The Moneychanger
Weekly Commentary
Friday, 9 October a.d. 2015 Browse the commentary archive
Here's the weekly scorecard:
  2-Oct-15 9-Oct-15 Change % Change
Silver, cents/oz. 1,525.70 1,580.90 55.20 3.6
Gold, dollars/oz. 1,137.10 1,156.30 19.20 1.7
Gold/silver ratio 74.530 73.142 -1.388 -1.9
Silver/gold ratio 0.0134 0.0137 0.0003 1.9
Dow in Gold Dollars (DIG$) 299.46 305.43 5.97 2.0
Dow in gold ounces 14.49 14.78 0.29 2.0
Dow in Silver ounces 1,079.66 1,080.68 1.02 0.1
Dow Industrials 16,472.37 17,084.49 612.12 3.7
S&P500 1,951.36 2,014.89 63.53 3.3
US dollar index 96.33 94.88 -1.45 -1.5
Platinum 907.30 979.50 72.20 8.0
Palladium 697.60 706.80 9.20 1.3

Healthy week for silver with a 3.6% gain, and for gold with 1.7%. Dollar index seems finally to be signalling its direction, and that earthward. Stocks rallied this week, an impressive 3.7% & 3.3% bear market rally, but a bear market rally still. Look at that Platinum, up 8% in one week!

BOOM! Pfssst! BOOM! Pfssst! That's the Fed's blarney cannon, firing as fast as it can. Fed sent out two shills today, NY FedPres. William Dudley and Atlanta FedPres Dennis Lockhart. Both of 'em said, Sure, right-o, yes-indeedy, we are a-gonna raise rates here soon, maybe in December, but it may be in 2016, or even 2020, or by 2030 for sure. Interpret all this as frantic Fed efforts to recapture their credibility, which escaped forever when they failed to raise rates in September.

Let us then try to pierce the persiflage to see what markets are doing.

Most eyecatching today was the US dollar index, which tanked 52 basis points (0.55%) to 94.88, below everything: 95.50 support, all three moving averages, & the lower boundary of a potentially fatal rising wedge. Go look at this chart, Doesn't that two day fall look like it's spilling out of a leak in that rising wedge? No indication dollar under its own power can do anyhting save fall, but of course the Nice Govenrment Men might step in any time to prop it up. It's nature, though, is to declare gravity triumphant.

Yen fell 0.25% to 83.18. Euro appears -- appears, I say -- to have broken out upward. Even showed a slight gap up. Rose 0.71% to $1.1358. Given Europe's worse economy than the US and ongoing QE to inflate its currency, why would anybody buy them nasty euros?

Stocks have run out of steam in another rising wedge. That's what rising wedges portray, a move running out of gas. Dow added 33.74 (0.2%) while the S&P500 gained 2.15 (0.18%) to close at 2,014.89. It was an indecisive day, reversing trend five times, and underwater at 2:30. But "somebody" opened a can of spinach & fed it to stocks about 2:30 so they ended the day higher. Was it real, or Memorex, or Popeye? Mercy, I don't know.

I do suspect, however, that today marks the limit of that upward move, which will be followed by a markedly swifter & stronger downward move.

Dow in Gold fell 1.31% to 14.78 troy ounces today, below the 200 & 50 day moving averages, so headed firmly down. Once it passes that last low at 14.05 oz its downwardness will wax swiftly.

Dow in silver fell 0.78% today to 1,079.93 troy ounces. Momentum is downhill.

Here's a shocking contradiction to that deflation story the central banks have been trying to sell. Reuters reported this morning that in the wake of Glencore's output cuts, metals rallied wildly: Zinc up 12%, lead up 9%, Copper 2.9% higher, aluminum up 3.5%, nickel up 3.1% and tin 1.3% higher. Although West Texas Intermediate Crude fell 3.6% to $49.49 today, it has broken out of a pennant and today touched its 200 DMA. Wants to rise, rise after a double bottom, March & August. Copper has a double bottom, too.

Gold at last joined the party, shooting up $11.60 (1%) to $1,156.30, finally above $1,150. Silver inched u 4.9 cents (0.3%) to 1580.9c.

Gold simply climbed all day long, 45 degree angle. And once it got up there it held on. Here's a five month chart,

On that chart y'all can see that gold's last intraday high was $1,169.80, & that the 200 day moving average lies above at $1,176.48. Gold needs to break down that $1,170 - $1,177 barrier. That can happen crazy fast, and shoot gold through $1,200.

Silver had handed the baton over to gold, after running out in front so long. It tried to cross 1600c, but couldn't hold on up there. What is silver dealing with here? Breaking thorugh that 200 day moving averrage (1596c today). Once it conquers that level, next real resistance doesn't appear until 1778c.

That outrageously high premium on US 90% silver coin has backed down this week, down to $2.75/ounce from $3.80/oz. However, supply is still very tight for newly produced silver rounds and 100 ounce bars, with delivery delays of 4 - 6 weeks. If that 90% coin premium reaches $4.00/oz again, swap 90% for bars.

Next week promises to be a wild one for silver & gold.

Y'all enjoy your weekend.

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
9-Oct-15 Price Change % Change
Gold, $/oz 1,156.30 11.60 1.0
Silver, $/oz 15.81 0.05 0.3
Gold/Silver Ratio 73.142 0.732 1.0
Silver/Gold Ratio 0.0137 0.0000 0.3
Platinum 979.50 26.20 2.7
Palladium 706.80 5.00 0.7
S&P 500 2,014.89 2.11 0.1
Dow 17,084.49 33.74 0.2
Dow in GOLD $s 305.43 -2.45 -0.8
Dow in GOLD oz 14.78 -0.12 -0.8
Dow in SILVER oz 1,080.68 -1.22 -0.1
US Dollar Index 95.40 -0.18 -0.2
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: 1,157.20      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,189.60 1,197.70 1,197.70
1/2 AE 0.50 589.66 610.42 1,220.85
1/4 AE 0.25 297.72 311.00 1,243.99
1/10 AE 0.10 121.40 126.71 1,267.13
Aust. 100 corona 0.98 1,128.62 1,137.62 1,160.60
British sovereign 0.24 274.45 287.45 1,221.10
French 20 franc 0.19 217.67 221.67 1,187.30
Krugerrand 1.00 1,178.03 1,188.03 1,188.03
Maple Leaf 1.00 1,167.20 1,181.20 1,181.20
1/2 Maple Leaf 0.50 665.39 607.53 1,215.06
1/4 Maple Leaf 0.25 295.09 309.55 1,238.20
1/10 Maple Leaf 0.10 122.66 126.13 1,261.35
Mexican 50 peso 1.21 1,385.35 1,396.35 1,158.13
.9999 bar 1.00 1,161.25 1,169.20 1,169.20
SPOT SILVER: 15.86      
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 13,306.15 14,021.15 19.61
US 40% silver 1/2s 0.30 4,486.95 4,736.95 16.06
100 oz .999 bar 100.00 1,611.00 1,636.00 16.36
10 oz .999 bar 10.00 160.10 165.10 16.51
1 oz .999 round 1.00 15.96 16.42 16.42
Am Eagle, 200 oz Min 1.00 17.36 18.86 18.86
SPOT PLATINUM: 979.50      
Platinum Platypus 1.00 994.50 1,024.50 1,024.50
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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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