The Moneychanger
Weekly Commentary
Friday, 23 September a.d. 2016 Browse the commentary archive
Here's the weekly scorecard:
  16-Sep-16 23-Sep-16 Change % Change
Silver, cents/oz. 1,878.10 1,973.30 95.20 5.1
Gold, dollars/oz. 1,305.80 1,337.20 31.40 2.4
Gold/silver ratio 69.528 67.765 -1.763 -2.5
Silver/gold ratio 0.0144 0.0148 0.0004 2.6
Dow in Gold Dollars (DIG$) 286.91 282.20 -4.71 -1.6
Dow in gold ounces 13.88 13.65 -0.23 -1.6
Dow in Silver ounces 965.01 925.09 -39.92 -4.1
Dow Industrials 18,123.80 18,254.84 131.04 0.7
S&P500 2,139.16 2,164.69 25.53 1.2
US dollar index 96.06 95.39 -0.67 -0.7
Platinum 1,016.00 1,056.60 40.60 4.0
Palladium 672.85 706.40 33.55 5.0

Before you move another peg, go read this article, "Bond Math Class" by Jared Dillan at Read it carefully and let sink in how rising interest rates can and will destroy bond prices. And he's right, almost NO ONE, investor or advisor, grasps the riskiness of bonds or protects himself against it. If, as I suspect, interest rates are turning up sharply, that rise will loose a tsunami of panic in bond markets. Read, mark, learn, and inwardly digest.

Now that might be depressing, sofor a belly laugh go to and read how California is saving the world from cow flatulence. Yes, the Canutes in the California legislature passed a law that actually says cows must gradually reduce their gas passing between now and 2030 by 40%. Surely, those whom God would destroy he first makes mad. This is, really truly, how lunatic, how fanatic environmentalists are in pursuing the global warming/cooling religion.

Know what the greatest natural animal source of methane is? Termites. Yes, termites. Don't be surprised if the California legislature next passes a bill to buy zillions of little corks and hire millions of termite-corkers to go find termites and terminate their flatulence.

Finally, bear in mind that global warming/climate change, for all their claims, has NO science on its side. It is total, pure-D hogwash. Ultimately, it's a lie that environmentalists love "nature." They may love some abstract called "nature", but the real, sweaty, smelly thing, nasty cows and termites & sheep and pigs and bugs and dirt, well, all that has to be controlled for its own good, and ours.

Several points to be drawn from the last 10 days. First, the Fed flinched again, & central banks are losing their ability to fool the populace. Second, interest rates have begun rising on their own, will-the Fed, nil-the Fed. Tis the beginning of the bond bubble's bursting, and lo! 'twill cover the globe with slime. Third, stocks have broken down. Fourth, silver & gold's little correction has ended & the next leg up begun. Course, I could have it all wrong cause I ain't no more'n a nat'ral born durned fool from Tennessee. But stupid as I am, I don't own no government bonds or stocks and I ain't running for yankee gummit president.

Thanks to the Fed playing Whack-A-Mole with interest rates, the US dollar index got whacked. Once again, as at September's gateway, the US dollar index has failed at 96.30, giving double tops and double-proving it. It will fall more. Today it even obligingly closed below the 20 day moving average (95.49) at 95.39, up one lonely basis point from yesterday.

Don't take my nat'ral born durned fool word for it, look for yourself,

Dollar is forming another even sided triangle or flat topped triangle (not outlined on chart), but there's no predictive value there. It can break up or down, but performance since July says it remains in a downtrend.

Yen lost 0.28% to 98.95 and the Euro gained 0.22% to $1.1231. That yen is like a fly you swat then it gets up, sharpens its face, cleans its wings, and flies off. Beneficiary of scared money.

Stocks teased with false hope this week, then gave back the gains as the martini-drinkers fled Wall Street for their weekend bliss, shaken, not stirred. Dow lost 131.01 (0.71%) to end the day at 18,254.84. S&P500 wasn't far behind, down 12.49 (0.57%) to 2,164.69.

Look at the Dow chart here,

It built a flat topped triangle, broke out of it & rallied to the 50 DMA, then gave all that back today. That might be the end of the rally-ette, or it might be a touchback before moving higher. Either short term outcome leaves me indifferent, because stocks are set up for a Victoria Falls size cascade. Think of it this way. You've got an 300 foot long corral, that narrows gradually to a chute 22 inches wide up into the truck. You keep gently push pushing those cows down that corral toward the chute, keep closing gates behind em, keep your voice down & act nice, and at last they have no place in the world to go but into that 22 inch chute and onto that truck.

