voted in a kind of straw plebiscite to secede from Spain? Well, now maybe Bavaria is thinking about seceding from Germany. Bavaria used to be a kingdom of its own. 'Pears they don't fancy being the dumping ground for all those migrants. Bavaria's premier says it might send refugees back to Austria. Somebody's gonna lose this shovin' match.

West Texas Intermediate Crude oil rose 2.7% today to $49.43 a barrel. Has broken out of a pennant and is heading for the 200 DMA at $51.06. Copper looks to have double bottomed. That's about right -- just about the time the deflation scare reaches its peak, commodity markets, which have been battered for a year, turn up, signalling the inflation to come.

Gold backed off $4.30 (0.3%) on Comex to close $1,144.70. Silver coughed up 32.8 cents (2%) to 1576c.

Yesterday they looked awfully tired ("tard", we say), so this little dip shouldn't surprise anyone.

Right about 9:45 this morning somebody -- who I don't know -- commenced selling a lot of silver, & then gold. That drove them down to the day's lows (1543.5c & $1,137.40) but by noon they had fully recovered. Not even the FOMC minutes bothered 'em at noon-thirty, then about 4:00 both shot up, then fell back. Right now trading at $1,139.20 & 1572c. All in all silver & gold showed themselves pretty stout.

Gold's first target here is getting above $1,156.40, that last (September) high. Once through that it will jump sure enough. 200 DMA stands only $23 higher at $1,176.59. A breach of that mark will make gold much more technically attractive. About that same place gold will meet the downtrend line from October 2012, which it hasn't been able to beat for 3 years. Punching that won't hurt gold a bit. That ain't plainspoken, is it? I mean both (1) that will attract buyers, & (2) it won't strain gold at all, it has plenty of strength for that.

Silver fulfilled my expectation for a correction today with that 1543c low, but I will extend that to 1523c, a 50% correction of the foregoing move. I also would not be surprised if silver jumped up tomorrow. Something's going on behind the curtains that we can't see, some trouble brewing that's dragging that US dollar index down and pushing silver & gold up hard. Maybe it's Deutsche Bank in trouble, maybe Glencore, maybe something else we peons can't see, but we can see its roiling markets, like wind stirring the treetops.

All is not well in central banking land, or in the mighty welfare-warfare economy.

On 8 October 1856 the Second Opium War (Anglo-Chinese War) began with an incident on the Pearl River. For some reason Imperial China didn't want all that opium being grown in British India to be dumped on its shores, but the English & New England opium merchants had to dump it somewhere, didn't they?

On 8 October 1918 Tennessee Sergeant Alvin York singlehandedly killed 25 German soldiers and captured 132. A little Tennessee goes a long way.

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
8-Oct-15 Price Change % Change
Gold, $/oz 1,144.70 -4.30 -0.37%
Silver, $/oz 15.76 -0.33 -2.04%
Gold/Silver Ratio 72.633 1.214 1.70%
Silver/Gold Ratio 0.0138 -0.0002 -1.67%
Platinum 953.30 8.80 0.93%
Palladium 701.80 3.65 0.52%
S&P 500 2,013.43 17.10 0.86%
Dow 17,050.75 138.46 0.82%
Dow in GOLD $s 307.91 3.64 1.20%
Dow in GOLD oz 14.90 0.18 1.20%
Dow in SILVER oz 1,081.90 30.66 2.92%
US Dollar Index 95.40 -0.18 -0.19%
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: 1,139.20      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,171.10 1,179.07 1,179.07
1/2 AE 0.50 580.48 600.93 1,201.86
1/4 AE 0.25 293.09 306.16 1,224.64
1/10 AE 0.10 119.51 124.74 1,247.42
Aust. 100 corona 0.98 1,111.06 1,120.06 1,142.69
British sovereign 0.24 270.18 283.18 1,202.97
French 20 franc 0.19 214.28 218.28 1,169.17
Krugerrand 1.00 1,159.71 1,169.71 1,169.71
Maple Leaf 1.00 1,149.20 1,163.20 1,163.20
1/2 Maple Leaf 0.50 655.04 598.08 1,196.16
1/4 Maple Leaf 0.25 290.50 304.74 1,218.94
1/10 Maple Leaf 0.10 120.76 124.17 1,241.73
Mexican 50 peso 1.21 1,363.81 1,374.81 1,140.26
.9999 bar 1.00 1,143.19 1,151.20 1,151.20
SPOT SILVER: 15.72      
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 13,384.80 14,242.30 19.92
US 40% silver 1/2s 0.30 4,445.65 4,695.65 15.92
100 oz .999 bar 100.00 1,597.00 1,622.00 16.22
10 oz .999 bar 10.00 158.70 163.70 16.37
1 oz .999 round 1.00 15.82 16.28 16.28
Am Eagle, 200 oz Min 1.00 17.22 18.72 18.72
SPOT PLATINUM: 953.30      
Plat. Platypus 1.00 968.30 998.30 998.30
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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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