The Moneychanger
Daily Commentary
Wednesday, 24 August a.d. 2016 Browse the commentary archive

I'm having so much fun today I'm afraid I'm gonna start drooling

First, and further to that Amazing Cheese Transaction yesterday, today I learned that the almighty yankee government & its USDA (Destruction of Agriculture Dept.) are also saving y'all from a PEANUT glut. If you subsidize, they will plant it. Nobody should be surprised then that the USDA will shell out $2 billion in subsidies to peanut farmers, to keep them in the style to which government has made them accustomed.

If you want to know why independent small farmers who raise wholesome, chemical free food have trouble competing, here's why: the yankee government subsidizes food prices. Therefore, the cost you pay for peanuts or milk does NOT reflect a free market price. That lower priced, usually inferior, industrially produced "food" looks cheaper, until you check the nutrition. And its low price runs nutrient-dense producers out of business. Well, it's cheaper until you look at the effect glyphosate & other chemicals have on your health, but it's real cheap till you peg out with cancer or celiac disease.

Second, check out this article "Four More Mega-Banks Join the Anti-Dollar Alliance." Long & short is that banks are adopting blockchain technology to end-run US government controls and the US banking system's charges. Blockchain technology makes them able to pass funds directly to each other rather than through the US banking system. Oh, my! Huge implications.

Third, look at this Zero Hedge article, "Someone Puked $1.5 Billion of Notional Gold, And The Selling Continues."

The report says that somebody at 8:40 Eastern dumped $1.5 billion of notional gold into the future markets. Dumped over 10,000 contracts in one minute.

I don't want to insult y'all's intelligence, but y'all do understand that no profit-maximizing seller in Creation would dump all that gold at once, even if he wanted to sell 10,000 oz., right? Because the more you sell, the lower the price falls. Hard to imagine this was not some branch of the Nice Government Men softening up the gold & silver markets before Gelid Yellen croaks tomorrow into the Jackson Hole.

Let us assess the damage.

US dollar index for no known reason and in face of weak US existing home sales rose 25 basis points 0.26%) to 94.74. Look at the chart,

Technically this is known as "pushing your luck." Dollar has run slap up against that downtrend from the July high. Now the news from the Toad Lady must be good, or the dollar will disappear like a hummingbird in a tornado. Of course, if she manages to snow the gullible into believing the fantasy that the Fed will raise interest rates, the dollar might poke up right through that downtrend.

Stocks weren't comfortable with a higher dollar. Dow lost 65.82 (0.35%) to 18,481.48. S&P500 backed off 11.46 (0.52%) to 2,175.44.

On Comex gold tumbled $16.20 (1.2%) to close at $1,324.40. Silver fell down a mudslide 35.4¢ (1.9%) to 1855.6¢.

Y'all will find the gold chart here,

From a technical standpoint gold wounded itself by closing below the 50 day moving average (now $1,334.01). That move targets $1,310 - $1,300 support. You'll know tomorrow after the Yellen-Fest, how far gold will fall. If observers take her remarks to mean no rate hike, gold will soar.

Silver chart lurks here,

Silver was already below its 50 DMA (1940¢) and aiming at support around 1800¢. If that holdeth not, more support lurks at the post-December uptrend line, now about 1750¢.

It's silly for me to say anything beyond that, because I have no idea what Yellen might say tomorrow, ore even how markets might react to it. I don't believe one moldy word that falls off her lips, but the credulous outnumber me.

Take this home. Silver & gold are correcting in a larger upmove since December. That low market the turn in the 5 year silver & gold bear phase. Whatever the outcome of this present correction, the primary trend for the next 5 - 8 years will be UP.

Today is St. Bartholomew's day. On 24 August 1572 the Huguenots, French Protestants, were slaughtered by the government, beginning in Paris. An estimated 70,000 people died.

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
24-Aug-16 Price Change % Change
Gold, $/oz 1,324.40 -16.20 -1.21%
Silver, $/oz 18.56 -0.35 -1.87%
Gold/Silver Ratio 71.373 0.479 0.68%
Silver/Gold Ratio 0.0140 -0.0001 -0.67%
Platinum 1,079.70 -29.10 -2.62%
Palladium 682.50 -16.45 -2.35%
S&P 500 2,175.44 -11.46 -0.52%
Dow 18,481.48 -65.82 -0.35%
Dow in GOLD $s 288.47 2.47 0.86%
Dow in GOLD oz 13.95 0.12 0.86%
Dow in SILVER oz 995.98 15.16 1.55%
US Dollar Index 94.74 0.25 0.26%
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: 1,322.30      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,354.04 1,366.60 1,366.60
1/2 AE 0.50 673.86 697.51 1,395.03
1/4 AE 0.25 340.23 355.37 1,421.47
1/10 AE 0.10 138.74 144.79 1,447.92
Aust. 100 corona 0.98 1,287.05 1,296.05 1,322.23
British sovereign 0.24 313.60 326.60 1,387.44
French 20 franc 0.19 244.40 248.40 1,330.50
Krugerrand 1.00 1,330.23 1,340.23 1,340.23
Maple Leaf 1.00 1,332.30 1,346.30 1,346.30
1/2 Maple Leaf 0.50 760.32 694.21 1,388.42
1/4 Maple Leaf 0.25 337.19 353.72 1,414.86
1/10 Maple Leaf 0.10 140.16 144.13 1,441.31
Mexican 50 peso 1.21 1,579.82 1,590.82 1,319.41
.9999 bar 1.00 1,326.93 1,334.30 1,334.30
SPOT SILVER: 18.50      
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 13,188.18 13,510.18 18.90
US 40% silver 1/2s 0.30 5,264.28 5,414.28 18.35
100 oz .999 bar 100.00 1,829.50 1,864.50 18.65
10 oz .999 bar 10.00 186.45 191.45 19.15
1 oz .999 round 1.00 18.30 18.80 18.80
Am Eagle, 200 oz Min 1.00 20.00 21.50 21.50
SPOT PLATINUM: 1,079.70      
Plat. Platypus 1.00 1,094.70 1,124.70 1,124.70
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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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