The Moneychanger
Daily Commentary
Tuesday, 17 December a.d. 2013 Browse the commentary archive

Other than a giant whacking that fell on silver & gold, nothing much happened today. Over all is cast the shadow of the midgets & teenagers who run the Federal Reserve, waiting on them to tell us tomorrow after the FOMC meeting how they plan to mess up the US economy & monetary system next.

The Greeks used to say that when you fight an enemy a long time, you become your enemy. Your take on your enemy's position. The Fed is a picture of that: the capitalist central bank has become the head socialist. Now think: what presupposition underlies a central bank? Other than stealing the most money from the most people the most easily? A central bank presupposes that somebody, or some committee, is clever enough, & hath knowledge exhaustive enough, to run the economy. But instead of Stalin, we have Bernanke. Think about the gall: that one man or twenty men know better than the millions of market participants what business should be done, how much, and at what interest rate.

If that ain't certifiably insane, I ain't a natural born fool from Tennessee.

US dollar index didn't even move. Literally, it was unchanged at 80.22. Euro was also nearly unchanged, up 0.05% to $1.3768. Yen rose 0.34% to 97.40, but it's so far down in the well you can hardly spy it anyway. Dow lost 9.31 (0.6%) to 15,875.26 & the S&P gave up 5.54 (0.31%) to end at 1,781.

But some of the Nice Government Men did get around to taking out their club and bashing silver & gold. Silver staggered back 25.7 cents to 1979.2c, familiar territory. Gold went down for $14.30, landing on $1,231.20.

Plumb on 8:30 when New York opened somebody sold the dickens out of both silver & gold, then little happened the rest of the day.

All right, I'm going to tell y'all what I see. Eight days ago silver & gold broke through the downtrend line from the October top. They remain above & outside that downtrend line.

If gold drops below $1,210 or silver below 1890c, they'll tumble. Otherwise, we are waiting for them to confirm this little breakout with a closes above resistance at 2100c & $1,267.

Who knows what nutty effect the FOMC's announcement will wreak? As I said yesterday, their mere meeting, let alone their speaking, jams human brain waves.

On 17 December 1777 George Washington's army returned to Valley Forge, Pennsylvania. Ever wonder why the poor Americans spent a wretched winter starving in Valley Forge & freezing in their tattered uniforms, while a few miles away in Philadelphia the British were snug, warm, & well fed? Simple: inflation. Right, the British paid for everything in good gold guineas, while the Americans had only paper money authorized by the Continental Congress. All that only proves that in 236 years Americans have learned nothing about inflation.

On 17 December 1862 General Nathan Bedford Forrest defeated a yankee cavalry force near Lexington in his famous raid through west Tennessee. As I remember, he started with 1,000 men and few weapons and after a couple of weeks of solid victories, he crossed the Tennessee River back into middle Tennessee with a 1,500 man army fully armed, courtesy of the yankee army. He had been everywhere at once, from Clifton in Wayne County in the South all over West Tennessee.

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
17-Dec-13 Price Change % Change
Gold, $/oz 1,231.20 -14.30 -1.15%
Silver, $/oz 19.79 -0.26 -1.28%
Gold/Silver Ratio 62.207 0.084 0.14%
Silver/Gold Ratio 0.0161 -0.0000 -0.14%
Platinum 1,343.70 -15.50 -1.14%
Palladium 699.65 -6.25 -0.89%
S&P 500 1,781.00 -5.54 -0.31%
Dow 15,875.26 -9.31 -0.06%
Dow in GOLD $s 266.54 2.91 1.10%
Dow in GOLD oz 12.89 0.14 1.10%
Dow in SILVER oz 802.10 9.82 1.24%
US Dollar Index 80.22 0.00 0.00%
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: 1,231.05      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,269.21 1,274.14 1,274.14
1/2 AE 0.50 627.33 649.38 1,298.76
1/4 AE 0.25 327.50 330.84 1,323.38
1/10 AE 0.10 130.39 135.42 1,354.16
Aust. 100 corona 0.98 1,200.64 1,210.64 1,235.10
British sovereign 0.24 291.53 303.53 1,289.41
French 20 franc 0.19 231.56 234.64 1,256.76
Krugerrand 1.00 1,249.52 1,260.52 1,260.52
Maple Leaf 1.00 1,246.05 1,261.05 1,261.05
1/2 Maple Leaf 0.50 707.85 646.30 1,292.60
1/4 Maple Leaf 0.25 313.92 329.31 1,317.22
1/10 Maple Leaf 0.10 130.49 134.18 1,341.84
Mexican 50 peso 1.21 1,472.28 1,487.28 1,233.54
.9999 bar 1.00 1,235.36 1,247.05 1,247.05
SPOT SILVER: 19.96      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 25.00 26.50 34.64
VG+ Peace dollar 0.77 22.00 24.25 31.70
90% silver coin bags 0.72 14,914.90 15,164.90 21.21
US 40% silver 1/2s 0.30 5,696.45 5,846.45 19.82
100 oz .999 bar 100.00 1,986.00 2,046.00 20.46
10 oz .999 bar 10.00 204.60 205.60 20.56
1 oz .999 round 1.00 20.06 20.56 20.56
Am Eagle, 200 oz Min 1.00 21.71 22.96 22.96
SPOT PLATINUM: 1,343.70      
Plat. Platypus 1.00 1,368.70 1,408.70 1,408.70
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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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