The Moneychanger
Daily Commentary
Tuesday, 31 May a.d. 2016 Browse the commentary archive

One of my sons and his wife want to sell their house built in 2011 here on our farm & move nearer her work. Here's a link to the listing,

The house has four bedrooms, three baths, and 2,061 square feet, & sits on 2-1/2 Acres on a gravel road. They originally listed it for $210K, it appraises for $185k, & now they've lowered the price to $148k. They're in a hurry. You northerners won't believe this, but yearly taxes are only $518.00. Check the listing, and look at the pictures yourself.

Let us not mince words: stocks were saved today by a "miraculous friend" who entered the falling market PRECISELY one hour before close to buy like a mad dog -- like somebody to whom money is no object. Who would do such a thing? Who indeed? Investors?

Y'all don't take my word for anything. God to and click on every one of those index charts. Look at 'em. Every one was invaded by friends right at 3:01.

Some of us who don't believe in stock faeries might suspect the Nice Government Men had a hand in that, but we are all jaundiced cynics.

Dow ended down 86.0 (00.48%) at 17,787.20 while the SP500 lost only 2.0 (0.1%) for a close at 2,096.96.

Mercy, they can fight gravity all they want, but eventually gravity will wreak its vengeance. Stocks are completing a head and shoulders top, whether "friendly" buying saved them from closing below their 50 day moving averages today or not. Stocks have cracked. Like an egg falling out of the cracked shell over a skilletfull of hot bacon grease, nothing sizzling yet, but just you wait till it hits that hot grease.

US dollar index rose 38 basis points (0.4%) to 95.88, yet did not crush gold. Mmmm. Dollar index continues it slothful rally, reaching toward the breaking point at the 200 DMA, now 96.62. A failure there would put some nitro in gold & silver's tank. A punch through that 200 DMA might give 'em flat tires.

Today was actually an up-day for Gold, although the $1.00 (0.08%) higher close at $1,214.80 on Comex doesn't look like much. Not so silver, which lost 27.4¢ (1.7%) at 1597.2¢.

Gold's low today came at $1,201.50, and gold is putting up a stout fight at $1,200, as expected. Should gold break the $1,200 support, it will fall to $1,190 or even to the 200 DMA, now at $1,163.74 & rising. Y'all may want me to step out on a limb with a definite target, but no. I'll give you a target in time, however, and that is three weeks at most for gold to reach a low. And I don't expect to see it fall much below $1,190, albeit I will be nothing downcast if it spikes to $1,140 one day. Y'all should view all of this as your last opportunity to buy gold on the cheap. Chart:

Silver's low reached 1591¢. Today's weakness makes that 1590¢ resistance look mighty rickety. My two foremost targets for silver are this 1600¢ area it's playing in today, or the 1575¢ level, where the uptrend line form the January low hits, or below that, the 200 DMA (now about 1520¢) where the downtrend line from the April 2011 high will catch it. Remember that silver broke upward through that line in April. Here's the chart, with red arrows on those targets,

On 31 May 1902 the Anglo-Boer War ended with the Treaty of Vereeniging. This was not Britain's finest war, in which they at first found themselves hopelessly outmatched against Boer commandos armed with the latest technology, smokeless powder, & superb bolt action German Mausers. Eventually numbers weighed on the fierce Boer guerrillass, but only after the British created Concentration Camps where they interned Boer women and children who died in droves. The war had been sparked by Cecil Rhodes & others greedy for the gold mines in the Boer republics, and was immensely unpopular in Great 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
31-May-16 Price Change % Change
Gold, $/oz 1,214.80 1.00 0.08%
Silver, $/oz 15.97 -0.27 -1.69%
Gold/Silver Ratio 76.058 1.344 1.80%
Silver/Gold Ratio 0.0131 -0.0002 -1.77%
Platinum 978.70 -1.80 -0.18%
Palladium 547.75 8.15 1.51%
S&P 500 2,096.96 -0.10 -0.00%
Dow 17,787.20 -86.02 -0.48%
Dow in GOLD $s 302.68 -1.71 -0.56%
Dow in GOLD oz 14.64 -0.08 -0.56%
Dow in SILVER oz 1,113.65 13.49 1.23%
US Dollar Index 95.88 0.38 0.40%
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: 1,217.30      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,251.38 1,258.08 1,258.08
1/2 AE 0.50 620.31 642.13 1,284.25
1/4 AE 0.25 313.20 327.15 1,308.60
1/10 AE 0.10 127.71 133.29 1,332.94
Aust. 100 corona 0.98 1,187.23 1,196.23 1,220.40
British sovereign 0.24 288.70 301.70 1,281.65
French 20 franc 0.19 228.97 232.97 1,247.85
Krugerrand 1.00 1,227.04 1,237.04 1,237.04
Maple Leaf 1.00 1,227.30 1,241.30 1,241.30
1/2 Maple Leaf 0.50 699.95 639.08 1,278.17
1/4 Maple Leaf 0.25 310.41 325.63 1,302.51
1/10 Maple Leaf 0.10 129.03 132.69 1,326.86
Mexican 50 peso 1.21 1,457.30 1,468.30 1,217.80
.9999 bar 1.00 1,221.56 1,229.30 1,229.30
SPOT SILVER: 15.99      
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 12,072.78 12,432.78 17.39
US 40% silver 1/2s 0.30 4,597.58 4,759.58 16.13
100 oz .999 bar 100.00 1,623.50 1,648.50 16.49
10 oz .999 bar 10.00 161.35 166.35 16.64
1 oz .999 round 1.00 16.09 16.55 16.55
Am Eagle, 200 oz Min 1.00 17.49 18.74 18.74
SPOT PLATINUM: 978.70      
Plat. Platypus 1.00 993.70 1,023.70 1,023.70
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© 2015 Little Mountain Corporation, d.b.a. The Moneychanger. All rights reserved. May not be republished in any form, including electronically, without our express permission.

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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