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Wednesday, 30 March a.d. 2016 Browse the commentary archive

On Tuesday the Fed's answer to the Wicked Witch of the East, Janet Yellen, cooked up a spell to help Wall Street. In a speech in New York she waffled (I know that's redundant, "Fed" and "Waffle") on raising interest rates soon. Signal to the market was, "Party animals! Stock party's still on!" Also, "Dollar will get no help from the Fed." Stocks jumped, gold & silver jumped, dollar tanked, and hedge & mutual fund managers get to make better reports for the first quarter. See how easy that was? A simple spell: "N-o-R-a-t-e-R-i-s-e."

No doubt she always wanted to throw a bone to oil producers. Just drop it off her broom in a fly-by, as it were, knocking down the US dollar. Whoa! Watch out for them wanged monkeys! Them thangs bite!

Stocks today kept rising, but without much inspiration. Dow climbed 83.55 (0.47%) to 17,716.66. S&P500 chugged along at its side, 8.94 (0.44%) higher at 2,063.95.

Dow approacheth its last high close at 17,721 (29 December 2015). Yeah, won't they be jubilatin' on Wall Street if it can pass that mark. 2,078.36 is the S&P500's comparable close. I'm not counting on seeing that. Dow in Silver & Dow in Gold appear to be nearing the end of their rallies, so that puts a limit on how much higher stocks can climb.

By the way, y'all do understand that raw number gains are meaningless, right? Only thing that counts is PURCHASING POWER GAINS. During the 1921-23 German hyperinflation, for example, stocks soared hugely but lost purchasing power. Raw numbers mean nothing, only purchasing power. Raw number for the Dow look great, until you adjust them for inflation or compare them to gold or silver.

US dollar index plunged 33 basis points (0.34%). Chart's here, http://schrts.co/ZhjJhK

Come to think of it, all the trouble the Dollar Index has suffered these last 9 months has come from central banks. All those waterfalls you see on the chart were loosed by some central bank's announcement, including the latest one precipitated by Mother Yellen. Dollar has now reached the downtrend line from its March 2015 peak. It's below all its moving averages, and ain't got a friend in the world. Only important thing to watch is 92.50. If the dollar breaks down there, we have a whole new game, because it will sink much further.

Euro rose 0.45% to $1.1342, pursuing a reluctant rally. Yen rose 0.22% to 88.95, above its 20 DMA again but indecisive twixt rallying and plunging.

Gold tumbled $8.90 (0.72%) to $1,226.90 while silver barely moved, down 1.4¢ (0.09%) at 1520.6¢.

Yesterday gold leapt $15.70 (1.3%) on Mother Yellen's broom, but although it climbed over $1,240, its fingers were too slippery to hold on there. What interest me more than yesterday's bound is the limit of the fall. Day before yesterday gold hit $1,206.10, yesterday $1,215.30, today $1,223.40. Hasn't closed below $1,220, so clearly there are enthusiastic buyers below $1,220. Chart: http://schrts.co/kGImYK

That $1,206 low came awfully close to the 50 DMA, a frequent target in bull market corrections. My mind is now fermenting (you there! Stifle that smart remark!) on the possibility that gold won't drop any further. That instead of returning to $1,170 it will take off from here and blow past $1,308. I am not yet saying it will, but that idea is invading my mind.

One reason it's invading is found on silver's chart. http://schrts.co/kY9doO I've drawn a green uptrend line from the January low, and it has caught every fall since then. It's tautological, but silver would have to break that uptrend in order to make that 1460¢ low I have been anticipating.

What if it don't? The low so far, 1506¢, came right close to the 200 dma (1492¢). Might be correction enough.

Tomorrow silver needs to close below 1517¢ to break that line. If it does, well, that ends the fermentation in my brain. If it don't, then maybe we ought to start making other plans, cause that chart is preening a flat-topped rising triangle, which forecasts an upside breakout.

Not sure yet. Just musing.

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
30-Mar-16 Price Change % Change
Gold, $/oz 1,226.90 -8.90 -0.72%
Silver, $/oz 15.21 -0.01 -0.09%
Gold/Silver Ratio 80.685 -0.511 -0.63%
Silver/Gold Ratio 0.0124 0.0001 0.63%
Platinum 964.30 -0.90 -0.09%
Palladium 565.40 -7.35 -1.28%
S&P 500 2,063.95 8.94 0.44%
Dow 17,716.66 83.55 0.47%
Dow in GOLD $s 298.50 3.55 1.20%
Dow in GOLD oz 14.44 0.17 1.20%
Dow in SILVER oz 1,165.11 6.56 0.57%
US Dollar Index 94.82 -0.33 -0.35%
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SPOT GOLD: 1,225.60      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,255.01 1,266.66 1,266.66
1/2 AE 0.50 624.55 646.50 1,293.01
1/4 AE 0.25 315.33 329.38 1,317.52
1/10 AE 0.10 128.58 134.20 1,342.03
Aust. 100 corona 0.98 1,194.13 1,203.13 1,227.43
British sovereign 0.24 290.67 303.67 1,290.02
French 20 franc 0.19 230.54 234.54 1,256.22
Krugerrand 1.00 1,239.08 1,249.08 1,249.08
Maple Leaf 1.00 1,235.60 1,249.60 1,249.60
1/2 Maple Leaf 0.50 704.72 643.44 1,286.88
1/4 Maple Leaf 0.25 312.53 327.85 1,311.39
1/10 Maple Leaf 0.10 129.91 133.59 1,335.90
Mexican 50 peso 1.21 1,467.24 1,478.24 1,226.04
.9999 bar 1.00 1,229.89 1,237.60 1,237.60
SPOT SILVER: 15.21      
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 11,983.40 12,305.40 17.21
US 40% silver 1/2s 0.30 4,368.95 4,530.95 15.36
100 oz .999 bar 100.00 1,546.00 1,571.00 15.71
10 oz .999 bar 10.00 153.60 158.60 15.86
1 oz .999 round 1.00 15.31 15.77 15.77
Am Eagle, 200 oz Min 1.00 16.71 17.96 17.96
SPOT PLATINUM: 964.30      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 979.30 1,009.30 1,009.30
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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.
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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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