The Moneychanger
Daily Commentary
Wednesday, 4 May a.d. 2016 Browse the commentary archive

Never disremember that currency exchange rates cannot be trusted. Why? Central banks manipulate the rates. Wherefore the extremest caution is in order when resting any decision on the direction of exchange rates, for they can abruptly reverse & cream you like mashed potatoes.

Now 'tis true that the US dollar appears to have turned up & back from the lip of hell. It posted a Key Reversal yesterday & tomorrow (regardless of the market, I'd like to add one more day's confirming close to that). But I remind y'all that on 14 April the dollar seemed to have turned, & numbrous other times I could name. If the colluding central bank criminals have agreed to let the US dollar drop much lower, they will not pull the props out all at once, lest an unseemly panic damage all scrofulous fiat currencies. Rather, they play the market like a master fisherman plays a bass, now giving him line, now taking it away, but always deceiving the poor fish, doomed for the frying pan.

I'm saying this not to alibi for falling gold & silver, merely to remind y'all that exchange rate movements are generated in wildly unpredictable political criminal central bank minds, and not in nature.

Besides, I want y'all to ruminate on something else: central banks are fast losing credibility. Now measles is not a "credible" disease in that everyone scorns it, but it can still kill you. So, before central banks breath their longed-for final stinking breath, they are still dangerous, especially when fighting for their lives. That doesn't alter, however, the metals' December change in trend from five-years-down to UP. So whatever shenanigans the CB criminals may pull, silver & gold will keep steadily rising over the next 5-8 years.

Disbelieve that at your financial peril.

Stocks keep on rolling headlong downhill. Dow lost another 99.65 (0.56%) today and closed at 17,651.26. S&P500 held hands with the Dow, losing 12.25 (0.59%) to 2,051.12.

Stocks have now fallen out of a rising wedge, broken down through their up-channel line, poked through the 20 day moving average, and perched unsteadily just above their 50 day moving averages. Can some shiny-pointy-toed-shoe Wall Streeter to 'splain to me how this is coming back? I'm such a nat'ral born durned fool I can't figger it out, bless my heart.

Gold lost $17.40 (1.35%) today for a $1,273.30 close. Low came at $1,273.60. Silver peeled off 19.7¢ (1.13%) to close Comex at 1727.7¢.

Clearly gold has topped for the moment, but aside from that brilliant observation, what do it mean?? Is this a large correction starting, or only a tee-tiny one?

Durned if I know. If it's only a small correction in a larger rally, then the correction will be short & shallow, maybe dropping to $1,245. If a larger degree correction, gold could fall to $1,200.

Today it stopped at the uptrend line from the January low.

Gold has everything going for it that an overbought market need to accumulate before a correction: terrible Commitments of Traders, height above 200 DMA, overbought RSI, and multitudinous hot money speculators that have piled on to take their bite out of the "inflation trade." But none of that tells me whether it will be a short or long correction, at least, not yet. Price will tell us in the next few days.

If gold is overbought, silver is overboughter, and enjoys all the drawbacks & warts of gold. However, the question remains, Will this be a large or small correction? A small one would work off the overboughtness so the rally could continue.

For right now, some indecision remains. However, both metals are entering a correction. That leaves us waiting for some turn-around signal. Keep watching.

All the Establishment's arrogant vitriol poured out of my radio this morning as National Proletarian Radio ("The Voice of Socialism in the US") addressed Donald Trump. Y'all well know I bear no love for Trump, and consider him only slightly less deadly than Hillary. Still I was amazed at their brazen bias, calling him "toxic" and "corrosive" and the "least popular candidate in history."

Made me wonder what the words "toxic" and "corrosive" mean. Mercy, if Bernie the Kindly Thief ain't "toxic", spreading class warfare, who would be? Or what could make Hillary the Cunning more "corrosive" as she stirs up class, race, and gender warfare on behalf of the Establishment?

So words mean nothing any longer, they are just propaganda pejoratives to throw at your enemy. The news has become Orwell's "Three Minute Hate." The response is the measure of the Establishment's fear of the truth. Screwball as Trump is, the long-suffering American public hears the some slight resonance of sense and national interest in what he says, and responds. Plainly the Republicans & "conservatives" follow the Establishment's agenda, not the American public's.

But I'm still warning y'all, Trump ain't what he seems.

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
4-May-16 Price Change % Change
Gold, $/oz 1,273.30 -17.40 -1.35%
Silver, $/oz 17.28 -0.20 -1.13%
Gold/Silver Ratio 73.699 -0.165 -0.22%
Silver/Gold Ratio 0.0136 0.0000 0.22%
Platinum 1,054.40 -15.70 -1.47%
Palladium 594.70 -12.40 -2.04%
S&P 500 2,051.12 -12.25 -0.59%
Dow 17,651.26 -99.65 -0.56%
Dow in GOLD $s 286.57 2.27 0.80%
Dow in GOLD oz 13.86 0.11 0.80%
Dow in SILVER oz 1,021.66 5.82 0.57%
US Dollar Index 93.19 0.26 0.28%
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GOLD Fine Tr.Oz. BID ASK $/oz
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British sovereign 0.24 303.67 316.67 1,345.23
French 20 franc 0.19 240.84 244.84 1,311.43
Krugerrand 1.00 1,291.92 1,301.92 1,301.92
Maple Leaf 1.00 1,290.40 1,304.40 1,304.40
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SILVER Fine Tr.Oz. BID ASK $/oz
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VG+ Peace dollar 0.77 17.50 20.00 26.14
90% silver coin bags 0.72 13,002.28 13,288.28 18.59
US 40% silver 1/2s 0.30 5,010.58 5,172.58 17.53
100 oz .999 bar 100.00 1,763.50 1,788.50 17.89
10 oz .999 bar 10.00 175.35 180.35 18.04
1 oz .999 round 1.00 17.49 17.95 17.95
Am Eagle, 200 oz Min 1.00 18.89 20.14 20.14
SPOT PLATINUM: 1,054.40      
Plat. Platypus 1.00 1,069.40 1,099.40 1,099.40
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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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