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

Do y'all have any idea how vital dung beetles are to pasture ecosystems? I'm at a grazing conference with my son, digging into really important things like this, but I have to interrupt my study to deal with another & far less useful kind of dung beetle, central bankers. (I am not kidding about the importance of dung beetles to wholistic agriculture. They are astounding.)

Today the FOMC lost whatever shreds of credibility it had left. The Fed flinched again, and left interest rates untouched. Y'all really must not miss this epochal change: multitudes are recognizing the emperor's nakedness. Never mind what else Jelly Janet said, they flinched. The death throes of central banking have arrived.

Bank of Japan annunced not more QE but to controlling the yield curve. Never mind the details, market took it as good for the yen, which rose 1.38% to 99.67.

Stocks took the news as favorable. Dow rose 163.74 (0.9%) to 18,293.70. S&P500 gained 23.36 (1.09%) to 2,163.12. Nice, but not near enough to save stocks from further breakdown. Take not my word, look for yourself.

Fed pulled the flush chain on the US dollar index. Look here,

First the Dollar Index cut up into the 200 day moving average, then tumbled below its 50 DMA & further, posting the first half of a key reversal. Lower close tomorrow confirms a key reversal. Whether is secret Fed policy or underlying fundamentals, dollar index will sink further.

Gold closed Comex $13.20 (1%) higher at $1,326.90. Silver added 49.1¢ (2.34%) to 1968.6¢. In the post-FOMC aftermarket, gold reached $1,333.40 & silver 1968.5¢.

Gold and silver acted precisely as they should if acting from strength. Start with the gold chart,

On enormous volume gold rose 2.55% by day's end. It bounded up off the 20 day moving average and sliced plumb through the 50 DMA. Since it traded today into lower territory than yesterday but closed higher, that's the first half of a key reversal. On the way it busted through resistance around $1,325, then in the aftermarket bounced to next resistance at $1,333. A similar leap tomorrow would carry it to the downtrend line from the July high, call that $1,362. Gold should crack that very shortly, and resume its path toward $1,450.

Right, go back & read that again, that's exactly what I mean. AND it's happening against a backdrop of stocks hanging on the cliff's edge and a global bond panic. Couldn't ask for more fuel than that.

Now behold silver,

Silver bounded off its internal uptrend line, running today with the 20 DMA, and jumped up through the 50 DMA. Silver's goal is to get over 2000¢ & stay there. That is a teeny 15¢ above, and it also coincides with the downtrend line from the July high. In plain Southern, a breakout through that upper channel boundary sends silver shooting toward 2300¢.

Higher. Metals are going higher. Now.

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
21-Sep-16 Price Change % Change
Gold, $/oz 1,326.90 13.20 1.00%
Silver, $/oz 19.69 0.45 2.34%
Gold/Silver Ratio 67.403 -0.894 -1.31%
Silver/Gold Ratio 0.0148 0.0002 1.33%
Platinum 1,047.50 17.00 1.65%
Palladium 684.25 0.30 0.04%
S&P 500 2,163.12 23.36 1.09%
Dow 18,293.70 163.74 0.90%
Dow in GOLD $s 285.00 -0.29 -0.10%
Dow in GOLD oz 13.79 -0.01 -0.10%
Dow in SILVER oz 929.27 -13.28 -1.41%
US Dollar Index 95.67 -0.31 -0.32%
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: 1,333.40      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,373.40 1,378.07 1,378.07
1/2 AE 0.50 679.52 703.37 1,406.74
1/4 AE 0.25 343.09 358.35 1,433.41
1/10 AE 0.10 139.90 146.01 1,460.07
Aust. 100 corona 0.98 1,295.24 1,304.24 1,330.58
British sovereign 0.24 316.24 329.24 1,398.63
French 20 franc 0.19 246.46 250.46 1,341.49
Krugerrand 1.00 1,344.07 1,354.07 1,354.07
Maple Leaf 1.00 1,343.40 1,357.40 1,357.40
1/2 Maple Leaf 0.50 766.71 700.04 1,400.07
1/4 Maple Leaf 0.25 340.02 356.68 1,426.74
1/10 Maple Leaf 0.10 141.34 145.34 1,453.41
Mexican 50 peso 1.21 1,593.08 1,604.08 1,330.41
.9999 bar 1.00 1,338.07 1,345.40 1,345.40
SPOT SILVER: 19.87      
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 14,203.48 14,489.48 20.27
US 40% silver 1/2s 0.30 5,668.43 5,818.43 19.72
100 oz .999 bar 100.00 1,966.50 2,001.50 20.02
10 oz .999 bar 10.00 200.15 205.15 20.52
1 oz .999 round 1.00 19.67 20.17 20.17
Am Eagle, 200 oz Min 1.00 21.37 22.87 22.87
SPOT PLATINUM: 1,047.50      
Plat. Platypus 1.00 1,062.50 1,092.50 1,092.50
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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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