The Moneychanger
Daily Commentary
Tuesday, 17 May a.d. 2016 Browse the commentary archive

I read in The Daily Bell today at an article noting that the mainstream media is slamming Hillary. Authors muse that it might be a sign Hillary is losing Establishment support and will have to withdraw from the "race" (quotation marks obligatory). Really worth reading & pondering. The Daily Bell shows real insight and the best speculation of what's happening behind the media screens.

When roosters quack & ducks crow, you wonder what's going wrong. When markets don't act right, you wonder what you're not seeing. Dollar index tried one again today to clear its 50 DMA (94.76) and failed second day running. Lost 7 basis points (0.07%) to 94.49.

Not fatal, but like a rooster quacking, it makes you ask, "Why?" And moreso because it comes atop a slothful, lethargic rise off the early May low. So far nothing at all about that rally looks like anything more than a routine upward correction in a ruling downtrend. But what do I know? I'm no more'n a one-footed nat'ral born durn fool from Tennessee. Right now if I got into a kicking contest, I'd have to borrow somebody else's foot.

Other stinking, scrofulous, scurvy, scabby fiat currencies went nowhere today. How they ALL fell and the dollar index fell, too, I am not quite mathematically certain. I reckon they're falling out of this world back'ards!

It's tough enough being the only practicing non-communist in the USA, but worse would be owning stocks. Oh, yea, they were a-jubilatin' & a-drinkin' them martinis on Wall Street yesterday when the Dow rose 1%, so today I reckon they're drinking vinegar, ipecac, & milk-of-magnesia because it dropped 1.02%. Yes, lost 180.73 to close at 17,529.98. S&P500 did not disappoint, either, dropping 19.45 (0.94%) to 2,047.21.

Today the Dow in fact closed below the neckline of the Head & Shoulders top it has been drawing, & it goes without saying below its 20 & 50 DMAs. That head & shoulders measures to a target of about 17,000, and that right soon.

Listen, this is NOT entertainment and I am deadly serious. Mark my words: get out of stocks. Get out. Outlook for next 5-8 years is to lose 50% or more from the 18,312.39 high from last May. In case you're slow with a calculator, that means it will drop to 9,156.20 OR LOWER. Stocks will lose 85% of their present value against silver & gold.

If I did nothing more than look at the gold/silver ratio, I would conclude that this metals rally probably has further to run. Rallies take the ratio DOWN, & in spite of correcting for two weeks and more, the rally has not managed to break through the 200 day moving average above or the lower range boundary it broke getting here. Ratio appears set to move further down.

Silver rose 9.3¢ to 1723.5¢ and gold added a measly $2.80 to $1,276.20.

Both are rattling back & forth, trapped like a tiger and trying to break out. Look first at the gold chart for something new,

Blue-dotted line shows an even sided triangle, and gold has traded out into the tight nose cone. Above $1,287.50 gold burst out upside. Below $1,270 gold crashes to the earth. An even-sided triangle says nothing about which way it will break, only that it will break soon.

Now look at silver,

Silver has outlined a falling right triangle. As a general rule, these triangles are supposed to break downward, but I have often seen them serve as a consolidation and break out upwards. Odds favor a downside breakout, and momentum has slowed and turned down. Yet for all that I can't shake a reluctance, a trembling in my tongue, to say silver & gold will fall.

I'll be delivered shortly, at least. These triangles are swiftly coming to their point.

On 17 May 1444 was born the splendid Italian painter Sandro Botticelli, in the Italian Republic of Florence.

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
17-May-16 Price Change % Change
Gold, $/oz 1,276.20 2.80 0.22%
Silver, $/oz 17.24 0.09 0.54%
Gold/Silver Ratio 74.047 -0.238 -0.32%
Silver/Gold Ratio 0.0135 0.0000 0.32%
Platinum 1,053.70 0.60 0.06%
Palladium 584.40 -6.40 -1.08%
S&P 500 2,047.21 -19.45 -0.94%
Dow 17,529.98 -180.73 -1.02%
Dow in GOLD $s 283.95 -3.56 -1.24%
Dow in GOLD oz 13.74 -0.17 -1.24%
Dow in SILVER oz 1,017.12 -16.06 -1.55%
US Dollar Index 94.49 -0.07 -0.07%
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: 1,279.50      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,314.05 1,322.36 1,322.36
1/2 AE 0.50 652.04 674.94 1,349.87
1/4 AE 0.25 329.21 343.87 1,375.46
1/10 AE 0.10 134.24 140.11 1,401.05
Aust. 100 corona 0.98 1,247.90 1,256.90 1,282.28
British sovereign 0.24 303.45 316.45 1,344.32
French 20 franc 0.19 240.67 244.67 1,310.52
Krugerrand 1.00 1,291.02 1,301.02 1,301.02
Maple Leaf 1.00 1,289.50 1,303.50 1,303.50
1/2 Maple Leaf 0.50 735.71 671.74 1,343.48
1/4 Maple Leaf 0.25 326.27 342.27 1,369.07
1/10 Maple Leaf 0.10 135.63 139.47 1,394.66
Mexican 50 peso 1.21 1,531.77 1,542.77 1,279.56
.9999 bar 1.00 1,283.98 1,291.50 1,291.50
SPOT SILVER: 17.27      
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 12,884.30 13,424.30 18.78
US 40% silver 1/2s 0.30 4,976.65 5,138.65 17.42
100 oz .999 bar 100.00 1,752.00 1,777.00 17.77
10 oz .999 bar 10.00 174.20 179.20 17.92
1 oz .999 round 1.00 17.37 17.83 17.83
Am Eagle, 200 oz Min 1.00 18.77 20.02 20.02
SPOT PLATINUM: 1,053.70      
Plat. Platypus 1.00 1,068.70 1,098.70 1,098.70
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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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