The Moneychanger
Daily Commentary
Wednesday, 11 May a.d. 2016 Browse the commentary archive

I make it a point never to say, "I told y'all so," but remember what I said about the sudden stock rally yesterday? Well . . .

All the air went out of stocks today, nearly all that had pumped them up yesterday on rumors of the Chinese government's magical measures to continue the bubble. Dow lost 217.23 (1.21%), leaving it exactly 5.21 points higher than day before yesterday and effectively erasing the 222.44 point gain Tuesday. S&P500 could not stand, either, and lost 19.93 (0.96%) to 2,064.46.

Memorize: Bear market rallies are sudden, sharp, & short. They quickly give back all their gains.

Dow in Gold and Dow in Silver have resumed their downward flight, after a small correction. They testify with one voice: Stocks are about to lose value against metals. Charts are at http://schrts.co/8Sv0tc and http://schrts.co/ohwLZP

US dollar index fainted at that top range boundary & 20 day moving average. Here's the chart, http://schrts.co/OkJ5UT

This tells us the dollar index has not yet repudiated its downtrend, because the range has been trending down. Of course, after rising for six days running, today was likely not much more than a normal correction. Dollar lost 48 basis points or 0.51%. Yen climbed 0.81% to 92.26. Euro added 0.46% to $1.1428.

OIL (WTIC) rose today 4.99% to $46.75, but remains within a lethal rising wedge, and can only negate that danger by closing above & outside the wedge, way around $49. Chart's at, http://schrts.co/KvfGnd

Dollar fell, gold & silver rose. Silver added 22.7¢ (1.33%) to 1730.2¢. Gold advanced $10.70 (0.85%) for a $1,274.60 Comex close.

Today was thrilling, but answered no questions & proved no intents. Silver & gold remain trapped within trading ranges, and short term downtrends. Now closes above $1,306 and 1806¢ are needed to prove a rally dependable.

Still, both stubbornly refuse to collapse in the face of terrifyingly bad Commitments of Traders reports, and both remain above their 20 day moving averages, first tripwire of a decline. How does that fit together with the bearish sign of gold walking through its uptrend line from January?

Beats me. Here's a gold chart, http://schrts.co/0vM4CX and here's silver, http://schrts.co/t9IUae

The gold silver ratio chart speaks plainly, though. http://schrts.co/kh9gOy March first the ratio peaked at the top of its trading range (green lines) at 84.38. Then it deteriorated, painting an even-sided triangle and plunging out of that with a Thump and a gap. Fell straight down through the 200 DMA. Plunged more, then gapped down through the bottom range boundary to 70.40 as April ended. Since then it has rallied, but only to the lower boundary line, and today has fallen again below its 20 DMA. All this says, "Silver is relatively strong, so a rally should continue." Whole picture shows a change of quality from the last 5 years. and one more witness that the December 2015 lows were THE bottom of the post-2011 correction.

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-May-16 Price Change % Change
Gold, $/oz 1,274.60 10.70 0.85%
Silver, $/oz 17.30 0.23 1.33%
Gold/Silver Ratio 73.668 -0.353 -0.48%
Silver/Gold Ratio 0.0136 0.0001 0.48%
Platinum 1,068.50 15.90 1.51%
Palladium 608.30 15.85 2.68%
S&P 500 2,064.46 -19.93 -0.96%
Dow 17,711.12 -217.23 -1.21%
Dow in GOLD $s 287.24 -5.98 -2.04%
Dow in GOLD oz 13.90 -0.29 -2.04%
Dow in SILVER oz 1,023.65 -26.33 -2.51%
US Dollar Index 93.78 -0.48 -0.51%
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: 1,277.60      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,312.10 1,320.40 1,320.40
1/2 AE 0.50 651.07 673.93 1,347.87
1/4 AE 0.25 328.72 343.36 1,373.42
1/10 AE 0.10 134.04 139.90 1,398.97
Aust. 100 corona 0.98 1,246.04 1,255.04 1,280.39
British sovereign 0.24 303.00 316.00 1,342.41
French 20 franc 0.19 240.32 244.32 1,308.61
Krugerrand 1.00 1,289.10 1,299.10 1,299.10
Maple Leaf 1.00 1,287.60 1,301.60 1,301.60
1/2 Maple Leaf 0.50 734.62 670.74 1,341.48
1/4 Maple Leaf 0.25 325.79 341.76 1,367.03
1/10 Maple Leaf 0.10 135.43 139.26 1,392.58
Mexican 50 peso 1.21 1,529.49 1,540.49 1,277.67
.9999 bar 1.00 1,282.07 1,289.60 1,289.60
SPOT SILVER: 17.41      
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 12,980.83 13,305.83 18.61
US 40% silver 1/2s 0.30 5,016.48 5,178.48 17.55
100 oz .999 bar 100.00 1,765.50 1,790.50 17.91
10 oz .999 bar 10.00 175.55 180.55 18.06
1 oz .999 round 1.00 17.51 17.97 17.97
Am Eagle, 200 oz Min 1.00 18.91 20.16 20.16
SPOT PLATINUM: 1,068.50      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,083.50 1,113.50 1,113.50
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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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