The Moneychanger
Daily Commentary
Thursday, 11 February a.d. 2016 Browse the commentary archive

It was a bad day in the temple of Mammon. Mammon couldn't speak, he couldn't walk, his hands could only tremble when the earthquakes shook the temple. His priests & acolytes & cheerleaders, even central bankers, were cast into confusion & panic. Their god had failed them.

You heard the door slam on an era today. Central banks have lost their credibility, & their negative interest rate policy is driving money out of stocks & their own currencies and into gold.

Catalyst of today's move was the puking sick US dollar. Europe was already mouth deep in water with feet tied to an anvil. Markets fell everywhere, with bank stocks diving into the deep end. Euro banks ended down 6.6%, US BKX down 4.18%. German Dax down 2.93%, French CAC down 4.05%, London FTSE off 2.39%.

US dollar index has fallen & can't get up -- needs Life Alert. Keeps on falling, another 32 bps (0.33%) today to 95.62, working now on smashing yet another support level at 95.5.

Behold, the logic of negative interest rates! You loan your money to a bank or to the government (by buying government bonds), and they CHARGE you for the privilege. Keynesian/central bank logic is that if you receive negative interest, you will spend your money and jump start the economy. Turns out you will pull your money out of the bank and buy gold & silver instead. Central banks have actually invented a way to host a financial panic WITHOUT the dollar rising, in fact, to lead the panic with a falling dollar. Wow. I am awed in the presence of such singular idiocy.

Negative interest rates are driving people to do crazy thing in Europe. In Germany, people are paying their taxes in advance, because they can earn one percent that way at least. Better than a bank deposit. Nuts.

You heard the door slam on a primary trend change today, too. Few can now question that stocks have turned down and metals up. I'll explain shortly how metals' surge today was, as the media like to say, "historical." (I don't get that. Doesn't everything that happens belong to "history"?)

Dow at one point was 411 under water, but managed to close down "only" 254.56 (1.6%) at 15,660.18. S&P500 lost 22.78 (1.23%) to 1,829.08.

Here's the sound of the door slamming: Dow in Gold, and the Dow in Silver, Go, look, don't take my nat'ral born durned fool from Tennessee word for it, look.

Dow in gold dropped 5.51% today to 12.56 oz (G$259.64 gold dollars). It sliced through the uptrend from August as 2016 opened, and in February has smashed through its lower support AND the uptrend from the 2011 low. The recovery of stocks against gold that began in 2011 at 5.71 oz has ended, the trend has turned, stocks will fall against gold.

Dow in silver ended at 991.46 oz (S$1,281.89 silver dollars), down 4.71% today. DiS, too, has punched through the uptrend from August 2013 and that from the 2011 low, and not by a scootch but by a mile. Slam! Trend change.

Fear is sending billions of dollars fleeing into US treasuries. Today the yield on the 10 year treasury note gapped down 3.58% and ended at 1.644%. That puts the note at its highest level since 2015.

Euro rose 0.35% to $1.1324. but the real beneficiary of the dollar's illness has been the yen, up today another 0.91% to 88.97. Chart makes me nervous, though. It is extremely overbought, and shows a breakaway gap at the beginning of the run and what might be an exhaustion gap today.

West Texas Intermediate crude ended at a new low for the move, a 12 year low, at $27.30.

On Comex today gold shot up 53.20 (4.5%) to $1,247.90 and silver jumped 51.2¢ (3.4%) to 1578¢. Highs came at $1,263.90 and 1599¢

Why do I say silver & gold made an "historical" move today? Volume is highest since 1980, save for the slamdown in April 2013. More than that, gold burst through $1,200 resistance not with a timid peek, but a $50 plus kick. On the monthly chart, gold shot out of a falling wedge, through the downtrend line, and through the 20 month moving average (MA). On the weekly, gold has not only burst through the 50 week MA ($1,143.02) last week AND the falling wedge's top boundary, it has also closed above the 150 week MA.

I'm not finished yet. On its monthly chart silver's close took it nearly through the 20 month MA 1602¢. The weekly chart shows a breakout through the falling wedge built since October 2012, and through the 50 WMA 1532¢) and the 20 (1466¢).

Silver & gold are heaping confirmation, slamming the door on the bear phase that began in 2011. It's over, y'all hear?

Given gold's breakout today, don't wait for a correction because you won't get one before $1,300.

The gold/silver ratio today climbed 1.1% to 79.036. Y'all ought to swap gold for silver here. Why? Because silver usually lags as a rally begins, but will snap back and lap gold. 79:1 lies at the top of the ratio's range, & when it falls it will not rest until it hits 30:1. Silver offers you greater leverage, although it may start more slowly.

The sweater is coming unraveled fast, and the only safe haven seems to be silver and gold. Nice Government men will try to knit it back together, but can succeed only marginally and temporarily. Can't stop a tsunami.

I sure hope y'all like chicken, because they're coming home to roost.

My wife Susan's eye is improving as fast as a glacier whizzing down an Alpine valley. Her patience amazes me, and she is no doubt helped by your kind prayers, emails, and cards. Thank you, and please continue to pray for her recovery.

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
11-Feb-16 Price Change % Change
Gold, $/oz 1,247.90 53.20 4.45%
Silver, $/oz 15.79 0.51 3.35%
Gold/Silver Ratio 79.036 0.834 1.07%
Silver/Gold Ratio 0.0127 -0.0001 -1.05%
Platinum 962.40 2.91 0.30%
Palladium 524.70 -0.30 -0.06%
S&P 500 1,829.08 -22.78 -1.23%
Dow 15,660.18 -254.56 -1.60%
Dow in GOLD $s 259.42 -15.96 -5.79%
Dow in GOLD oz 12.55 -0.77 -5.79%
Dow in SILVER oz 991.84 -49.90 -4.79%
US Dollar Index 95.62 -0.32 -0.33%
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SPOT GOLD: 1,247.60      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,280.04 1,298.75 1,298.75
1/2 AE 0.50 635.77 658.11 1,316.22
1/4 AE 0.25 321.00 335.29 1,341.17
1/10 AE 0.10 130.89 136.61 1,366.12
Aust. 100 corona 0.98 1,216.78 1,225.78 1,250.54
British sovereign 0.24 295.89 308.89 1,312.18
French 20 franc 0.19 234.67 238.67 1,278.38
Krugerrand 1.00 1,260.08 1,270.08 1,270.08
Maple Leaf 1.00 1,257.60 1,271.60 1,271.60
1/2 Maple Leaf 0.50 717.37 654.99 1,309.98
1/4 Maple Leaf 0.25 318.14 333.73 1,334.93
1/10 Maple Leaf 0.10 132.25 135.99 1,359.88
Mexican 50 peso 1.21 1,496.59 1,507.59 1,250.38
.9999 bar 1.00 1,251.97 1,259.60 1,259.60
SPOT SILVER: 15.79      
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 12,791.35 13,148.85 18.39
US 40% silver 1/2s 0.30 4,540.05 4,702.05 15.94
100 oz .999 bar 100.00 1,604.00 1,629.00 16.29
10 oz .999 bar 10.00 159.40 164.40 16.44
1 oz .999 round 1.00 15.89 16.35 16.35
Am Eagle, 200 oz Min 1.00 17.29 18.54 18.54
SPOT PLATINUM: 962.40      
Plat. Platypus 1.00 977.40 1,007.40 1,007.40
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© 2015 Little Mountain Corporation, d.b.a. The Moneychanger. All rights reserved. May not be republished in any form, including electronically, without our express permission.

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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