The Moneychanger
Daily Commentary
Tuesday, 22 March a.d. 2016 Browse the commentary archive

About that jump-let in gold and silver today: If a market needs terrorist attacks to prop it up, it may have problems.

Then again, it might be something else. The pattern gold has traced out might also be a continuation pattern, and not a top. If 'tis, then gold is gathering up its strength for a jump.

Terrorist attacks are not positive for stock markets. For Europe an attack on Brussels resembles an attack on Washington or New York. European Nice Government Men must have been working overtime, because instead of diving European stock indices actually nosed up.

Any sober adult would perceive that Europe has sunk into deep peril & mortal danger, but no sober adults are to be found among their politicians. Grievously sorrowful! Cicero said, "A nation can survive its fools, even the ambitious, but it cannot survive treason from within."

In the US stocks nudged down a hair. Dow lost 41.3 (0.23%) to 17,582.57 & S&P500 shaved off 1.8 (0.9%) to 2,049.80. Only significance I attach to this is that both indices have managed to climb over their 200 day moving averages. To my nat'ral born durn Tennessee fool mind, that brings them just that much closer to a break.

Should come as no surprise that the US dollar index rose on the bad news, up 34 basis points (0.36%) but that was, as they say, a "muted" response. Flight to quality did take the dollar index up through 95.30 resistance, but looked none too perky. Ended at 95.64.

Nice Government Men in Europe must have been busier than a one-armed man changing a diaper. They had to keep stocks from crashing AND the euro. In the end I reckon they did a heroic job, as the euro dropped only 0.2% to $1.1217. If you call manipulating markets "heroic".

Yen fell 0.3% to 89.06. Not clear yet whether it has a mind to rise or fall.

Although it hit an intraday high of $1,260, Comex gold rose only $4.40 (0.35%) to $1,248.20. After a 1604¢ high, silver settled Comex at 1587.7¢, up only 3.6¢ (0.23%).

On the End of Day chart the gold/silver ratio has nearly bumped into the lower channel boundary. No cosmic law decrees it cannot fall further, but odds are it will bounce up from that line. Here's a chart,

Mathematically it can happen several ways, but a reversing gold/silver ratio means lower silver prices at least, and most likely lower gold.

Let me try to make clearer the stakes here. Right around 1600¢ the downtrend line from the April 2011 high crosses silver's path. If silver breaks through that now, it will draw buyers like free sandwiches draw hobos. And it will jump hugely. That's why I keep telling y'all, all bets for a correction are off if silver can close above 1624¢.

Silver & gold can't stay mired in this range forever. Every day they do increases the pressure to move up or down, but to MOVE. Today gold closed once again above its 20 day moving averages, after closing below it yesterday.

If gold and silver can press through those blocking levels -- 1600¢ and $1,280 -- they will run like scalded dogs. However, the odds still favour a correction.

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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
22-Mar-16 Price Change % Change
Gold, $/oz 1,248.20 4.40 0.35%
Silver, $/oz 15.88 0.04 0.23%
Gold/Silver Ratio 78.617 0.099 0.13%
Silver/Gold Ratio 0.0127 -0.0000 -0.13%
Platinum 996.30 15.00 1.53%
Palladium 605.32 2.85 0.47%
S&P 500 2,049.80 -1.80 -0.09%
Dow 17,582.57 -41.30 -0.23%
Dow in GOLD $s 291.19 -1.72 -0.59%
Dow in GOLD oz 14.09 -0.08 -0.59%
Dow in SILVER oz 1,107.42 -5.12 -0.46%
US Dollar Index 95.64 0.34 0.36%
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: 1,247.30      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,278.48 1,289.08 1,289.08
1/2 AE 0.50 635.61 657.95 1,315.90
1/4 AE 0.25 320.92 335.21 1,340.85
1/10 AE 0.10 130.86 136.58 1,365.79
Aust. 100 corona 0.98 1,215.27 1,224.27 1,249.00
British sovereign 0.24 295.82 308.82 1,311.88
French 20 franc 0.19 234.62 238.62 1,278.08
Krugerrand 1.00 1,258.53 1,268.53 1,268.53
Maple Leaf 1.00 1,257.30 1,271.30 1,271.30
1/2 Maple Leaf 0.50 717.20 654.83 1,309.67
1/4 Maple Leaf 0.25 318.06 333.65 1,334.61
1/10 Maple Leaf 0.10 132.21 135.96 1,359.56
Mexican 50 peso 1.21 1,494.72 1,505.72 1,248.84
.9999 bar 1.00 1,251.67 1,259.30 1,259.30
SPOT SILVER: 15.89      
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 12,537.53 12,859.53 17.99
US 40% silver 1/2s 0.30 4,568.08 4,730.08 16.03
100 oz .999 bar 100.00 1,613.50 1,638.50 16.39
10 oz .999 bar 10.00 160.35 165.35 16.54
1 oz .999 round 1.00 15.99 16.45 16.45
Am Eagle, 200 oz Min 1.00 17.39 18.64 18.64
SPOT PLATINUM: 996.30      
Plat. Platypus 1.00 1,011.30 1,041.30 1,041.30
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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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