The Moneychanger
Daily Commentary
Thursday, 4 December a.d. 2014 Browse the commentary archive

Unless you want them to completely overrun you and make you miserable, one thing you learn about training children is "never threaten," because threatening wears out on children very fast. Did y'all ever watch a mama or daddy keep telling a child, "Now stop doing that or I'll have to punish you"? It becomes a refrain repeated endlessly because the child knows the parent is only bluffing. They lose all fear the parent will really act.

So Mario Draghi, head criminal at the European Central Bank, put the fear into the public a couple of years ago when he announced he would do "whatever was necessary" to save the euro & boost the Euro economy. Well, now about every time the ECB equivalent of the Fed's FOMC meets, Draghi comes out & threatens to unleash Quantitative Easing. Today he threatened again, but put it at "early next year. Then he said, "Early means early. It doesn't mean at the next meeting."

What's scary is, he might not be threatening. He might seriously promote QE/money printing for the euro. He really is that thick-headed, like the rest of the world's central bankers. Bad economics, Keynesian ideology, and high salaries for sinecures, it's a bad combination, like giving teenage boys cases of beer and car keys. Only difference is, the teenage boys will only hurt themselves. Central banking criminals will hurt us all, but not themselves.

First half key reversals appeared in number of markets today. Odd.

In stocks both the Dow and the S&P500 put in tiny key reversals, but there it is anyway: break into new high territory with a close below yesterday's. Another lower close tomorrow & Monday clinches it. No lower close, no reversal.

Dow closed at 17,900.10, lower by 12.52 (0.07%) and the S&P500 ran right alongside, down 2.41 (0.12%) to 2,062.34. When confidence collapses, it will collapse suddenly.

Dow in Silver & Dow in Gold were roughly flat today. Dow in silver dropped 0.94% to S$1,396.30 ($1,079.95), still beneath the 20 DMA. Dow in Gold rose 0.2% to G$306.77 gold dollars (14.84 oz).

My, O, My, the US dollar index didn't do what it was supposed to after yesterday's tee-tiny breakout from the range. Today it rose to a new high for the move, but closed lower for the day: first half of a key reversal. Having left behind 37 basis points (0.42%), the dollar index closed at 88.64. To confirm a breakdown needs to (1) close below the 20 DMA (88.04) AND (2) break below the range's bottom boundary, tomorrow about 87.45.

The euro rose today, perhaps on Draghi's threats, only slightly more substantial than moonbeams. Anyway, the euro rose 0.57% to $1.2378, cancelling the breakdown from its even-sided triangle & rising all the way up to the triangle's upper boundary & the 20 DMA (1.2452) but losing its nerve to close at $1.2378, barely above the triangle's bottom boundary. Strong as boiled cardboard.

Yen surprised everybody by rising a miniscule 0.3% today to 83.50.

Silver caught the bid today and rose 16.1 cents to close at 1652c, ABOVE 1650c! Gold, on the other hand, lost a buck to close $1,207.50. Ranges for both were very tight and sleepy, $1,213.50 - $1,201.10 and 1668c - 1638c.

Both metals have formed little three day rising flat topped triangles, which argue for an upside breakout. All indicators whisper, "Higher prices in store!" So what's holding them up? That's what bothers me.

We are right back at the same daily stalemate but $10 higher in gold & 30 cents higher in silver. Great rallies are not made of such stuff.

Sometimes markets appear calm when in fact they only reflect a fragile balance where opposing forces are equal but a tiny change can send one side fleeing.

Gold and silver cannot stagnate. They must move forward or fall back.

I was intrigued and amused by protestors fighting for a $15 federal minimum wage, raising it from the present $7.25. Let's see, wages are falling and have been since 2009, gazillions have dropped out of the job markets after losing hope, and somebody wants to DOUBLE minimum wage? Sounds like a great way to put millions out of work!

I reckon there's hardly any stupid idea in the world that several million Americans won't swallow hook, line, and socialism. Personally I have a better idea: have the Federal Reserve print up enough money to give everybody in the country $25,000. Think how all that spending would boost the economy.

On 4 December 1563 the Council of Trent holds its last session, after 18 years. Both the Reformers and many Roman Catholics had hoped that the Council would result in reconciliation, but the council only hardened the Roman position.

On 4 December 1844 Tennessean James Knox Polk was elected 11th US president. I am sitting about an hour's drive from his home in Columbia.

On 4 December 1947 Tennessee Williams' play, "A Streetcar Named Desire," premiered on Broadway. I was just 20 days shy of seven months old. Tennessee Williams was not a native of Tennessee, but of Columbus, Mississippi.

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
4-Dec-14 Price Change % Change
Gold, $/oz 1,207.50 -1.00 -0.08%
Silver, $/oz 16.52 0.16 0.98%
Gold/Silver Ratio 73.093 -0.780 -1.06%
Silver/Gold Ratio 0.0137 0.0001 1.07%
Platinum 1,245.40 18.40 1.50%
Palladium 801.45 4.60 0.58%
S&P 500 2,062.34 -2.41 -0.12%
Dow 17,900.10 -12.52 -0.07%
Dow in GOLD $s 306.44 0.04 0.01%
Dow in GOLD oz 14.82 0.00 0.01%
Dow in SILVER oz 1,083.54 -11.43 -1.04%
US Dollar Index 88.64 -0.37 -0.42%
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: 1,207.20      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,239.79 1,249.45 1,249.45
1/2 AE 0.50 621.19 636.80 1,273.60
1/4 AE 0.25 310.60 324.44 1,297.74
1/10 AE 0.10 126.65 132.19 1,321.88
Aust. 100 corona 0.98 1,172.65 1,184.65 1,208.58
British sovereign 0.24 285.88 297.88 1,265.42
French 20 franc 0.19 227.07 230.18 1,232.91
Krugerrand 1.00 1,221.69 1,231.69 1,231.69
Maple Leaf 1.00 1,222.20 1,237.20 1,237.20
1/2 Maple Leaf 0.50 694.14 633.78 1,267.56
1/4 Maple Leaf 0.25 307.84 322.93 1,291.70
1/10 Maple Leaf 0.10 127.96 131.58 1,315.85
Mexican 50 peso 1.21 1,448.12 1,472.12 1,220.97
.9999 bar 1.00 1,211.43 1,223.20 1,223.20
SPOT SILVER: 16.48      
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 12,998.70 13,356.20 18.68
US 40% silver 1/2s 0.30 4,669.85 4,819.85 16.34
100 oz .999 bar 100.00 1,638.00 1,698.00 16.98
10 oz .999 bar 10.00 169.80 170.80 17.08
1 oz .999 round 1.00 16.58 17.13 17.13
Am Eagle, 200 oz Min 1.00 18.23 19.23 19.23
SPOT PLATINUM: 1,245.40      
Plat. Platypus 1.00 1,270.40 1,310.40 1,310.40
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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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