The Moneychanger
Daily Commentary
Wednesday, 18 May a.d. 2016 Browse the commentary archive

Don't y'all think the most appalling thing about the yankee government & Federal Reserve is their merciless tiresomenesst? Their tedious predictability? The programmed fear & instability? They need a new choreographer.

So with utter predictability the Fed's Federal Obtuse Moron Committee today HINTED they might just raise rates in June after all -- no promises, mind you, but hints that those who read the Fed's sheep livers can plainly see. I say this was "predictable" because they needed to boost the dollar, which had stalled, and more, they need to keep markets off balance, constantly sawing from one expectation to the other so nobody will know what they plan. Maybe they have some reason for this (I doubt it's valid) but the net outcome is to prevent millions of folks from planning & ordering their lives, and to plant instability & uncertainty like Kudzu.

It remains "a tale told by an idiot, full of sound and fury, signifying nothing."

Let's look at the outcome. First, the Fed & its staff of imposters & poseurs had better not speak too loudly about raising interest rates, lest the stock market hear, fear, and die. The heroic efforts of the Nice Government Men managed to bring the Dow back from a 17,418.21 low where the FOMC announcement blew it, up to nearly unchanged at 17,526.62, 3.36 (0.2%) lower than yesterday. The NGM managed to bring the S&P500 into positive territory at 2,047.63, although a 0.42 rise (0.02%) isn't likely to win a home in any record books.

Lo! 'Twas no more'n a bounce off the Head & Shoulders neckline for the S&P, & a further drop beneath the neckline for the Dow. No cause for jubilatin' there, Wall Street, so stow away your dancing Guccis. Stock indices will next imitate a large anvil floating in deep water. Higher rates will tie chains on the anvil.

Of course, it's purely subjective, but I wasn't particularly moved to awe by the Dollar Index' move today. A 64 basis point (0.68%) move to 95.18 broke no records. While it did punch through the hitherto impunchable 50 day moving average, it stopped cold at the upper downtrend boundary stretching back to 1 February. Look, http://schrts.co/0vo2jg The red lines mark the downtrend from February. Within that downtrend the green lines show another, interior trading range. Last four days' action merely carried the dollar index to that upper boundary. No rally can happen without the dollar index penetrating that line. Maybe it will tomorrow, but for now my sneer remains intact.

Today offered another lesson in why nobody should trade currencies. The FOMC's announcement panicked the euro and yen markets. Euro fell a meaty 0.83% to $1.1210 while the yen tumbled massively, down 1.02% to 90.70.

And here's a reason it's dangerous to trade US treasuries, too. FOMC mumbles today wounded bond prices and sent yields soaring. 10 year treasury yield rose 6.88% to 1.21%. Who knew? That's why I don't want to play on any government playground, currencies or bonds, cause everything they touch turns to -- mud.

Oil (WTIC) is pushing against the upper border of a long-lived rising wedge. Closed today at $48.78, but if it doesn't break through $50 soon, it will nosedive, too.

On Comex gold lost a mere $2.50 (0.2%), closing at $1,273.70. Silver lost 11.5¢ (0.67%) to 1712¢.

But remember that the Comex closes at 1:30 Eastern while the FOMC bloviates at 2:00 Eastern, so those closes came before the announcement. After the dust settled & the dancing stopped, gold stood at $1,257.20, down $19 (1.5%) from yesterday's Comex close. Silver lost 37.5¢ from yesterday's comes, or 2.2%.

Behold, the gold chart, http://schrts.co/quY8qs

Remember that even-sided triangle on the gold chart I mentioned yesterday? Well, today gold broke down out of that. And it punched into the nearby ascending fan line from the January low, if not quite through the 50 DMA ($1,252.16). That suggests that gold will drop further tomorrow. If it doesn't, that refusal would show great strength.

Silver's case differs. Look here, http://schrts.co/t9IUae

This end of day chart shows today's silver low at 1692, but it hit 1686. That is the very bottom of the falling right triangle, and the limit of support. Belwo nothing will catch silver before 1631¢ (50 DMA). Falling right triangles usually but not always resolve by breaking downward. To resist breaking, silver must stay above 1685¢.

My mind's not really here today because my youngest son (of five), Zachariah, is at the hospital with his wife Victoria laboring with their first baby. She has been travailing since yesterday morning, and shortly must have a C-section if the baby won't come. She is indescribably brave & has given every effort to prevent this. Please pray for Victoria and her baby in labor, and for Zachariah.

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
18-May-16 Price Change % Change
Gold, $/oz 1,273.70 -2.50 -0.20%
Silver, $/oz 17.12 -0.12 -0.67%
Gold/Silver Ratio 74.398 0.351 0.47%
Silver/Gold Ratio 0.0134 -0.0001 -0.47%
Platinum 1,042.00 -11.70 -1.11%
Palladium 579.40 -5.00 -0.86%
S&P 500 2,047.63 0.43 0.02%
Dow 17,526.62 -3.36 -0.02%
Dow in GOLD $s 284.45 0.50 0.18%
Dow in GOLD oz 13.76 0.02 0.18%
Dow in SILVER oz 1,023.75 6.64 0.65%
US Dollar Index 95.18 0.64 0.68%
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: 1,257.20      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,291.14 1,299.32 1,299.32
1/2 AE 0.50 640.66 663.17 1,326.35
1/4 AE 0.25 323.47 337.87 1,351.49
1/10 AE 0.10 131.90 137.66 1,376.63
Aust. 100 corona 0.98 1,226.15 1,235.15 1,260.10
British sovereign 0.24 298.16 311.16 1,321.85
French 20 franc 0.19 236.48 240.48 1,288.05
Krugerrand 1.00 1,268.51 1,278.51 1,278.51
Maple Leaf 1.00 1,267.20 1,281.20 1,281.20
1/2 Maple Leaf 0.50 722.89 660.03 1,320.06
1/4 Maple Leaf 0.25 320.59 336.30 1,345.20
1/10 Maple Leaf 0.10 133.26 137.03 1,370.35
Mexican 50 peso 1.21 1,505.07 1,516.07 1,257.42
.9999 bar 1.00 1,261.60 1,269.20 1,269.20
SPOT SILVER: 16.86      
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 12,591.15 13,131.15 18.37
US 40% silver 1/2s 0.30 4,855.70 5,017.70 17.01
100 oz .999 bar 100.00 1,711.00 1,736.00 17.36
10 oz .999 bar 10.00 170.10 175.10 17.51
1 oz .999 round 1.00 16.96 17.42 17.42
Am Eagle, 200 oz Min 1.00 18.36 19.61 19.61
SPOT PLATINUM: 1,042.00      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,057.00 1,087.00 1,087.00
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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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