The Moneychanger
Daily Commentary
Wednesday, 6 April a.d. 2016 Browse the commentary archive

This morning I blew coffee all over my steering wheel, dashboard, and windshield when I heard the communist announcer (sorry, that's a redundancy) report that new Labor Department regulation setting standards for investment advice ("Fiduciary Rule") said that it would "cut costs and increase efficiency."

Lay aside momentarily the issue of administrative law and executive agencies making law instead of the legislature. That's a bottomless affront to self-government, but not what I am foaming at the mouth about.

Get out your stone tablets and chisel & carve thereupon these words: "The purpose of ALL regulation is to stifle competition." All means "all."

By its nature government regulation must increase costs and decrease efficiency, simply by forcing markets to do what they don't want to do. Left to themselves, markets will eventually flow into the lowest cost, most efficient streambed. ALL regulation builds a dam across that stream.

The communists in government and National Proletarian Radio really have nothing but scorn for us if they throw buckets of hogwash like that in our faces & expect us to believe it. Mercy.

Federal Reserve published FOMC minutes today & after the market read the guts of the rats (much like the ancient Roman haruspex would read the guts of a sheep or cow to tell the future, but not as edifying) it decided it was good news & the Fed wouldn't raise rates any time soon. Dow rose 112.73 (0.64%) to 17,716.05. S&P500 added 21.49 or 1.05% for a 2,066.66 close.

Changes nothing in the technical picture. Lower high with lower low. Defines a downtrend. Shortly, shortly the wailing & tooth-gnashing will pierce the skies over Wall Street.

US dollar index, also thanks to FOMC minutes, stumbled 17 basis points (0.18%) to end at 94.46. Minutely that puts the dollar index below the downtrend line from March 2015. Too minute to count as a breakdown. Important point in any event, point below which the dollar index must not fall, is 92.50.

Yen today shot up 0.51% to 91.11. Rallying. Euro lost 0.11% to $1.1397.

Gold lost $5.90 to close Comex at $1,222.50. Silver eased back 6.2¢ to 1505.2¢. Gold/silver ratio at Comex close was 81.218:1.

I am unrepentant: I would still swap gold for silver at this high ratio, targeting a fall below 32:1 within the next three years.

Look at a different gold chart, this one:

Gold has traded in a range (bounded by the blue lines) since the July 2013 low and the August 2013 high. This February's breakout took told through that upper boundary. Now gold has come back ot the line for a final kiss good-bye. That explains its stubbornness holding on above $1,220. It would look an awfully lot better for gold not to break that line. Awfully.

Remember that uptrend line from the January low and the 50 day moving average are practically running together right now.

Laggard silver has little to say to us, except that it continues to hold on above its 200 DMA (now 1489¢). A drop to 1460¢ remains possible.

I am looking for this correction to end by this Friday or the next, latest.

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
6-Apr-16 Price Change % Change
Gold, $/oz 1,222.50 -5.90 -0.48%
Silver, $/oz 15.05 -0.06 -0.41%
Gold/Silver Ratio 81.218 -0.057 -0.07%
Silver/Gold Ratio 0.0123 0.0000 0.07%
Platinum 942.90 -7.10 -0.75%
Palladium 539.70 -7.35 -1.34%
S&P 500 2,066.66 21.49 1.05%
Dow 17,716.05 112.73 0.64%
Dow in GOLD $s 299.57 3.34 1.13%
Dow in GOLD oz 14.49 0.16 1.13%
Dow in SILVER oz 1,176.99 12.29 1.05%
US Dollar Index 94.46 -0.17 -0.18%
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: 1,222.70      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,256.94 1,263.66 1,263.66
1/2 AE 0.50 623.07 644.97 1,289.95
1/4 AE 0.25 314.59 328.60 1,314.40
1/10 AE 0.10 128.28 133.89 1,338.86
Aust. 100 corona 0.98 1,192.50 1,201.50 1,225.77
British sovereign 0.24 289.98 302.98 1,287.10
French 20 franc 0.19 229.99 233.99 1,253.29
Krugerrand 1.00 1,232.48 1,242.48 1,242.48
Maple Leaf 1.00 1,232.70 1,246.70 1,246.70
1/2 Maple Leaf 0.50 703.05 641.92 1,283.84
1/4 Maple Leaf 0.25 311.79 327.07 1,308.29
1/10 Maple Leaf 0.10 129.61 133.27 1,332.74
Mexican 50 peso 1.21 1,463.77 1,474.77 1,223.16
.9999 bar 1.00 1,226.98 1,234.70 1,234.70
SPOT SILVER: 15.06      
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 11,518.65 11,843.65 16.56
US 40% silver 1/2s 0.30 4,324.70 4,486.70 15.21
100 oz .999 bar 100.00 1,531.00 1,556.00 15.56
10 oz .999 bar 10.00 152.10 157.10 15.71
1 oz .999 round 1.00 15.16 15.62 15.62
Am Eagle, 200 oz Min 1.00 16.56 17.81 17.81
SPOT PLATINUM: 942.90      
Plat. Platypus 1.00 957.90 987.90 987.90
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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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