Stocks are moving through that 300 foot corral on the way to the chute. 'Fore too long, they'll reach that chute.

Gold & silver both backed up today. Gold shaved off $3.20 (0.2%) to $1,337.20 while silver tumbled 28.7¢ (1.4%) to 1973.3¢. For the week gold rose 2.3% & silver 5.1%. They're entitled to back up a little on Friday.

Behold the gold chart,

My, O, my. Gold burst up Wednesday on high volume, then today volume shrank as price dropped. Good sign. MACD has turned unequivocally up, as has the RSI.

What needeth gold? First, to cut through that dotted blue line overhead that corrects the tops since July. Next it must better $1,380, then $1,400. This you will see, perhaps all of it next week. Gold is positioned above its 20 & 50 Day moving averages, has worked off its overboughtness, and is ready to knock heads & take names.

Silver's chart is not complicated. It bounced off an internal uptrend line, never really got near the uptrend line from December. Silver may NOT lollygag here, but must cut sharply and quickly through that red downtrend line from the July high. No choice, because if it doesn't it dooms itself to bounce back to the bottom channel line. But now time & trend are on silver's side. It will break through that channel line, early next week, then fight to pass through the July high at 2123¢. Any close below 1900¢ signals trouble.

On 23 September 1889 Fusajiro Yamauchi founded Nintendo Koppai to produce and market the card game Hanafuda. Nintendo Koppai later became Nintendo Co., Ltd.

I know that some of y'all think that I have exaggerated Southern opinions. Well, I understand. I'm just a nat'ral born durn fool from Tennessee, but y'all would believe a college perfessor, wouldn't you? For years & years Dr. Clyde Wilson taught history at the University of South Carolina. Truly, he is one of the most astonishingly well educated men I have ever met. He has a new book, not long, only about 100 pages, and not expensive, only $5.65. It's called, "The Yankee Problem: An American Dilemma." Y'all can find and order it here, Read it if you dare.

Y'all enjoy your weekend.

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-Sep-16 Price Change % Change
Gold, $/oz 1,337.20 -0.32 -0.0
Silver, $/oz 19.73 -0.29 -1.4
Gold/Silver Ratio 67.765 -0.006 -0.0
Silver/Gold Ratio 0.0148 -0.0002 -1.4
Platinum 1,056.60 -7.40 -0.7
Palladium 706.40 5.40 0.8
S&P 500 2,164.69 -12.49 -0.6
Dow 18,254.84 -131.01 -0.7
Dow in GOLD $s 282.20 -1.93 -0.7
Dow in GOLD oz 13.65 -0.09 -0.7
Dow in SILVER oz 925.09 6.72 0.7
US Dollar Index 95.39 0.01 0.0
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: 1,337.00      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,377.11 1,381.79 1,381.79
1/2 AE 0.50 681.36 705.27 1,410.54
1/4 AE 0.25 344.02 359.32 1,437.28
1/10 AE 0.10 140.28 146.40 1,464.02
Aust. 100 corona 0.98 1,298.73 1,307.73 1,334.15
British sovereign 0.24 317.09 330.09 1,402.25
French 20 franc 0.19 247.12 251.12 1,345.05
Krugerrand 1.00 1,347.70 1,357.70 1,357.70
Maple Leaf 1.00 1,347.00 1,361.00 1,361.00
1/2 Maple Leaf 0.50 768.78 701.93 1,403.85
1/4 Maple Leaf 0.25 340.94 357.65 1,430.59
1/10 Maple Leaf 0.10 141.72 145.73 1,457.33
Mexican 50 peso 1.21 1,597.38 1,608.38 1,333.98
.9999 bar 1.00 1,341.68 1,349.00 1,349.00
SPOT SILVER: 19.67      
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 14,028.30 14,314.30 20.02
US 40% silver 1/2s 0.30 5,610.90 5,760.90 19.53
100 oz .999 bar 100.00 1,947.00 1,982.00 19.82
10 oz .999 bar 10.00 198.20 203.20 20.32
1 oz .999 round 1.00 19.47 19.97 19.97
Am Eagle, 200 oz Min 1.00 21.17 22.67 22.67
SPOT PLATINUM: 1,056.60      
Platinum Platypus 1.00 1,071.60 1,101.60 1,101.60
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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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