The Moneychanger
Daily Commentary
Wednesday, 3 February a.d. 2016 Browse the commentary archive

Dear Friends, my wife Susan is suffering a lot of pain from her eye. Doctor today had to cut a stitch from her eye & scratched the eye doing it. She is clean worn out fighting pain. Would y'all please continue to pray for her?

MEDITATION: If all the world's central banks take interest rates negative, how could the Fed possibly stand against that tide? Leaving US rates positive would suck in all the capital in the world into the dollar. Why did Bloomberg report yesterday that the Fed announced it will assess the resilience of big banks to, among other conditions, negative interest rates (rate on 3 mo. Treasury bill below zero for a prolonged period). Are they merely satisfying their idle curiosity? Remember, negative rates remove the great objection to holding silver & gold, namely, they pay no interest. Under negative rates investors would have to PAY to hold bank deposits or government bonds, while holding metals would cost nothing & offer potential price rise.

I wrote the above early this morning, before the dollar's foretold weakness erupted like a boil. Dollar fell 163 basis points (1.65%) to 97.24. During the day it fell clean through all possible support and below the December low (97.21), hit the 200 day moving average (96.91), but recovered slightly to 97.24. Dollar index is as broken as it gets, with paired waterfalls in December and February. Twas a huge move, and locks earthward momentum & all indicators. Chart's at

Dollar's drop set off a universal re-pricing for commodities & bonds. West Texas Intermediate crude rose $4.15 (14%) to $33.86, not quite enough for a reversal but way above the 20 DMA. Close above $34.82 confirms at least a short term rally.

10 year treasury note yield dipped to new low territory, hitting the uptrend line from the July 2012 low, and reversed to close at 1.881, up 0.91% and first half of a key reversal upwards. Copper jumped 2.39% to $2.10.

Not the least of the re-pricing happened in currencies. Euro vaulted 1.76% to $1.1110, above the $1.1052 200 day moving average for the first time since October. Now has painted a believable breakout from even-sided triangle. Oh, and the yen! Nipponese Nice Government Men must be throwing hissy fits. After they thought they fixed the Yen/$ exchange rate last week, it gapped up today and closed up 1.83% at 84.91, not far from the January intraday high at 86.06. Saved its rally.

Stocks wavered, scratched their heads, & then decided to rise. Dow climbed 183.12 (1.13%) to 16,336.66, back above the 20 DMA. But performance across indices oddly contradicted itself. S&P500 rose not 1.13% but only 0.5% or 9.5 to 1,912.53. Small cap Russell 2000 rose 0.14%, and the Nasdaq & Nasdaq 100 fell, 0.28% and 0.5%. That don't smell good, but at day's end the Big Two closed higher.

On Comex silver rose 44.4¢ to 1472¢, up 3.1%. Gold rose $14.00 or 1.2% to $1,141.30.

These breakouts smash my breakout requirements, 1465¢ & $1,128-$1,132. Strong & vigorous, they confirm each other. More, platinum rose 2.9% and palladium 5.4%. Gold has risen through its 200 DMA for the first time since October, and on rising volume. Silver's volume EXPLODED, from 30,250 contracts yesterday to 62,071 today.

Yet carp I still. Been fooled too many times. I want to see at least a 3% confirmation of these breakouts, that is, gold over $1,128 + 3% or $1,162 and silver over 1509¢. Call it 1513¢, cause that's where the 200 DMA presently resideth.

Here are the charts, and they are stunning: and

For a metals rally the gold/silver ratio needs to fall as well. Today it hit the bottom boundary of the rising trading channel that has entrapped it since October. Closed today below its 20 AND 50 DMA. Appears ready to drop out of the channel. A close below 76.50 tomorrow will clinch that.

This is exactly the sort of breakout move in metals that I've been looking for. BIG doin's. Gotta buy breakouts.

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
3-Feb-16 Price Change % Change
Gold, $/oz 1,141.30 14.00 1.24%
Silver, $/oz 14.72 0.44 3.11%
Gold/Silver Ratio 77.534 -1.431 -1.81%
Silver/Gold Ratio 0.0129 0.0002 1.85%
Platinum 878.80 24.40 2.86%
Palladium 516.85 26.25 5.35%
S&P 500 1,912.53 9.50 0.50%
Dow 16,336.66 183.12 1.13%
Dow in GOLD $s 295.90 -0.32 -0.11%
Dow in GOLD oz 14.31 -0.02 -0.11%
Dow in SILVER oz 1,109.83 -21.69 -1.92%
US Dollar Index 97.24 -1.63 -1.65%
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: 1,142.80      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,169.08 1,189.65 1,189.65
1/2 AE 0.50 582.32 602.83 1,205.65
1/4 AE 0.25 294.01 307.13 1,228.51
1/10 AE 0.10 119.89 125.14 1,251.37
Aust. 100 corona 0.98 1,112.33 1,121.33 1,143.98
British sovereign 0.24 271.03 284.03 1,206.60
French 20 franc 0.19 214.96 218.96 1,172.80
Krugerrand 1.00 1,157.66 1,167.66 1,167.66
Maple Leaf 1.00 1,152.80 1,166.80 1,166.80
1/2 Maple Leaf 0.50 657.11 599.97 1,199.94
1/4 Maple Leaf 0.25 291.41 305.70 1,222.80
1/10 Maple Leaf 0.10 121.14 124.57 1,245.65
Mexican 50 peso 1.21 1,369.49 1,380.49 1,144.97
.9999 bar 1.00 1,146.80 1,154.80 1,154.80
SPOT SILVER: 14.65      
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 12,083.50 12,441.00 17.40
US 40% silver 1/2s 0.30 4,203.75 4,365.75 14.80
100 oz .999 bar 100.00 1,490.00 1,515.00 15.15
10 oz .999 bar 10.00 148.00 153.00 15.30
1 oz .999 round 1.00 14.75 15.21 15.21
Am Eagle, 200 oz Min 1.00 16.15 17.40 17.40
SPOT PLATINUM: 878.80      
Plat. Platypus 1.00 893.80 923.80 923.80
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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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