The Moneychanger
Daily Commentary
Wednesday, 23 March a.d. 2016 Browse the commentary archive

Owch! Metals' correction arrived today with claws bared. Stocks didn't do so hot, either, or commodities.

What was left to rise? US dollar index. Scrofulous, scurvy, scabrous, scatological, scaly US dollar index rose 42 basis points (0.44%) to 96.06. Part of that rise probably came as the aftershock of the Brussels terror attack yesterday.

As a recovery it's not exactly throwing its crutches into the dumpster. Big deal, today it reached a 38.2% correction (roughly) of its fall from 2 March through 18 March. Need to throw a couple more tea bags in that pot to blacken that brew. Oh, I confess the Dollar index has rallied the last four days, but what will happen when it gets to the 50% correction level (96.6) and the 20 day moving average (96.76)? Some time or other the dollar index will finally tip its hand and break out of this range. Remember that the last high was 98.60, and it must pass that before it spawns hopes of further rises.

Euro shaved off 0.27% today to $1.1185. Yen was flat, down 0.4% to 88.97.

Stocks have eroded the last two days, and were none too perky the day before that. Dow backed up 79.98 (0.45%) to 17,502.59 while the S&P500 looked even weaker, off 13.09 (0.65%) to 2,036.71.

Dow has formed a bearish rising wedge, and today (depending on where you draw the bottom uptrend line), it broke down. Really, any close below 17,500 will topple it like a statue of Stalin in 1956 Budapest.

Dow in Gold today rose 1.56% to 14.30 oz, giving rise to all sorts of pondering about how far it might climb. I vote for 14.71 oz max, and since this is a democracy my nat'ral born durn Tennessee vote counts just as much as your'n. Besides, that 200 day moving average at 15.09 oz looks awfully far away.

Inflation markets all fell: WTIC 3.47% lower at $39.79/bbl, Copper down 2.44% at $2.236, & the CRB index 2.19% lower at 173.24. Picture now trying to focus might be that commodities have already bottomed, rallied, & now are making the first big test of that rally's staying power. Remember that after an 8 year plunge, commodities ought to bottom and rally in 2016's first half.

Today the Comex was a painful scene for silver & gold. Silver tumbled 61.4¢ (3.87%) to 1526.3¢. Gold slid $24.50 (1.96%) to $1,223.70, portentously beneath $1,225.

Gold wasn't much harmed today until about 10:30 am when it began to slide from $1,235 and never stopped until it reached $1,215.40 about 1:00 p.m. Behold the chart,

Where might it roost? A 38.2% correction of the rise from December would land gold on $1,195.50, about where the 50 day moving average ($1,192.16), a frequent correction target for uptrending markets. A 50% correction, another frequently seen number, would carry to $1,167. That level would also take gold for a final kiss good-bye to the trendline it broke through in February. This would look picture perfect.

Silver, please recall, is always more volatile than gold. Today on its first thrust down it nearly reached the 38.2% level (1523¢ low against a 1513¢ 38.2% correction). Closed near the bottom of the range, plus broke through its 20 DMA (1540¢). Chart's here,

200 day moving average stands at 1489¢ and 1486¢ would correct the foregoing rise by 50%. Likely, but could carry to a 61.8% level at 1460¢ -- 'tis silver, after all. That is also roughly the lip of the bowl silver bottomed in during November, December, and January.

Long awaited correction has arrived. Use this as a golden, no, a sterling, opportunity to buy silver & gold at sale prices. My opinion hasn't changed: both bottomed in December, ending the post-2011 correction.

On 23 March 1901 it became public that Boers were starving in British concentration camps in South Africa.

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
23-Mar-16 Price Change % Change
Gold, $/oz 1,223.70 -24.50 -1.96%
Silver, $/oz 15.26 -0.61 -3.87%
Gold/Silver Ratio 80.174 1.557 1.98%
Silver/Gold Ratio 0.0125 -0.0002 -1.94%
Platinum 960.30 -36.00 -3.61%
Palladium 582.75 -22.60 -3.73%
S&P 500 2,036.71 -13.90 -0.68%
Dow 17,502.59 -79.98 -0.45%
Dow in GOLD $s 295.67 4.48 1.54%
Dow in GOLD oz 14.30 0.22 1.54%
Dow in SILVER oz 1,146.73 39.31 3.55%
US Dollar Index 96.06 0.42 0.44%
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SPOT GOLD: 1,219.80      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,250.30 1,260.66 1,260.66
1/2 AE 0.50 621.59 643.44 1,286.89
1/4 AE 0.25 313.84 327.82 1,311.29
1/10 AE 0.10 127.97 133.57 1,335.68
Aust. 100 corona 0.98 1,188.47 1,197.47 1,221.66
British sovereign 0.24 289.29 302.29 1,284.17
French 20 franc 0.19 229.44 233.44 1,250.37
Krugerrand 1.00 1,233.22 1,243.22 1,243.22
Maple Leaf 1.00 1,229.80 1,243.80 1,243.80
1/2 Maple Leaf 0.50 701.39 640.40 1,280.79
1/4 Maple Leaf 0.25 311.05 326.30 1,305.19
1/10 Maple Leaf 0.10 129.30 132.96 1,329.58
Mexican 50 peso 1.21 1,461.77 1,472.77 1,221.50
.9999 bar 1.00 1,224.07 1,231.80 1,231.80
SPOT SILVER: 15.24      
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 12,076.35 12,398.35 17.34
US 40% silver 1/2s 0.30 4,377.80 4,539.80 15.39
100 oz .999 bar 100.00 1,549.00 1,574.00 15.74
10 oz .999 bar 10.00 153.90 158.90 15.89
1 oz .999 round 1.00 15.34 15.80 15.80
Am Eagle, 200 oz Min 1.00 16.74 17.99 17.99
SPOT PLATINUM: 960.30      
Plat. Platypus 1.00 975.30 1,005.30 1,005.30
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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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