The Moneychanger
Weekly Commentary
Friday, 19 December a.d. 2014 Browse the commentary archive
Here's the weekly scorecard:
  12-Dec-14 18-Dec-14 Change % Change
Silver, cents/oz. 1,701.90 1,599.10 -102.80 -6.0
Gold, dollars/oz. 1,222.00 1,195.90 -26.10 -2.1
Gold/silver ratio 71.802 74.786 2.984 4.2
Silver/gold ratio 0.0139 0.0134 -0.0006 -4.0
Dow in Gold Dollars (DIG$) 292.33 307.77 15.44 5.3
Dow in gold ounces 14.14 14.89 0.75 5.3
Dow in Silver ounces 1,015.38 1,113.43 98.04 9.7
Dow Industrials 17,280.83 17,804.80 523.97 3.0
S&P500 2,002.33 2,070.65 68.32 3.4
US dollar index 88.33 89.84 1.51 1.7
Platinum 1,231.00 1,196.50 -34.50 -2.8
Palladium 816.55 805.70 -10.85 -1.3

Volatility is metastasizing from market to market. Stocks this week staged two huge daily gains, and ended the week 3+% higher. Gold & silver got whacked with an ugly stick, down 6% and 2.1% respectively, and saw the gold/silver ratio over 75:1 and nearly at 76:1. The scrofulous, scurvy US dollar index, powered like stocks by the FOMC's benignity, jumped a huge 151 basis points (0.17%) but is moving awfully slowly up the chart for something that intends to run away.

S'posed to be my job to watch milestones, but sometimes I don't pay close attention. Today I was astonished to realize that platinum and gold are trading at par! Right here y'all will find a 20 year chart of the Platinum/Gold ratio, (Platinum/Gold ratio is the platinum price divided by the gold price, or how many ounces of platinum will buy an ounce of gold.) I'm not just foamy-mouth enthusiastic about playing this spread, but the chart says that whenever it reaches 1:1 then it usually rises for a while, although not always by any means. So if you have a lot of gold, you might swap a tiny amount for platinum and play the spread. Platinum today closed at $1,196.50 while gold closed at $1,195.90. Or just buy a little platinum outright. Note even as I say this that this didn't work particularly well from 2009 -2010 (rose to 1.53), and since then the ratio has been a loser. However, 2011 -2014 has been a precious metals correction while 2000 - 2008 was mostly a raging bull market.

Stocks had two banner days this week, up 1.69 & 2.43%, thanks to Mother Yellum & her fellow criminals on the Federal Open Market Committee. They promised to keep interest rates low for a while, which markets bought the way tourists buy the Brooklyn Bridge. Stocks today tailed off. Dow gained only 26.65 (0.15%) to 17,804.80 while the S&P500 added 9.42 (0.46% to 2,070.65.

In the ebullience of the season I wouldn't be surprised if stocks hit a marginal new high. That would only nail one more nail in their coffin, far's I'm concerned. Dow, for instance, still is trading below its uptrend line from March 2009, with it broke only in July of this year.

By the way, folks who expect falling oil prices are good for stocks ought to look at this chart, 20 years of the S&P500 against West Texas Int. Crude. WTIC today gained 2.97% to $56.52 & appears to be readying a tergiversation.

Of course stocks' two strong days this week, combined with metals' weakness, led to higher prices in the Dow in Metals. Still, the pattern in both is the same, Gator Jaws or broadening top (megaphone). In both cases they formed the patterns, broke down out of the pattern, & now have traded back up into the pattern. This is the same wearing, frustrating action Gator Jaws always put you through, but in the end, even when they rally up or even a little beyond the top boundary, they fall.

Dow in Gold rose 0.33% to G$307.80 (14.89 troy ounces). Chart's here, Dow in silver fell today, 1.07% to S$1,432.50 silver dollars (1,107.95 troy ounces).

US dollar index, vampire on the global carotid, jumped up 0.42% to 89.84, but that's not really a breakout although it is higher than the last high 89.57). The rising wedge formation remains valid and point to an earthward breakdown soon.

Euro had rallied up to its 50 DMA & promised more when the FOMC cold-cocked it on Wednesday. In the last three days it has lost all the December gains and closed today at a new low for the move, $1.2232, down 0.44%. Still expecting a rally.

