The Moneychanger
Daily Commentary
Thursday, 14 January a.d. 2016 Browse the commentary archive

A friendly reader from Hamburg in the international shipping trade corrected that Zero Hedge report about no ships between the USA & Europe. The writer checked the wrong website; the seas are not quite empty yet.

However, the greater problem in international shipping is a bubble caused by a world awash in cheap cash. As with all suckers for bubbles, investors thought they knew it all and, armed with cheap borrowed money, saw to it that the market was oversupplied with ships to the choking point.

My friend also implies that the cargo flow of dry bulk commodities remains quite steady. Zero Hedge's report erred and spotlighted the wrong problem. The real one is probably worse.

Given the oversoldness of stocks, a rebound is about now in order, just to work off their present oversold state. Markets are like pendulums (pendula?) swinging back and fort from overbought to oversold. But this analogy fails because there is an OVERALL DIRECTION to those swings that keeps taking a market up or down. Anyway, a rally to relieve oversoldness is not a change of primary trend, although green folks might think it so.

Dow today added 227.64 (1.41%) to 16,379.05. S&P500 beat it with a 31.56 (1.67%) gain to 1,921.84. Dow could rally to 16,800, S&P500 to 1,960. However, this is no more than a rally in the midst of a strong downwave, so don't get caught long. Bear in mind that bear market rallies can be strong as a garlic milkshake, thanks to scared shorts chucking their losing positions overboard. Once they lose that gas, however, they quickly collapse.

US dollar index continues in reluctant uptrend, rushing like a kid going toget a whippin'. It's stepped out into an even sided triangle so far into the nose cone that it must break one way or t'other soon. As it stands above the 20 & 50 day moving averages, up has the odds. Those odds are increased looking at the Yen, which appears to have worn the new off its rally, & to be crawfishing off an extremely overbought cliff. Dropped 0.34% to 84.70. Nor does the euro show any trace of ambition, losing 0.12% to $1.0867. Nasty, nasty fiat currencies, vectors of parasitism and sorry poverty. Pasty white undead corpses, like Vlad Dracula, servants of hell.

Any of y'all keeping up with where I stand on fiat currencies? Any doubt? Before my eyes close in death I pray to see the end of 'em.

Silver & gold whipsawed their friends again today. Gold pitched off its chair & hit the floor, down $13.60 (1.25%) to 1,073.90, near the bottom of the range. Silver toppled 40.8¢ to 1373.4¢.

Understand the problem: a generally sound strategy is to buy near the bottom of an established trading range. Drawback is that the more times that support is tested, more likely it will give way. More'n that, this ain't normal, friends. Go look at this 5 day silver chart, Looks like a mesa in New Mexico. Wednesday up 40¢ at a single bound, today down 40¢ in a single bound. Markets generally don't act that jumpy. Clearly there some magic at 1405¢ that either boosts or cripples silver, which has no stomach for trading in-between there and 1385¢. Passing odd, but I won't pull down the deus ex machina and talk about Nice Government Men hitting the gold market through the silver market in order to keep money panicked out of stocks from flowing into gold. No, I am too much a gentleman to expose their naked undercarriage that way, even though no less than the Wall Street Journal itself chronicled that in its December 1987 report on how the Fed & the yankee government handled the 1987 stock market collapse. No, sir, I won't bring up old crimes like that.

Rather, I could just attribute it to a thin market and stop orders clustered at the same place, as they were apparently clustered around $1,080 in gold today.

Then I backed off the silver & gold charts and took a longer view. Go back to June, and from June through September (for silver) or October (for gold), there appears a great dip and return rise. Then another deeper dip begins & scrapes bottom across November & December. If silver & gold are trying to reverse, then this pattern would answer: an upside-down head & shoulders. That also means they can't trade below the recent lows, $1,045.40 for gold & 1362¢ for silver. Right underneath both is the bottom of a falling wedge a-forming since 2013, which ought also support them. Here, I've marked it out on charts at and

Whatever the next move, I am patient. Those folks who listened to a wild-eyed nat'ral born durned fool from Tennessee back in 1998 - 2002 and sold stocks for silver & gold are sitting still on gains large enough to compensate for the pain of the last 4-1/2 years. Not satisfying to the nervous soul, but to the calm a balm.

On 14 January 1914 Henry Ford introduced an assembly line for the Model T Ford automobile. His production methods would revolutionize industrial process.

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
14-Jan-16 Price Change % Change
Gold, $/oz 1,073.90 -13.60 -1.25%
Silver, $/oz 13.74 -0.41 -2.88%
Gold/Silver Ratio 78.176 1.293 1.68%
Silver/Gold Ratio 0.0128 -0.0002 -1.65%
Platinum 834.00 -16.20 -1.91%
Palladium 419.15 4.60 1.11%
S&P 500 1,921.84 31.56 1.67%
Dow 16,379.05 227.64 1.41%
Dow in GOLD $s 315.28 8.27 2.69%
Dow in GOLD oz 15.25 0.40 2.69%
Dow in SILVER oz 1,192.33 50.49 4.42%
US Dollar Index 99.13 0.15 0.15%
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: 1,078.60      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,109.88 1,122.82 1,122.82
1/2 AE 0.50 549.58 568.96 1,137.92
1/4 AE 0.25 277.48 289.87 1,159.50
1/10 AE 0.10 113.15 118.11 1,181.07
Aust. 100 corona 0.98 1,051.96 1,060.96 1,082.39
British sovereign 0.24 255.81 268.81 1,141.91
French 20 franc 0.19 202.88 206.88 1,108.11
Krugerrand 1.00 1,094.78 1,104.78 1,104.78
Maple Leaf 1.00 1,088.60 1,102.60 1,102.60
1/2 Maple Leaf 0.50 620.20 566.27 1,132.53
1/4 Maple Leaf 0.25 275.04 288.53 1,154.10
1/10 Maple Leaf 0.10 114.33 117.57 1,175.67
Mexican 50 peso 1.21 1,289.96 1,300.96 1,079.01
.9999 bar 1.00 1,082.38 1,090.60 1,090.60
SPOT SILVER: 13.81      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 22.50 26.00 33.99
VG+ Peace dollar 0.77 17.50 20.00 26.14
90% silver coin bags 0.72 11,375.65 11,733.15 16.41
US 40% silver 1/2s 0.30 3,955.95 4,117.95 13.96
100 oz .999 bar 100.00 1,406.00 1,431.00 14.31
10 oz .999 bar 10.00 139.60 144.60 14.46
1 oz .999 round 1.00 13.91 14.37 14.37
Am Eagle, 200 oz Min 1.00 15.31 16.56 16.56
SPOT PLATINUM: 834.00      
Plat. Platypus 1.00 849.00 879.00 879.00
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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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