The Moneychanger
Daily Commentary
Monday, 11 April a.d. 2016 Browse the commentary archive

The markets were not kind to the US dollar and stocks today, but oh! Silver and gold shone.

US dollar index has reached Fish or Cut Bait time. It's at the bottom line of a channel that has long caught it -- since December, and today closed below that bottom boundary. More, it has reached the 92.50 - 93.85 support area that has backstopped it since last May. Here: see what you think,

If the dollar index falls through this support, nothing will catch it before 80. One expects the loonies at the Federal Reserve wouldn't want markets banged around by a tanking dollar, but who knows what motivates their primitive nervous systems?

Yen has climbed so much that it has Japanese Nice Government Men making announcements that they might have to do something if folks don't straighten up and let the yen fall. Rose another 0.13% today to 92.64, highest close of the upmove since December that began at 80.81. Oooooo.

Euro rose 0.11% to $1.1410. European stocks today rose as investors bought -- wait for it -- Italian bank shares, on the hope the government bail out would church 'em up. I reckon they'll wake up feeling pretty rough after that drunk.

In the United States, Home of the Banks & Land of Big Bank Fees, stocks fared not so well. They kept dropping all day, unable to rise up, and finally ended the day lower. Dow chipped off 20.55 (0.12%) to 17,556.41 but the S&P500 lost more, 0.27% or 5.61, to 2,041.99. Hovering, floating, like Wile E. Coyote before the ZIP! Fall.

More to the point are the Dow in Gold & Dow in Silver. Here the DiG chart,

After crashing through the uptrend line from the 2011 low the DiG started an upward retracement that corrected less than 50% of the previous fall, topping at 14.574. Since then it has fallen through the 20 DMA, the uptrend line, and today, nearly, that post-2011 uptrend. The 50 DMA also lurks in the same area, 13.84. It won't take more than a puff from a bat's wing to push the DiG through those lines, at which point gravity takes over.

Behold, the Dow in Silver,

Same pattern as the DiG appears here, long fall from December to February and rallying into 1 April. However, more volatile silver went pas the 61.8% correction level and the 200 DMA, but it the last three days it dove off the high dive. It has cut through the uptrend line, the 20 DMA, the 50 DMA, and the 20 DMA, AND today punched through that uptrend line from 2011. Lower she goes!

Before I say anything about silver & gold, ponder a moment on the Gold/Silver ratio, It tumbled 2.6% today, gapped down and broke the bottom channel line.

Why do I care? Because this signals that silver is leading this rally, & that it has a full head of steam. Now the ratio didn't close below that lower boundary, but right near. Silver's got that mean look in its eye.

Today silver rose 59.2¢ (3.8%) to 1597.4¢ but gold rose only 1.1% ($14.20) to 1,256.70.

All this only amounts to gold and silver moving into position to rally. Fireworks will start when silver breaches 1600¢, likely tomorrow.

Unless metals turn smack around 180 degrees & plunge straight down tomorrow, y'all can stop waiting for any further correction or lower prices. REPEAT: Correction has ended, next rally has begun. Y'all will never see silver & gold at these prices again, if I'm right.

One at a time. Silver first, and so the chart,

Price rose on rising volume. MACD, Rate of Change, & RSI are all flapping skywards. Silver already touched its 200 DMA in correction, surely satisfying a correction's requirements. Now it has risen through its 50 & 200 day moving averages.

What looms? That 1617¢ high from March. 1600¢ is a brick wall, & to prove silver can knock its way through, it has to run clean through 1617¢. Above that word will get out that silver is flying, and it will attract buyers like free whiskey attracts city voters.

On Friday all the major gold stock indices escaped to the upside -- good, they're leading gold. Here's the gold chart,

Everything's lined up propitiously. Today gold punched through that $1,240-ish resistance that had kept it imprisoned, rising on rising volume. MACD is turning up, as has Rate of Change & RSI.

So what? What must gold do to prove its upward intentions? Close above that last peak at $1,272, for starters. Than clear the peak before that, $1,288. Now it's ready to bust a gut running through $1,308 and beyond.

I am just reporting what the chart shows. STOP WAITING FOR A CORRECTION. Buy now.

On 12 April, well, never mind the year, was born my dear wife, Susan.

On 11 April 1689 were crowned William (of Orange) and Mary as joint sovereigns of Britain.

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
11-Apr-16 Price Change % Change
Gold, $/oz 1,256.70 14.20 1.14%
Silver, $/oz 15.97 0.59 3.85%
Gold/Silver Ratio 78.672 -2.105 -2.61%
Silver/Gold Ratio 0.0127 0.0003 2.68%
Platinum 989.40 21.90 2.26%
Palladium 546.90 6.75 1.25%
S&P 500 2,041.99 -5.61 -0.27%
Dow 17,556.41 -20.55 -0.12%
Dow in GOLD $s 288.79 -3.64 -1.25%
Dow in GOLD oz 13.97 -0.18 -1.25%
Dow in SILVER oz 1,099.06 -43.64 -3.82%
US Dollar Index 93.94 -0.31 -0.33%
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: 1,258.00      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,291.97 1,300.14 1,300.14
1/2 AE 0.50 641.07 663.60 1,327.19
1/4 AE 0.25 323.68 338.09 1,352.35
1/10 AE 0.10 131.99 137.75 1,377.51
Aust. 100 corona 0.98 1,226.93 1,235.93 1,260.89
British sovereign 0.24 298.35 311.35 1,322.66
French 20 franc 0.19 236.63 240.63 1,288.86
Krugerrand 1.00 1,266.81 1,276.81 1,276.81
Maple Leaf 1.00 1,268.00 1,282.00 1,282.00
1/2 Maple Leaf 0.50 723.35 660.45 1,320.90
1/4 Maple Leaf 0.25 320.79 336.52 1,346.06
1/10 Maple Leaf 0.10 133.35 137.12 1,371.22
Mexican 50 peso 1.21 1,506.03 1,517.03 1,258.21
.9999 bar 1.00 1,262.40 1,270.00 1,270.00
SPOT SILVER: 15.94      
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 12,215.78 12,575.78 17.59
US 40% silver 1/2s 0.30 4,582.83 4,744.83 16.08
100 oz .999 bar 100.00 1,618.50 1,643.50 16.44
10 oz .999 bar 10.00 160.85 165.85 16.59
1 oz .999 round 1.00 16.04 16.50 16.50
Am Eagle, 200 oz Min 1.00 17.44 18.69 18.69
SPOT PLATINUM: 989.40      
Plat. Platypus 1.00 1,004.40 1,034.40 1,034.40
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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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