The Moneychanger
Daily Commentary
Thursday, 29 October a.d. 2015 Browse the commentary archive

I've been flipping through these charts & I feel like I've been sortin' wildcats without a shirt on. If I ever had anything good to say about the Federal Reserve or the FOMC, a cosmic unlikelihood, I am plumb used up on 'em now.

The FOMC blew smoke again, and markets bought it. It's either luck or a pact with the devil, I'll let y'all figure out which, cause I don't believe in luck. They sang the same We're Gonna Raise Rates Someday tune again, and markets bought it. To those whose head is not addled by fumes from a mountain fruit jar, clearly those knotheads fear to raise rates the way a slow snake fears a sharp hoe. But never mind, the party's on again, after only six weeks of bear market worry, & stocks are a-chargin'.

Yesterday stocks wavered, dropped below unchanged after the FOMC blathered, then reverse rocketed up 198.09 (1.13%) to 17,755.80. S&P500 did the same, adding 24.46 (1.18%) to 2,090.35. Today stocks backed off. Dow gave back 23.72 (0.13%) to 17,755.80 & S&P lost 0.94 (0.4%) to 2,089.41.

Whether it makes fundamental economic sense or not, stocks have risen high enough to call into question the lethality & permanence of the August break. They have climbed back above the 200 day moving average and risen to challenge the upside-down bowl topping formation. See charts at and

If they break through that bowl, then the August break was only a correction & not the beginning of a trend change. The Fed will have managed to delay the rout, but not forever.

The alternative is to believe that they really are Masters of the Universe, they really can blow bubbles up and when they explode bail out their cronies without consequences to the economy, & that an economy can be limitlessly abused by credit creation & malinvestment without any chickens ever coming home to roost. Shucks, it's a brave new world, ain't it?

Upon the FOMC's announcement the US dollar index jumped 87 basis points (0.9%) to 97.86. Since the US dollar is gold's chief competitor, that ain't good for gold. With that jump the dollar pierced the downtrend line from the March high. Today it touched back to that line, but that's normal. Chart's here,

Assuming the dollar confirms this rise by closing above the last high at 98.43, y'all can expect the dollar to continue the rise it began in July 2014, targetting roughly 108.

Gold & silver closed strongly higher yesterday before the FOMC announcement. Gold gained $8.20 to 1,177.10 & silver 43 cents to 1628.8c. That don't near about tell the story, though. On the end of day chart you can see that gold ended at 1,155.70 and silver at 1594c. That move into new high ground with a lower close on the day is the first half of a key reversal. Second half came today with lower closes still. Gold lost 2.6% or $29.80 to $1,147.20. Silver fell 4.6% or 74.4 cents to 1554.4c.

Today's close finally finished erasing gold's October gains by falling below $1,150 again. If it continues to fall the uptrend line from July is the most obvious target, about $1,120.

Y'all know that when you have been thoroughly whipped, it's hard to catch your breath and turn around and fight. So when a market has disappointed you, you tend to extend the move all the way out into the future forever, world without end. Well, hang on. Gold's low today marks a 50% retracement of the move that began on 1 October. Commitments of Traders reports for gold and silver are, it's true, not optimistic. But stocks have now reached overbought on their RSI and the dollar index is only a gnat's whisker from the same. Maybe those moves have reached their upper limit, while metals have reached their lower limit.

Back to silver. Silver did not quite post a key reversal, because it closed higher on Wednesday. Today of course it plunged back to that old 1550-1560c level we know so well, support for 8 months until it was broken in July.

Silver needs to turn around here, or all that trading through October looks like a top. If it catches no traction here, it could fall to 1500c again, where the uptrend from August now stands.

Looking at these charts, as I said, leaves me feeling like I've been sortin' wildcats. Unless silver & gold can immediately reverse upward AND exceed recently posted peaks, they will keep falling.

On 29 October 1945 the first ballpoint pens went on sale at Gimbel's in New York for $12.50 each ($165.24 in 2015 dollars). The difference between socialism and freedom is the price of that ballpoint in 1945 and today. If the government were manufacturing them, they'd still cost $12.50 each.

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
29-Oct-15 Price Change % Change
Gold, $/oz 1,147.20 -29.80 -2.53%
Silver, $/oz 15.54 -0.74 -4.57%
Gold/Silver Ratio 73.803 1.542 2.13%
Silver/Gold Ratio 0.0135 -0.0003 -2.09%
Platinum 991.80 -19.20 -1.90%
Palladium 670.60 -15.00 -2.19%
S&P 500 2,089.41 -0.94 -0.04%
Dow 17,755.80 -23.72 -0.13%
Dow in GOLD $s 319.95 7.68 2.46%
Dow in GOLD oz 15.48 0.37 2.46%
Dow in SILVER oz 1,142.29 50.72 4.65%
US Dollar Index 97.35 -0.52 -0.53%
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SPOT GOLD: 1,146.50      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,175.16 1,186.63 1,186.63
1/2 AE 0.50 584.21 604.78 1,209.56
1/4 AE 0.25 294.97 308.12 1,232.49
1/10 AE 0.10 120.28 125.54 1,255.42
Aust. 100 corona 0.98 1,115.93 1,124.93 1,147.66
British sovereign 0.24 271.91 277.91 1,180.59
French 20 franc 0.19 215.66 219.66 1,176.52
Krugerrand 1.00 1,159.11 1,169.11 1,169.11
Maple Leaf 1.00 1,156.50 1,170.50 1,170.50
1/2 Maple Leaf 0.50 659.24 601.91 1,203.83
1/4 Maple Leaf 0.25 292.36 306.69 1,226.76
1/10 Maple Leaf 0.10 121.53 124.97 1,249.69
Mexican 50 peso 1.21 1,373.93 1,384.93 1,148.65
.9999 bar 1.00 1,150.51 1,158.50 1,158.50
SPOT SILVER: 15.57      
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 12,344.48 12,773.48 17.87
US 40% silver 1/2s 0.30 4,399.93 4,649.93 15.76
100 oz .999 bar 100.00 1,581.50 1,606.50 16.07
10 oz .999 bar 10.00 157.15 162.15 16.22
1 oz .999 round 1.00 15.67 16.13 16.13
Am Eagle, 200 oz Min 1.00 17.07 18.57 18.57
SPOT PLATINUM: 991.80      
Plat. Platypus 1.00 1,006.80 1,036.80 1,036.80
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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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