The Moneychanger
Daily Commentary
Sunday, 28 August a.d. 2016 Browse the commentary archive

I'm sorry I missed y'all on Friday, but I got home late from Chattanooga &, not to put too fine a point on it, Yellen's speech amounted to no more than another central bank mouse burp. Nothing but a market destabilizer.

I joke about all this, but y'all realize you are watching the ever accelerating death of freedom, a free economy, and the last traces of self-government, right? Central banks have hijacked markets & run them to benefit their insider constituency, driving up stocks & bonds to make the rich richer. The Bank of Japan has wrecked the government bond market buy buying them all up, and one way or another owns something approaching 40% of all stock, and it ain't finished buying yet. Central banks, government, and sovereign wealth funds (government entities) own half the stocks in the world. Y'all might as well move with me to Mars where we can start a real economy all over from scratch.

Atop this reeking, steaming manure pile the central bank rooster (or roosteress, as the case may be), crows and crows from time to time, waking up the barnyard to worry & wobble, but none of it amounts to a mouse burp, as I said.

Oh, they are storing up economic wrath for some day to come, but like Greenspan & Bernanke, they all hope to retire first to fat speaking fees & consultancies rather than decorating a lamp post at 20th St. & Constitution Avenue as justice requires.

There, that's better: my spleen is purged. Couldn't help it: I do so mourn the death of freedom and reason.

Yellen's deflatulation offered only more of the same doublespeak, like the man on trial for murdering his parents who threw himself on the mercy of the court because he was now an orphan. Yes the economy is healing, no it's still sick, yes, more folks are working, but we need to see more yet, yes, we might raise the discount rate, but we don't know yet when. I'm an adult. I have no patience for such lying chin-boogie.

Neither did markets. Stocks shot up, then were shot down, and ended the day lower. Dollar index seesawed like a kindergarten playground, then finally rose to break through the downtrend line. Did Yellen do that, or BOJ head criminal Kuroda, who also spoke threatening banzai charges of new QE? Maybe that prospect made the dog-sick plug-ugly dollar look good. Silver & gold were confused, traded in a wide range, then ended slightly higher.

Like watching a hen scratch for bugs: lots of dust, not much meat.

So it was worthwhile to wait another trading day till the dust settled. Stocks regained about half their Friday loss today. Dow rose 107.59 (0.58%) to 18,502.99. S&P500 rose 0.52% or 11.34 to 2,180.38. What did today's rise accomplish? Not doodle. Didn't even rise as high as Fridays sawing high, but did reveal a cliff edge for the Dow & S&P500: 18,350 and 2,160.

Zooming in closer, both indices have established rectangular trading ranges. Look at and

Both are oscillating from top to bottom of that range, burning up buying power without advancing. Friday's roosteress' crow sent them to the bottom of the range & left them beneath the 20 day moving average. Today's rally barely recaptured that mark for the S&P500 (2,178.21) but not quite for the Dow Industrials (18,506.48). Y'all remind me, my memory's getting so bad: was it in August 1929 the Dow hit its peak, just before the October crash?

Y'all fetch a look at the Dollar Index chart,

Yellens mere bad breath whiff that the Fed would raise rates later this year (reinforced by her fellow criminal Stanley Fisher) shot the dollar index through the since-July downtrend line like shooting a midget out of cannon. Blew threw lateral resistance under 95.50 & today skidded to a stop at the 50 DMA. Closed today only two measly basis points above Friday at 95.56. Plumb tuckered out, bless his heart.

I ain't buying a higher dollar yet. I want to see if it's man enough & tough enough to wade through that 50 DMA. My only theory for the dollar index' persistent weakness is that the Fed criminals are colluding with the ECB mafiosi and the BoJ yakusa to suppress the dollar so the yen & euro don't evaporate. But I'm just a hick, no more'n a nat'ral born durned fool from Tennessee. Why, I don't even know how to pick pockets, much less rob millions with a fountain pen! Best I can do is cheat a little at a game of Rook. I ain't no good a-tall at international looting or shaking down nations.

Let's get on to silver & gold. Friday they closed Comex at $1, 321.50 and 1865.1¢, actually higher by $1.40 and 16.2¢. Today gold scootched up $1.40 (0.11%) to $1,322.90 while silver added 11.7¢ (0.63%) to 1876.8¢.

Friday Gold shot up to $1,341.60, then was slapped, banged, and thwacked back to $1,318, only to claw its way back to $1,321.50. Silver reached 1945¢ before being whacked down to 1854¢, but still managed to close higher.

