The Moneychanger
Daily Commentary
Tuesday, 9 February a.d. 2016 Browse the commentary archive

Y'all remember what a baseball does when you throw it straight up in the air? It rises and rises, then it slows and almost hovers an instant, turns, and falls straight down into your eye -- unless you're smart enough to step out of the way.

Markets are a lot the same way. When they surge or cascade, then slow & hover, they may be changing directions, depending on how far they've just moved.

Take stocks for instance. Always understanding that we may be watching a market jimmied by the Nice Government Men of the Plunge Protection Team, stocks had some very bad down days lately, but may have exhausted that gravitational momentum for the present, perhaps even to turning 'round for a small rally, even the C-leg of an A-B-C (up, down, up) correction that began off the 20 January lows. Might even rise higher, but will remain a countertrend rally, so don't let it fool you. Bear market rallies can be stronger than Limburger cheesetoast, but die quickly.

Dow today was a picture of confusion, tanking on the opening, then back up 140 points by 10, back down toward 15,900 by 11:00, rising back to unchanged, then sluicing down again to 15,882 at 1:20, and rallying from there to 16,133 at 3:00 --- only to fall back and close at 16,014.38, down 12.67 or 0.08%. I recount this turmoil in detail only to illustrate the market's bewildered indecision.

After like churning, S&P500 ended down 1.23 (0.07%) at 1,852.21.

Sometimes a hover or hesitation in a chart means it's getting ready to extend its run. Here's the euro chart, In the last four days it went sideways the first three, then advanced sharply again today. It was hovering to catch its breath to run further. Rose today 0.92% to $1.1296. Yen looks similar, For the short term at least, the central banking criminals seem to have agreed to let the US dollar drop. US dollar index plunged another 67 basis points (0.7%) to 96.07. Buck has broken the 96.50 support and is now working on breaking 95.50 support.

Silver gained 2.8¢ to 1544.4¢ while gold added 80¢ to $1,198.70. Dead in the water after seven wild up-days.

So both hover, after a long rise. Does it signal a continuation pause, or exhaustion before a faint? Durned if I know. I'm only a nat'ral born durned fool from Tennessee, not a soothsayer. I can't make up my mind which it is, because I can look at that advance from the bottom two different ways, and one says "'Twill go higher" and the other says, "Time for a rest." If I look at silver, often the slower runner of the two as the race begins, I see that it has not reached [what I assume to be] the neckline yet. Might rise to that before it pauses. Mercy -- where would that put gold?

Anyhow, main chance is at least a pause in the frantic pace of rallying, and probably a little correction. Don't mistake my meaning: silver & gold bottomed in December and have begun the first moves up of their next rally -- a rally that will OUTperform 1999-2011 handily. Further, money flow has shifted from stocks to metals. If you fail to line yourself up with these changes, money will flow away from you for some time to come.

Once again I thank your kind hearts for praying for my dear wife Susan. She is waiting for a stitch in her eyeball to dissolve. It's causing the pain by rubbing against her eyelid. She is tough, but enough pain can slow anybody down.

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
9-Feb-16 Price Change % Change
Gold, $/oz 1,198.70 0.80 0.07%
Silver, $/oz 15.44 0.03 0.18%
Gold/Silver Ratio 77.616 -0.089 -0.11%
Silver/Gold Ratio 0.0129 0.0000 0.11%
Platinum 937.70 10.70 1.15%
Palladium 517.80 -1.25 -0.24%
S&P 500 1,852.21 -1.23 -0.07%
Dow 16,014.38 -12.67 -0.08%
Dow in GOLD $s 276.17 -0.40 -0.15%
Dow in GOLD oz 13.36 -0.02 -0.15%
Dow in SILVER oz 1,036.93 -2.71 -0.26%
US Dollar Index 96.07 -0.67 -0.69%
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SPOT GOLD: 1,189.50      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,220.43 1,238.27 1,238.27
1/2 AE 0.50 606.14 627.46 1,254.92
1/4 AE 0.25 306.04 319.68 1,278.71
1/10 AE 0.10 124.79 130.25 1,302.50
Aust. 100 corona 0.98 1,160.12 1,169.12 1,192.73
British sovereign 0.24 282.11 295.11 1,253.65
French 20 franc 0.19 223.75 227.75 1,219.85
Krugerrand 1.00 1,201.40 1,211.40 1,211.40
Maple Leaf 1.00 1,199.50 1,213.50 1,213.50
1/2 Maple Leaf 0.50 683.96 624.49 1,248.98
1/4 Maple Leaf 0.25 303.32 318.19 1,272.77
1/10 Maple Leaf 0.10 126.09 129.66 1,296.56
Mexican 50 peso 1.21 1,426.89 1,437.89 1,192.58
.9999 bar 1.00 1,193.66 1,201.50 1,201.50
SPOT SILVER: 15.25      
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 12,437.43 12,794.93 17.90
US 40% silver 1/2s 0.30 4,379.28 4,541.28 15.39
100 oz .999 bar 100.00 1,549.50 1,574.50 15.75
10 oz .999 bar 10.00 153.95 158.95 15.90
1 oz .999 round 1.00 15.35 15.81 15.81
Am Eagle, 200 oz Min 1.00 16.75 18.00 18.00
SPOT PLATINUM: 937.70      
Plat. Platypus 1.00 952.70 982.70 982.70
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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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