The Moneychanger
Daily Commentary
Wednesday, 15 March a.d. 2017 Browse the commentary archive

The FOMC volcano erupted, but turned out to be only a mouse burp. Federal Open Markets Committee raised the federal funds rate by a quarter percentage point to a range of 0.75 - 1.0%. (I've been incorrectly referring to the "discount rate" lately" meaning the "federal funds rate." The Federal Reserve Board of Governors, a.k.a. "BOG," sets the discount rate. The FOMC sets the Federal Funds Rate. The discount rate is the rate the regional Federal Reserve's discount window charges to commercial banks. The FOMC targets and tries to maintain the federal funds rate by selling and buying US Treasuries. Got that? Stop yawning, it's impolite.)

Definitions aside, the FOMC raised the rate a whole big masterful 1/4 of 1%. Twas a classic case of Buy the Rumor, Sell the News. All that rate hike was already priced into the US dollar, so when the announcement became news, the US dollar index today fell a mammoth 105 basis points (1.03%) to 100.53, adding more evidence to the Head & Shoulders case. Here's the chart,

Today's dive plunged the Dollar Index below the 20 & 50 day moving averages deeper & deeper below 101 support and on its way to the neckline. Looks pukin' sick.

Here's the euro chart,

Euro is in an uptrend, but to prove any strength must clear $1.0830 which hath capped the range since October. Observe the upside-down head & shoulders on the chart.

Yen rose 1.25% to 88.4. Also range bound, but headed to top of the range at least.

Stocks were glad to hear from the FOMC. Dow rose 112.73 (0.54%) to 20,950.10. S&P500 jumped 19.81 (084%) to 2,385.26. That's nice, real fine, but doesn't really change the chart outlook at all.

The 10 year US treasury yield FELL, not as you would expect. Dropped 3.35% to 2.508%. That drove bond prices up, including the US 30 year treasury bond.

West Texas Intermediate Crude took the opportunity to throw a leg back across the 200 day moving average, but that probably won't last. Chart's here,

Comex closes at 1:30 Eastern time while the FOMC announcement comes at 2:00, so we saw one of those goofy days where Comex closed flat but the aftermarket soared.

On Comex gold closed at $1,20010, down $1.80. In the aftermarket it is trading at $1,219, up 1.4% from yesterday's Comex close.

Comex silver closed unchanged from yesterday's 1688.8¢ In the aftermarket it leapt 45¢ (2.65) to 1733¢.

'Pears it was sell the rumor, buy the news time for silver & gold. I suspected that would happen, but governments & central banks are so corruptly prone to manipulation, you never can wholly expect markets to trade "naturally."

Here is a gold chart, but for wholly unaccountable reasons it shows gold closed at $1,200.70 with a high at $1,213.80. Well, mentally draw in that aftermarket run and it takes you up through the 50 DMA at $1,215 & plumb to that bowl lip at $1,220. One martin doth not a spring make, so let's see what it does tomorrow. I am strongly inclined to conclude that gold's correction has ended.

Behold, the silver chart, with the same error,

Silver did NOT end the day at 1692¢ but is trading now at 1733¢. Wherefore mentally redraw the daily bar for silver above the downtrend line from the July high and above the H&S neckline, or right on it.

Both silver & gold made key reversals, provided they can confirm today by closing higher tomorrow. Time to stop waiting to buy.

Be it known I am not in favor of publishing pictures of nude women on the internet, but something about this scandal where pictures of nude female Marines were posted has me scratching my head. Who has naked pictures of him/herself? If you held a .45 to my temple and said, "Produce a picture of yourself nude" I'd probably die, because the only thing I've got that approaches such a thing shows me in a bathing suit hugging my wife by the ocean -- and her bathing suit don't near about leave her naked. You'd just have to shoot me for want of a nude pic of myself. Soooo, where did these pictures of nude female Marines come from? Hidden cameras? Or somewhere else? If somewhere else, don't that raise a bunch more questions? I don't get it. What expectation of privacy can you have if you give someone nude pictures of yourself, the world being what it is? I can see how it would upset the publishee, but is the publisher alone to blame?

Without comment I observe that oddly enough, twice in the last two days folks have mentioned to me that the great depression they felt, being downcast for the future of the country, lifted when Trump was elected, even though they didn't like him at all.

Don't y'all send me no eye-meltin' emails about this. I am not arguing for the truth of the proposition stated, only citing it to show a sea change in the public mind's state -- and that renewed optimism can stretch a long way. I think this probably reflects the opinion of thousands of Americans who work and run businesses for a living, if not for supernumerary millennials who get paid $15/hour to whine & protest.

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
15-Mar-17 Price Change % Change
Gold, $/oz 1,200.10 -1.80 -0.15%
Silver, $/oz 16.89 0.00 0.00%
Gold/Silver Ratio 71.062 -0.107 -0.15%
Silver/Gold Ratio 0.0141 0.0000 0.15%
Platinum 935.60 -2.10 -0.22%
Palladium 747.45 4.80 0.65%
S&P 500 2,385.26 -12.65 -0.53%
Dow 20,950.10 112.73 0.54%
Dow in GOLD $s 360.87 2.48 0.69%
Dow in GOLD oz 17.46 0.12 0.69%
Dow in SILVER oz 1,240.53 6.68 0.54%
US Dollar Index 100.53 -1.05 -1.03%
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SPOT GOLD: 1,219.00      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,245.82 1,258.62 1,258.62
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1/4 AE 0.25 319.73 327.61 1,310.43
1/10 AE 0.10 127.89 133.48 1,334.81
Aust. 100 corona 0.98 1,185.90 1,194.90 1,219.04
British sovereign 0.24 289.10 302.10 1,283.37
French 20 franc 0.19 227.59 233.59 1,251.14
Krugerrand 1.00 1,231.19 1,241.19 1,241.19
Maple Leaf 1.00 1,229.00 1,242.00 1,242.00
1/2 Maple Leaf 0.50 700.93 639.98 1,279.95
1/4 Maple Leaf 0.25 310.85 326.08 1,304.33
1/10 Maple Leaf 0.10 129.21 132.87 1,328.71
Mexican 50 peso 1.21 1,458.60 1,469.60 1,218.88
.9999 bar 1.00 1,219.00 1,231.00 1,231.00
SPOT SILVER: 17.33      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 22.50 26.00 33.99
VG+ Peace dollar 0.77 16.00 18.00 23.53
90% silver coin bags 0.72 12,283.70 12,641.20 17.68
US 40% silver 1/2s 0.30 4,920.60 5,070.60 17.19
100 oz .999 bar 100.00 1,723.00 1,748.00 17.48
10 oz .999 bar 10.00 174.80 179.80 17.98
1 oz .999 round 1.00 17.58 17.88 17.88
Am Eagle, 200 oz Min 1.00 18.33 19.58 19.58
SPOT PLATINUM: 935.60      
Plat. Platypus 1.00 930.60 975.60 975.60
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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.
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  • 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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