The Moneychanger
Daily Commentary
Monday, 1 February a.d. 2016 Browse the commentary archive

Today offers an example of what I try to tell people about governments manipulating markets. If they're all manipulated, they complain, why even try to figure out where they're headed?

Because the manipulation never works for long. They can only manipulate at the margin, & that doesn't last.

Case in point: on Friday (always before a weekend) the Bank of Japan threw a surprise party by announcing a 0.1% interest rate reduction, taking Nipponese interest rates into negative territory. Yes, that means the central bank will CHARGE banks to hold balances.

We need not delve into the moronic Keynesianism behind this move, we need only observe that stocks jumped worldwide. The dollar, facing a huge interest rate advantage over the yen, leapt a massive 102 basis points while the yen (I warned y'all the Japanese Nice Government Men would have to do something about that rally) gapped down 160 basis points or 1.35%. Stocks were jumping over the prospect of more central bank money creation, implied in the BoJ move.

Leave aside the presupposition that the BoJ always works in concert with the Fed, which would make the timing at January's end perfect, raising stocks' performance at months' end. Can't prove that, only suspect.

Several decisive & far reaching events appeared:

1. In the face of a madly rising dollar and buying panic in stocks, silver & gold never wavered but held firm. Magnificent showing, stout & brave.

Note & miss not that NEGATIVE interest rates means that the old argument against silver & gold -- they pay no interest -- no longer holds. Negative interest rates mean that you have to PAY to hold cash or government bonds, while holding silver or gold costs nothing. Think long & hard on that. Long & hard.

2. Today the US dollar index sank 0.67% to 98.98, leaving behind another failed attempt to get through 100.04. It also closed BELOW the 50 DMA (98.87). More, it has on Wednesday & Thursday broken down from a rising wedge, but on Friday jumped up into the wedge's middle. Today it gave up all that and fell out again. All this stinks of blubbering weakness, but that needs confirming by a dollar index close below 98.45, and then 97.20.

3. Stocks' hop up merely cannibalized or advanced in time the peak of the reaction rally. Dow reached a high at 16,466 & S&P500 1,940, both near my rally targets of 16,600 and 1,950. Yes, stocks can still move a little higher, to 17,000 and 2,000, but the BoJ's gamble did no more than drive them a little faster than otherwise. Wait and see.

TODAY the Dow backed off 17.12 (0.1%) to 16,449.18. S&P500 crawfished 0.86 (0.4%) to 1,939.38.

Dow in silver today closed 1,146.84 oz, down 0.72%. Friday took it slightly through its 1,149.74 oz 200 DMA, but today it fell beneath again. Beautiful, and argues the DiS rally may have ended. Watch it.

Dow in gold turned down, still below both the 200 (15.36 oz) & 20 (14.83 oz) day moving averages at 14.58 oz. Close below 14.17 oz renews downtrend.

After all that good news Friday for metals, gold bucked off the shackles today and jumped $12.30 (1.1%) to $1,127.90. Y'all pay close attention here: $1,128 is not only resistance from the last six months, it is also where lieth the downtrend line from the October 2012 high, and about where gold's 200 DMA is trading ($1,132.50). On the weekly chart, gold also breaks out upside through the downtrend from October 2012 & the 50 week MA stands nearby at $1,141.50.

So clearing $1,128 will throw gold over a huge hurdle.

Silver, silver, silver. High today was 1442¢, Comex close came at 1142.9¢, up 11.3¢ (0.8%).

Silver, too, is set to pop, BUT must first clear 1465¢, the last two highs & the post-2012 downtrend line on the weekly chart. The monthly chart needs to see 1530¢ plus for a skyward breakout.

Clearly Friday marked the end & low of the metal's little corrections, PROVIDED they march out smartly again tomorrow. Better start buying.

Governments talk a lot about terrorism, but never mention media & government terrorism. For example, there are the Terrorist Diseases they threaten us with, from bird flu to now the nika virus. Why do I suspect they are trying to stamped us into vaccination? Why might that not be a good idea? he asked the swine-flu vaccine casualties. Don't bother me, I've got Vitamin C.

And beware the Terrorist Weathermen. When my parents retired they watched the news & weather four times a day. They lived in North Alabama, but you let a hurricane in Yucatan turn up on Terrorist Weather, & they were ready to board up the windows. So it storms: I'll wear a raincoat. It snows: I'll throw another log on the fire. Forget living in terror, they just want to keep you panicked so they can control you.

Argentum et aurum comparanda sunt —
Silver and gold must be bought.

— Franklin Sanders, The Moneychanger

Your source for gold and silver. Read our latest reviews and testimonials.
Market Snapshot See more charts and market data
1-Feb-16 Price Change % Change
Gold, $/oz 1,127.90 12.30 1.10%
Silver, $/oz 14.33 0.11 0.79%
Gold/Silver Ratio 78.714 0.240 0.31%
Silver/Gold Ratio 0.0127 -0.0000 -0.30%
Platinum 868.80 2.90 0.33%
Palladium 501.60 10.60 2.16%
S&P 500 1,939.38 -0.85 -0.04%
Dow 16,449.18 -17.12 -0.10%
Dow in GOLD $s 301.48 -3.64 -1.19%
Dow in GOLD oz 14.58 -0.18 -1.19%
Dow in SILVER oz 1,147.96 -10.33 -0.89%
US Dollar Index 98.96 -0.67 -0.67%
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: 1,129.50      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,161.13 1,175.81 1,175.81
1/2 AE 0.50 575.54 595.81 1,191.62
1/4 AE 0.25 290.59 303.55 1,214.21
1/10 AE 0.10 118.49 123.68 1,236.80
Aust. 100 corona 0.98 1,099.39 1,108.39 1,130.78
British sovereign 0.24 267.88 280.88 1,193.20
French 20 franc 0.19 212.46 216.46 1,159.40
Krugerrand 1.00 1,144.18 1,154.18 1,154.18
Maple Leaf 1.00 1,139.50 1,153.50 1,153.50
1/2 Maple Leaf 0.50 649.46 592.99 1,185.98
1/4 Maple Leaf 0.25 288.02 302.14 1,208.57
1/10 Maple Leaf 0.10 119.73 123.12 1,231.16
Mexican 50 peso 1.21 1,354.92 1,365.92 1,132.88
.9999 bar 1.00 1,133.45 1,141.50 1,141.50
SPOT SILVER: 14.34      
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 11,786.78 12,144.28 16.99
US 40% silver 1/2s 0.30 4,110.83 4,272.83 14.48
100 oz .999 bar 100.00 1,458.50 1,483.50 14.84
10 oz .999 bar 10.00 144.85 149.85 14.99
1 oz .999 round 1.00 14.44 14.90 14.90
Am Eagle, 200 oz Min 1.00 15.84 17.09 17.09
SPOT PLATINUM: 868.80      
Plat. Platypus 1.00 883.80 913.80 913.80
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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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