The Moneychanger
Daily Commentary
Wednesday, 18 November a.d. 2015 Browse the commentary archive

Sorry I missed y'all yesterday, but I had to take my wife & son to a movie & supper. It was the last day to see "Bridge of Spies," which is an extremely engaging movie. Had shots of the Berlin Wall in 1960. When I was studying there in 1972-73 the East Germans had to install electric eyes to control the machine guns because the guards couldn't be trusted to shoot every time.

I miss communism almost as bad as I miss cholera.

Heaping insult on injury, now I have to live under central bank communism.

Markets were gassed again today by the hot & fetid breath of the Fed. October FOMC minutes were released showing a "solid core of officials rallied behind a possible December rate hike," according to Reuters. Markets overlooked that the FOMC criminals also debated whether the US economy's long term potential has permanently shifted lower. How's that for optimism?

But bulls hear what they want, and what they heard is -- I reckon -- that the Fed is bent on raising rates, so that must mean the economy is improving. Surprising reasoning, since the Fed raising rates historically drives the stock market lower. You! Logic! Shut up & sit down!

Without trying to make sense out of all that, note that the Dow rose 247.66 or 1.42% to 17,737.16. S&P500 jumped 33.14 (1.62%) to 2,083.58. As that places both indices above their 20 & 200 day moving averages, expect higher prices.

This doesn't change my persuasion that the stock market topped in May.

Today did post new highs in the Dow in Gold and Dow in Silver. Dow in gold hit 16.60 troy ounces versus July's high for the post-2011 low at 16.50 oz. Dow in silver closed 1,259.65 troy ounces versus July's 1,236.37. Without time passing there's no way to judge whether these are double tops or beginning of another advance, in which case the Christmas goose & I have something in common.

US dollar index, terrorist of scurvy fiat currencies, fell two basis points today. That does nothing to interrupt its present uptrend. All hail the Fed, Masters of the Universe, extraordinary economagicians!

In Europe, where they can't grow as robust a strain of central bankers, the euro rose 0.14% to a failing $1.0660. On its way to 90 cents? Yen fell 0.16% to 80.81. It's broken, too.

In a flurry of high stakes trading gold rose a superheated ten cents today to close Comex at $1,068.80. Silver lost nine cents to close at 1408c. Hot.

Silver's 23.5 cent range today took it to a high at 1422c and a low at 1398.5c. Fifteen down days running, and counting. Way oversold.

Gold hit $1,062.00 today, another post 2011 low, lower than the July low, but still refusing to break down. Only thing wondersome here is why gold & silver won't break down.

Here's a theory. Look at this chart, Other than showing gold extremely oversold (look at the RSI up top), it shows a falling wedge formed since 2013. Gold is right now tickling the bottom boundary of that wedge. If it falls through, it will fall a long way. Moving averages are line up bearishly, so to reverse gold needs to climb above those first. Also, it would be helpful if it stopped falling.

Probably not coincidentally, silver hath also traced out a 2-3/4 year falling wedge, even wedgier than gold's, Silver has not yet reached that wedge's bottom boundary, which appears to me to stand today around 1350c. Silver's in the selfsame case as gold. Either turn around & prove it by conquering those moving averages above, or fall though that line till the mud stops you.

Both metals are oversold and edging down on dropping volume. However, both are also locked in a 4-1/4 year downtrend.

I never saw two markets need PROOF so bad, proof they intend to turn around. I think they will, and I think it will happen here in November. But I still want proof.

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
18-Nov-15 Price Change % Change
Gold, $/oz 1,068.80 10.00 0.94%
Silver, $/oz 14.08 -0.09 -0.64%
Gold/Silver Ratio 75.909 1.188 1.59%
Silver/Gold Ratio 0.0132 -0.0002 -1.56%
Platinum 847.50 -7.10 -0.83%
Palladium 531.85 -14.45 -2.65%
S&P 500 2,083.58 33.14 1.62%
Dow 17,737.16 247.66 1.42%
Dow in GOLD $s 343.06 1.60 0.47%
Dow in GOLD oz 16.60 0.08 0.47%
Dow in SILVER oz 1,259.74 25.48 2.06%
US Dollar Index 99.68 -0.02 -0.02%
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: 1,069.50      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,099.45 1,106.93 1,106.93
1/2 AE 0.50 544.94 564.16 1,128.32
1/4 AE 0.25 275.14 287.43 1,149.71
1/10 AE 0.10 112.19 117.11 1,171.10
Aust. 100 corona 0.98 1,039.94 1,048.94 1,070.13
British sovereign 0.24 253.65 266.65 1,132.75
French 20 franc 0.19 201.17 205.17 1,098.95
Krugerrand 1.00 1,085.54 1,095.54 1,095.54
Maple Leaf 1.00 1,079.50 1,093.50 1,093.50
1/2 Maple Leaf 0.50 614.96 561.49 1,122.98
1/4 Maple Leaf 0.25 272.72 286.09 1,144.37
1/10 Maple Leaf 0.10 113.37 116.58 1,165.76
Mexican 50 peso 1.21 1,281.65 1,292.65 1,072.12
.9999 bar 1.00 1,073.24 1,081.50 1,081.50
SPOT SILVER: 14.13      
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 11,743.88 12,173.88 17.03
US 40% silver 1/2s 0.30 3,975.13 4,125.13 13.98
100 oz .999 bar 100.00 1,437.50 1,462.50 14.63
10 oz .999 bar 10.00 142.75 147.75 14.78
1 oz .999 round 1.00 14.23 14.69 14.69
Am Eagle, 200 oz Min 1.00 15.63 16.88 16.88
SPOT PLATINUM: 847.50      
Plat. Platypus 1.00 862.50 892.50 892.50
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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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