The Moneychanger
Daily Commentary
Tuesday, 16 August a.d. 2016 Browse the commentary archive

The on-going saga of dollar weakness & gold strength continues. I have now reached a point where I am worried less about any gold correction than I am about y'all simply acquiring silver & gold.

I try to avoid disaster-mongering, but you'd have to be blind not to see that the world's central banks have worked themselves to the lip of a massive tiger trap, bristling with sharp pointed bamboo stakes below. They have screwed down and screwed down interest rates, distorting financial markets & forcing investors into government bonds and stocks. In bonds particularly they have created a bubble. Lately the 30 year US bond hit all-time highs, in the process throwing over its upper channel line. Right now it danceth back & forth over that line, but 'twill surely & inevitably break.

Now let your mind dwell on this: what will the exit look like when millions of people want out of bonds, RIGHT NOW? Markets will wrest interest rate control out of the Fed's pallid, clammy, uncalloused hands & take them up, yea, very much up. It reminds me of the two old boys, Willie & Earl, who used to drive trucks together. Willie was being tested to renew his license, & the inspector asked him, "Suppose you are going down the long steep grade of Monteagle Mountain, and suppose further that your brakes went out. Now suppose that you look at the foot of the mountain and see 35 cars in front of you waiting for a railroad train to pass. What would you do next?"

Willie never hesitated. "I'd wake up Earl."

Inspector said, "Wake up Earl? Why on earth would you wake up Earl?"

Willie shot back, "Cause he ain't never seen a wreck like this!"

Likewise, y'all think 1998 and 2000 and 2008 were all bad, and they were, but Earl ain't never seen seen a wreck like that bond bubble bursting.

Then it will be too late to buy silver and gold.

Doubts the Fed is manipulating the US dollar index downward were allayed today by the San Francisco Fed's head criminal opining loudly that the Fed ought to raise rates this year. Unhappily for the Fed, it didn't work. The US dollar index sank a meaty 81 basis points (0.85%) to 94.76. I heard some durned fool say yesterday that the dollar was liable to slide, and lo, if it didn't. Look,

No reason the dollar should stop at any particular place on this chart before it hits 92.50. None a-tall. Should that happen, gold will profit.

Today's dollar faint sent the scrofulous euro shooting up 0.84% for a $1.1244 close. Broke upside out of it's downtrending channel & should run for $1.1425. Go figure.

Yen also broke out upside with a gap. Closed up 0.98% to 99.72. Whoa, the buck is languishing & the upstarts are taking over.

Stocks backed up. S&P500 lost 12.00 (0.55%) to 2,178.15. Breaking point I am watching is 2,165. Dow fell back 84.03 (0.45%) to 18,550.65. Wake up, Earl!

Gold rose 0.76% or $10.20 to $1,350.50 on Comex. Silver barely moved on the close, up 2.7¢ to 1984.8¢. However, 'twas suspiciously higher until slammed about 9:00, high as 2012¢, and driven down to 1972¢. A similar script played out in Gold, with a high at $1,364.30 and a fall back to $1,244.50.

Points to be beat remain 2085¢ & $1,365, which has blocked gold for 5 days. Of course, $1,365 won't be enough to break out. For that Gold needs to top $1,378.

Y'all realize, I hope, that if silver & gold continue to hold up until end-August without breaking into a correction, then they're even stronger than I imagine.

In 1829 the Siamese twins, Chang & Eng Bunker, arrived in Boston, where they had come to be exhibited. They were 18 years old and joined at the waist. Eventually they married & settled near Mount Airy, North Carolina. Chang & Adelaide had 11 children and Eng and Sarah had 10. They lived until 1874 and were buried in Mt. Airy. Their descendants number more than 1,500.

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
16-Aug-16 Price Change % Change
Gold, $/oz 1,350.50 10.20 0.76%
Silver, $/oz 19.85 0.03 0.14%
Gold/Silver Ratio 68.042 0.422 0.62%
Silver/Gold Ratio 0.0147 -0.0001 -0.62%
Platinum 1,121.80 8.00 0.72%
Palladium 704.05 12.95 1.87%
S&P 500 2,180.89 1.98 0.09%
Dow 18,550.65 -84.03 -0.45%
Dow in GOLD $s 283.95 -3.46 -1.20%
Dow in GOLD oz 13.74 -0.17 -1.20%
Dow in SILVER oz 934.64 -5.51 -0.59%
US Dollar Index 94.76 -0.81 -0.85%
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: 1,347.60      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,379.94 1,392.74 1,392.74
1/2 AE 0.50 686.77 710.86 1,421.72
1/4 AE 0.25 346.75 362.17 1,448.67
1/10 AE 0.10 141.39 147.56 1,475.62
Aust. 100 corona 0.98 1,312.99 1,321.99 1,348.70
British sovereign 0.24 319.60 332.60 1,412.93
French 20 franc 0.19 253.48 257.48 1,379.13
Krugerrand 1.00 1,357.03 1,367.03 1,367.03
Maple Leaf 1.00 1,357.60 1,371.60 1,371.60
1/2 Maple Leaf 0.50 774.87 707.49 1,414.98
1/4 Maple Leaf 0.25 343.64 360.48 1,441.93
1/10 Maple Leaf 0.10 142.85 146.89 1,468.88
Mexican 50 peso 1.21 1,610.04 1,621.04 1,344.48
.9999 bar 1.00 1,352.32 1,359.60 1,359.60
SPOT SILVER: 19.82      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 25.00 27.00 35.29
VG+ Peace dollar 0.77 20.00 22.00 28.76
90% silver coin bags 0.72 13,956.80 14,276.80 19.97
US 40% silver 1/2s 0.30 5,655.15 5,805.15 19.68
100 oz .999 bar 100.00 1,962.00 2,032.00 20.32
10 oz .999 bar 10.00 199.70 204.70 20.47
1 oz .999 round 1.00 19.62 20.38 20.38
Am Eagle, 200 oz Min 1.00 21.32 22.82 22.82
SPOT PLATINUM: 1,121.80      
Plat. Platypus 1.00 1,136.80 1,166.80 1,166.80
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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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