The Moneychanger
Daily Commentary
Thursday, 23 June a.d. 2016 Browse the commentary archive

A reader called me yesterday after reading Bob Moriarty's article about swapping gold for platinum. The article is here, If y'all think swapping gold for platinum is a good idea, remember we help keep your transaction costs LOW because we charge commission on one side of the trade only. Whatever you take out we charge at our cost.

Brexit froze markets again today, but not stocks. They rose on the open, evidencing that investors had decided Brexit would fail. (I refuse to address their presumed belief that EU membership is good for the British economy, on grounds that my mind is too fastidious to sully with such nonsense. While a pan-European trade zone might be a great idea, the expensive, tyrannical EU bureaucracy vigorously squanders any advantage.)

Dow ended the day up $230 (1.29%) at 18,011.07. S&P500 gained 27.87 (1.34%) to 2,113.32. Take a picture, folks: this is as good as it gets. What new rabbit remains to be pulled out of the hat? Somewhere out there, not far, is a cliff, waiting for stocks to stumble over its edge.

Markets deciding they needed no safe haven after all sent the US dollar index down to a new low for the move. At its worst it hit 93.03, but closed at 93.53, down only 23 basis points (0.25%). Since this was a new intraday low, it pretty much decapitates any idea of a rally in the dollar index. It has made two lower highs and two lower lows. Now it's heading for that critical 92.50 level again.

Euro rose 0.6% to $1.1382. This is a slightly lower high than the last. Euro would have to close above $1.1574 to turn its trend seriously up. And we found out today that safe haven buying was furnishing all the demand under the yen. It fell a huge 2.07% to 93.63. Y'all look at this chart,

It gapped up off the May low, gapped again mid June, painted a sideways island for five days, then gapped down again today. This completes an island reversal, but it needs to be confirmed tomorrow by a lower close.

Gold closed Comes $6.60 lower at 41,261.20. Silver in fact rose 4.3¢ to 1734.8¢. In the aftermarket gold backed down to $1,258.60 and silver hardly backed off at all, only 2.8¢ to 1732¢.

If the picture for stocks is as good as it gets, for gold it's as bad as it gets. Maybe there's a day or two of follow up washout, but it will simply complete this short correction.

What grabs my jaws & makes me look is the gold/silver ratio, DOWN today from 73.274 yesterday to 72.700 -- 72.667 if you look at the aftermarket. Folks, if silver & gold are weak, that just ain't right. That ratio does not weaken when metals are weak, it strengthens. Okay, one swallow doth not a spring make nor one roach an infestation, nor one day's trading a trend, but it is a harbinger.

Today gold closed the day (not Comex) right at its 50 day moving average ($1,259.24). The 20 DMA lieth right beside it at $1,259.01. A retreat to the 50 DMA is enough to qualify as a shallow correction. Now that this Brexit kerfuffle is out of the way, we'll find out what gold's made of.

I see where some Democratic representatives staged a sit-in in the House of Representatives. Apparently they were pouting because they didn't get the gun control they want. When adults in the chamber of one of the world's greatest nations act like children, the country is becoming ungovernable.

Y'all can talk about rights all you want, but if government gets the guns, you won't have any more rights than a road-killed cat. What do you think holds the tyrants back from doing even WORSE things? They simply don't know where 200 million weapons are, or if the folks who own them will use them. As long as those guns are out there, government is restrained. The guns don't even have to be used, they just have to be there, so they might be used.

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
23-Jun-16 Price Change % Change
Gold, $/oz 1,261.20 -6.60 -0.52%
Silver, $/oz 17.35 0.04 0.25%
Gold/Silver Ratio 72.700 -0.562 -0.77%
Silver/Gold Ratio 0.0138 0.0001 0.77%
Platinum 965.90 -17.20 -1.75%
Palladium 568.25 4.00 0.71%
S&P 500 2,113.32 27.87 1.34%
Dow 18,011.07 230.00 1.29%
Dow in GOLD $s 295.21 5.29 1.82%
Dow in GOLD oz 14.28 0.26 1.82%
Dow in SILVER oz 1,038.22 10.71 1.04%
US Dollar Index 93.53 -0.23 -0.25%
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: 1,258.60      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,290.07 1,300.76 1,300.76
1/2 AE 0.50 641.38 663.91 1,327.82
1/4 AE 0.25 323.83 338.25 1,353.00
1/10 AE 0.10 132.05 137.82 1,378.17
Aust. 100 corona 0.98 1,227.51 1,236.51 1,261.49
British sovereign 0.24 298.50 311.50 1,323.26
French 20 franc 0.19 236.74 240.74 1,289.46
Krugerrand 1.00 1,268.67 1,278.67 1,278.67
Maple Leaf 1.00 1,268.60 1,282.60 1,282.60
1/2 Maple Leaf 0.50 723.70 660.77 1,321.53
1/4 Maple Leaf 0.25 320.94 336.68 1,346.70
1/10 Maple Leaf 0.10 133.41 137.19 1,371.87
Mexican 50 peso 1.21 1,508.26 1,519.26 1,260.07
.9999 bar 1.00 1,263.01 1,270.60 1,270.60
SPOT SILVER: 17.32      
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 12,705.55 12,990.55 18.17
US 40% silver 1/2s 0.30 4,991.40 5,153.40 17.47
100 oz .999 bar 100.00 1,757.00 1,782.00 17.82
10 oz .999 bar 10.00 174.70 179.70 17.97
1 oz .999 round 1.00 17.42 17.88 17.88
Am Eagle, 200 oz Min 1.00 18.82 20.07 20.07
SPOT PLATINUM: 965.90      
Plat. Platypus 1.00 980.90 1,010.90 1,010.90
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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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