Yen has been mauled, but not as badly as the euro. It fell 0.54% today to 83.70 cents/Y100.

Silver & gold remained flat today. Gold rose $1.20 to $1,195.90 while silver added 9.7 cents to 1599.1c.

This week was wounding but not fatal. Silver took a worse beating than gold. We may see more downside prices, maybe 1500c in silver and maybe even $1,155 in gold. Next few days' trading will be light, and when the big cats are away the rats tend to play. Those traders who do show up may run the stops just to do business, leaving big swings but prices not much changed, i.e., no significance left behind.

I remain persuaded that the 1 December price lows were the final lows for the after-2011 correction. We need confirmation that silver & gold have turned up, but that may not come before 2015 begins.

On 19 December 1777 General Washington settled his 11,000 troops at Valley Forge, Pennsylvania. Washington's men were so ragged he couldn't invite his wife to review them, and they starved, while a few miles away in Philadelphia the British spent a cozy winter. The reason? The British paid in gold and silver, the Americans with depreciated fiat paper money, Continental currency.

Here's a Christmas gift idea: pecans from Wade Plantation, Mercy! They have all sorts of pecans, plain, pralin, chocolate dipped, even chipotle. A friend sent me the two pound sampler with plain, salted, praline, and chocolate, & I haven't been able to keep my kids and grandkids out of my office with a stick. The Rolls-Royce of pecans. Forget the gift, buy 'em for yourself. Hint to Northerners: the nut is pronounced puh-KAHN, not PEE-kan.

Y'all enjoy your weekend!

Argentum et aurum comparanda sunt —
Silver and gold must be bought.

— Franklin Sanders, The Moneychanger

Your source for gold and silver. Read our latest reviews and testimonials.
Market Snapshot See more charts and market data
19-Dec-14 Price Change % Change
Gold, $/oz 1,195.90 1.20 0.1
Silver, $/oz 15.99 0.10 0.6
Gold/Silver Ratio 74.786 0.071 0.1
Silver/Gold Ratio 0.0134 0.0001 0.6
Platinum 1,196.50 0.10 0.0
Palladium 805.10 -12.95 -1.6
S&P 500 2,070.65 9.42 0.5
Dow 17,804.80 26.65 0.1
Dow in GOLD $s 307.77 0.18 0.1
Dow in GOLD oz 14.89 0.01 0.1
Dow in SILVER oz 1,113.43 -5.12 -0.5
US Dollar Index 89.84 0.38 0.4
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: 1,196.20      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,228.50 1,238.07 1,238.07
1/2 AE 0.50 615.53 631.00 1,261.99
1/4 AE 0.25 307.76 321.48 1,285.92
1/10 AE 0.10 125.50 130.98 1,309.84
Aust. 100 corona 0.98 1,161.96 1,173.96 1,197.68
British sovereign 0.24 283.27 295.27 1,254.35
French 20 franc 0.19 225.01 228.13 1,221.91
Krugerrand 1.00 1,211.75 1,221.75 1,221.75
Maple Leaf 1.00 1,211.20 1,226.20 1,226.20
1/2 Maple Leaf 0.50 687.82 628.01 1,256.01
1/4 Maple Leaf 0.25 305.03 319.98 1,279.93
1/10 Maple Leaf 0.10 126.80 130.39 1,303.86
Mexican 50 peso 1.21 1,434.93 1,458.93 1,210.03
.9999 bar 1.00 1,200.39 1,212.20 1,212.20
SPOT SILVER: 16.03      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 22.75 26.50 34.64
VG+ Peace dollar 0.77 19.00 22.00 28.76
90% silver coin bags 0.72 12,244.38 12,601.88 17.63
US 40% silver 1/2s 0.30 4,535.63 4,685.63 15.88
100 oz .999 bar 100.00 1,592.50 1,652.50 16.53
10 oz .999 bar 10.00 165.25 166.25 16.63
1 oz .999 round 1.00 16.13 16.68 16.68
Am Eagle, 200 oz Min 1.00 17.78 18.43 18.43
SPOT PLATINUM: 1,196.50      
Platinum Platypus 1.00 1,221.50 1,261.50 1,261.50
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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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