Over the weekend the Evil Elves were out again in force, just a-sellin' silver for all they were worth & drove it down to 1840¢. But at 12:00 a.m.. Eastern time it was at 1845¢, & climbed like it was born in the Swiss Alps all day, reaching a high of 1893¢. Ended the day settling back a little to 1876.8¢ on Comex, but trading now about 10¢ higher.

Well, Moneychanger, do you care to parse that? Don't care a-tall. I reckon that was the bottom of the gold & silver correction. Oh, I'm risking being a mite previous saying that, but recall that the Fed unleashed a summer propaganda blizzard and that failed contemptibly to break silver & gold. Anyhow, I'll give y'all a failsafe check on my outlook: if gold closes below $1,300, I'm wrong. There will be more correction, but not much.

Look here at this nine month gold chart

Throw your eye up on that Relative Strength Indicator (RSI). Behold how it has whittled down from the July high, working off most of the overboughtness. Behold the MACD below, which looks to have bottomed, although, yes, it might just drop still.

Behold the bold green uptrend line from the December bottom, mark that Gold hath not yet touched that uptrend line, now about $1,300.

Behold lateral support at $1,306, which hath so far stood steadfast.

All told, gold don't need much elbowing to get on its ladder and start climbing again.

Lo, silver.

Observe first the RSI, monstrously overbought as July began, but reduced almost to oversold now (38.93 today). The fat has been trimmed off that hog. MACD (below) has also turned up.

Behold, also, the red downtrend line marked "Downtrend from April 2011." That, dear readers, is the Big One, and silver broke up through that back in April.

Beginning in July silver formed an even sided triangle, then fell out of it. It idleth yet beneath its 20 & 50 DMAs. Maximum target for that triangle breakdown -- maximum -- is 1750¢, the green since-December uptrend line. Between there & here is strong support at 1800¢. Finally, silver has fought off without surrender the worst circumstances can thrown at it, and held up twice at 1846 - 1854¢. Somebody -- a lot of somebodies -- doesn't mind buying down there.

Okay, there's my case for no more silver & gold downside. And I may be wrong & nothing better than a durned fool, but at the very least I ain't no thieving', sneakin', clammy-handed, overfed & underworked, lying every time my lips move central bank criminal. Shucks, next to them mlalyfakturs, even I look like a upstandin', outstandin' cityzen in a new suit!

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
29-Aug-16 Price Change % Change
Gold, $/oz 1,322.90 1.40 0.11%
Silver, $/oz 18.77 0.12 0.63%
Gold/Silver Ratio 70.487 -0.367 -0.52%
Silver/Gold Ratio 0.0142 0.0001 0.52%
Platinum 1,078.30 3.10 0.29%
Palladium 697.30 5.15 0.74%
S&P 500 2,180.38 11.34 0.52%
Dow 18,502.99 107.59 0.58%
Dow in GOLD $s 289.13 1.38 0.48%
Dow in GOLD oz 13.99 0.07 0.48%
Dow in SILVER oz 985.88 -0.42 -0.04%
US Dollar Index 95.56 0.02 0.02%
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: 1,323.30      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,355.06 1,367.63 1,367.63
1/2 AE 0.50 674.37 698.04 1,396.08
1/4 AE 0.25 340.49 355.64 1,422.55
1/10 AE 0.10 138.84 144.90 1,449.01
Aust. 100 corona 0.98 1,288.02 1,297.02 1,323.22
British sovereign 0.24 313.84 326.84 1,388.45
French 20 franc 0.19 244.59 248.59 1,331.49
Krugerrand 1.00 1,331.24 1,341.24 1,341.24
Maple Leaf 1.00 1,333.30 1,347.30 1,347.30
1/2 Maple Leaf 0.50 760.90 694.73 1,389.47
1/4 Maple Leaf 0.25 337.44 353.98 1,415.93
1/10 Maple Leaf 0.10 140.27 144.24 1,442.40
Mexican 50 peso 1.21 1,581.01 1,592.01 1,320.40
.9999 bar 1.00 1,327.93 1,335.30 1,335.30
SPOT SILVER: 18.82      
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 13,563.55 13,849.55 19.37
US 40% silver 1/2s 0.30 5,360.15 5,510.15 18.68
100 oz .999 bar 100.00 1,862.00 1,897.00 18.97
10 oz .999 bar 10.00 189.70 194.70 19.47
1 oz .999 round 1.00 18.62 19.12 19.12
Am Eagle, 200 oz Min 1.00 20.32 21.82 21.82
SPOT PLATINUM: 1,078.30      
Plat. Platypus 1.00 1,093.30 1,123.30 1,123.30
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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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