The Moneychanger
Daily Commentary
Wednesday, 3 December a.d. 2014 Browse the commentary archive

To give y'all some idea of the oil market's plunge, West Texas Intermediate Crude has dropped from $107.68 a barrel on 13 June to a low of 63.72 on 1 December, a 41% loss in less than six months. Outcome of lower prices will be pain & suffering in US shale oil production, which had been one of the few bright spots in the US economy. Whoops. Chart at

In May at a Ludwig von Mises Institute Conference in Germany a former economist with the ECB and former VP of the German Bundesbank J├╝rgen Stark called the entire world financial system "pure fiction" and vulnerable to collapse, built on the premise of infinite money created by central banks without regard to goods and services available. Sounds about right to me. This, too, caught my eye, quoted by John Hathaway of Tocqueville in an article called "Monetary Tectonics" from Paul Singer of Elliott Management: "Nobody can predict how long governments can get away with fake growth, fake money, fake financial stability, fake jobs, fake inflation numbers, and fake income growth. Our feeling is that confidence, especially when its unjustified, is quite a thin veneer. When confidence is lost, that loss can be severe, sudden, and simultaneous across a number of markets & sectors."

Arresting comment when you recall that the fiat money system is built on "confidence." Right, it's a "confidence game."

Today the US dollar index broke upward through the upper boundary of its trading range, rising 33 basis points to 89.07, up 0.37%. That points to a target at 93.50 or higher, unless the dollar index immediately reverses.

Dollar's rise broke the euro's back. It fell out of an even-sided triangle to the downside and lost 0.59% to $1.2310. Target is $1.2150, measured by triangle height. The wretched yen fell again, 0.48% to 83.47, another new low & no change in sight.

Edge, edge, edge -- stocks keep inching & edging to new highs. Dow gained 33.07 (0.18%) to 17,912.62 today & the gurus are burbling. Optimism could hardly be higher. S&P500 also rose 7.78 (0.38%) to 2,074.33, another new high.

I'm not predicting, but the possibility occurs to me that stocks might yet make a parabolic (vertical) rise, blow out the top, and the Dow reach 20,000 next year before it collapses. Or they could stop here.

Parabolic rises never end well, and often stage a trial collapse that leaves a double top separated by a V. Purely for educational purposes I offer you the chart at which depicts gold from March 2011 through 30 September 2011. Notice the peak on 23August, $1,917.9, followed by a plunge to $1,705.40 (down 11%), followed by a straight up rise to $1,923.70 and the final top on 6 September. Mark ye well the parabolic rise that began about $1,560 in August then rose straight up into August. That sort of rise is always followed by collapse & tears. Now go look at the Dow or S&P500 chart from June through today.

Dow in gold dropped 0.78% today to end at G$303.86 gold dollars (14.81 oz). Still trending down. Dow in silver rose 0.4% to S$1,409.60 silver dollars (1,090.24 oz). Still looks like a broken market.

Silver spoiled the soup with a 4.9 cent drop today to 1635.9c on Comex, but that's not fatal. Silver is merely dragging its feet as a rise begins, not unusual. Gold gained $9.30 (0.78%) to $1,208.50, above the $1,205 resistance. Ranges were $1,215 to $1,193.50, silver 1659c - 1624. Notice that Gold dipped below $1,200, all the way to $1,193.50 and still closed higher. Very good.

Today's close took gold above its 50 DMA ($1,203.55) and through $1,205. Good. Behold, the next barrier is the October high at $1,255.60. Gold might still wither at that level, and will no doubt meet heavy selling there. Far more important still is the 200 day moving average up at $1,274. Above that mark gold will earn respect.

Silver below 1665c is nothing and nowhere. 50 DMA stands at 1671c, big resistance at 1700c where silver fell off in October, and 1860 where silver broke down in September.

So far gold is acting precisely as it should and silver -- blast it! -- is lagging. Look for gold to break $1,218 tomorrow.

Yes, I have bought both silver & gold. Higher prices coming.

On 3 December 1828 Andrew Jackson of Tennessee was elected President of the united States. Did I say he was from Tennessee?

On 3 December 1862 Confederate raiders attacked a Federal forage train on Hardin Pike near Nashville. Driving north from here on I-65 you can get off at the Hardin Pike exit still. No Confederate raiders there nowadays.

On 3 December 1910 the neon lamp was displayed for the first time at the Paris Motor Show. It was developed by French physicist Georges Claude.

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
3-Dec-14 Price Change % Change
Gold, $/oz 1,208.50 9.30 0.78%
Silver, $/oz 16.36 -0.05 -0.30%
Gold/Silver Ratio 73.874 0.787 1.08%
Silver/Gold Ratio 0.0135 -0.0001 -1.07%
Platinum 1,227.00 10.40 0.85%
Palladium 796.85 -6.20 -0.77%
S&P 500 2,074.33 7.78 0.38%
Dow 17,912.62 33.07 0.18%
Dow in GOLD $s 306.40 -1.81 -0.59%
Dow in GOLD oz 14.82 -0.09 -0.59%
Dow in SILVER oz 1,094.97 5.29 0.49%
US Dollar Index 89.01 0.33 0.37%
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: 1,209.20      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,241.85 1,251.52 1,251.52
1/2 AE 0.50 622.22 637.85 1,275.71
1/4 AE 0.25 311.11 324.97 1,299.89
1/10 AE 0.10 126.86 132.41 1,324.07
Aust. 100 corona 0.98 1,178.15 1,190.15 1,214.19
British sovereign 0.24 286.35 298.35 1,267.43
French 20 franc 0.19 227.45 230.56 1,234.91
Krugerrand 1.00 1,223.71 1,233.71 1,233.71
Maple Leaf 1.00 1,224.20 1,239.20 1,239.20
1/2 Maple Leaf 0.50 695.29 634.83 1,269.66
1/4 Maple Leaf 0.25 308.35 323.46 1,293.84
1/10 Maple Leaf 0.10 128.18 131.80 1,318.03
Mexican 50 peso 1.21 1,450.52 1,474.52 1,222.96
.9999 bar 1.00 1,213.43 1,225.20 1,225.20
SPOT SILVER: 16.34      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 22.75 26.50 34.64
VG+ Peace dollar 0.77 18.50 22.00 28.76
90% silver coin bags 0.72 12,966.53 13,324.03 18.64
US 40% silver 1/2s 0.30 4,627.08 4,777.08 16.19
100 oz .999 bar 100.00 1,623.50 1,683.50 16.84
10 oz .999 bar 10.00 168.35 169.35 16.94
1 oz .999 round 1.00 16.44 16.99 16.99
Am Eagle, 200 oz Min 1.00 18.09 19.09 19.09
SPOT PLATINUM: 1,227.00      
Plat. Platypus 1.00 1,252.00 1,292.00 1,292.00
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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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