The Moneychanger
Daily Commentary
Thursday, 4 February a.d. 2016 Browse the commentary archive

Most eye-catching about that big US dollar index drop yesterday is that no special trigger set it off, only several minor news events that took it to the channel boundary and then through & for a panic dive. Likely triggered by spreading realization the Fed can't raise interest rates with every other major central bank going negative -- in spite of Fed jawboning to the contrary. If the Fed continues raising rates now, they will dislocate every joint in the US economy.

Dollar index kept on cascading today, tumbling another 74 basis points (0.76%) over the rocks to 96.56. That teaseth the 96.50 support/resistance, plus plunges the Dollar Index below its 200 day moving average, & not by a little: 200 now stands at 96.90. Second day of decline implies the Nice Government Men are holding back, i.e., this may be a deliberate move by the Fed.

A falling dollar is, of course, the best fuel for a gold & silver rally, so this nat'ral born durned fool from Tennessee is not complaining.

At Comex close silver had added 11.6¢ (0.8%) to 1483.6¢. Gold gobbled up $16.30 (1.4%) for a $1,157.60 close.

Markets are very jumpy, all of 'em. At 10 a.m. Eastern time gold gapped from $1,150 to $1,155, a gap I find no explanation for. Gapped again from $1,155 to $1,157 about 2:45. Silver gapped, too, but not as strongly. First jumped from 1485¢ to 1490¢, second from 1488¢ to 1490¢. Nervous, very nervous.

Gold appears headed for $1,192, the last (October) high. That's a first and minimum target. I'm reining myself in, not getting too excited because I expect lots of up and down this year as silver & gold build a base for the next big advance. Gold still needs to cross $1,162, three percent above the $1,128 breakout, for proof. Passing that old $1,192 high will sooth my nerves, too, because gold has punched through its 200 DMA before, several times in the last twelvemonth, without following through. Here's an 11-month chart, strong lately as a garlic milkshake,

Silver ain't nearly as pert and lively as gold, & that sits as a burr under my saddle. Also, volume for silver & gold dropped way, way off today. Need more buyers to fuel a rally. Gold has pierced its 200 DMA, now silver needs to follow suit & push through 1513¢. High today was 1495¢, fifteen cents away.

Platinum & palladium are confirming silver & gold's rise. Platinum's 8-month chart, boasts a bullish falling wedge that began in July. Platinum broke out upside in January, touched back to the breakout point (upper wedge boundary), then soared. Today it rose another $25.60 to $904.40, over $900 again. Has added over $50 in last 2 days.

Palladium's chart isn't as juicy, It also shows a falling wedge with a bare minimal breakout. Palladium needs to confirm by moving from today's $516.80 close above its 50 DMA at $527.

Other inflation markets are also rising. WTIC oil rose nearly 2% to $33.38, but needs to cross $34.82 to prove a reversal, even short term. Copper rose 1.525 to $1.23, and has climbed back into the channel it fell from in January. Also completing a widening wedge that usually resolves skyward.

All systems are go for silver & gold, I am just watching on the porch, looking for more rally confirmations.

Thanks to all y'all who prayed for Susan. She has improved today but her eye is still hurting. For Miss High Pain Tolerance to say that, it must be smarting, but she is some kind of brave. Thanks in advance for continuing to pray for her.

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
4-Feb-16 Price Change % Change
Gold, $/oz 1,157.60 16.30 1.43%
Silver, $/oz 14.84 0.12 0.79%
Gold/Silver Ratio 78.026 0.492 0.64%
Silver/Gold Ratio 0.0128 -0.0001 -0.63%
Platinum 904.40 25.60 2.91%
Palladium 516.85 0.00 0.00%
S&P 500 1,915.45 2.92 0.15%
Dow 16,416.58 79.92 0.49%
Dow in GOLD $s 293.16 -2.74 -0.93%
Dow in GOLD oz 14.18 -0.13 -0.93%
Dow in SILVER oz 1,106.54 -3.29 -0.30%
US Dollar Index 96.56 -0.74 -0.76%
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SPOT GOLD: 1,156.90      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,183.51 1,204.33 1,204.33
1/2 AE 0.50 589.51 610.26 1,220.53
1/4 AE 0.25 297.64 310.92 1,243.67
1/10 AE 0.10 121.37 126.68 1,266.81
Aust. 100 corona 0.98 1,126.06 1,135.06 1,157.98
British sovereign 0.24 274.38 287.38 1,220.80
French 20 franc 0.19 217.61 221.61 1,187.00
Krugerrand 1.00 1,171.94 1,181.94 1,181.94
Maple Leaf 1.00 1,166.90 1,180.90 1,180.90
1/2 Maple Leaf 0.50 665.22 607.37 1,214.75
1/4 Maple Leaf 0.25 295.01 309.47 1,237.88
1/10 Maple Leaf 0.10 122.63 126.10 1,261.02
Mexican 50 peso 1.21 1,386.39 1,397.39 1,158.99
.9999 bar 1.00 1,160.95 1,168.90 1,168.90
SPOT SILVER: 14.88      
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 12,208.63 12,566.13 17.58
US 40% silver 1/2s 0.30 4,270.13 4,432.13 15.02
100 oz .999 bar 100.00 1,512.50 1,537.50 15.38
10 oz .999 bar 10.00 150.25 155.25 15.53
1 oz .999 round 1.00 14.98 15.44 15.44
Am Eagle, 200 oz Min 1.00 16.38 17.63 17.63
SPOT PLATINUM: 904.40      
Plat. Platypus 1.00 919.40 949.40 949.40
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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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