The Moneychanger
Daily Commentary
Thursday, 17 December a.d. 2015 Browse the commentary archive

I was so moved by the genius of the Fed raising rates yesterday that my poetry-box was turned over & I wrote this song:

SANTA CLAUS AIN'T COMING TO TOWN

YOU better not tout

You better not buy

Better not shout

I'm telling you why:

Santa Claus ain't coming to town.

THE FED has caught you sleeping

Their lies made your brain bake

You know they always do no good

So sell stocks for heaven's sake!

THEY lulled you with lies

Janet promised the moon

But here's a surprise

Better wake up, you goon:

Santa Claus ain't coming to town!

TODAY'S MARKETS:

Yesterday the Fed raised its discount rate 0.25%, the first raise in nine years. That brings their range to 0.25% to 0.5%. The Fed also committed itself to raising rates to 1% over the next year.

Now ponder this mystery with me: the Fed is tightening money supply as the economy is slowing. Make sense to you? Yep, if you want to create a depression. When stocks really tank & scare the ugly out of the Fed (no, not possible), you will see QE4, probably in 2016.

Scarier still is the collapse of junk bonds, which have fallen out of a nearly 3 year gator jaws formation. http://schrts.co/slu7Li Like gangrene progressing up an infected foot to the leg, the junk bond meltdown threatens to rise up the quality scale to higher grade bonds, which themselves look none too healthy and are about to drop through the bottom of a 1-1/2 year falling triangle. Owch. Like watching a tornado approach. http://schrts.co/TLHHt9

Stocks first reaction was a big rise yesterday, Dow up 1.28% & S&P500 up 1.45%. They thought better of that today. Dow plummeted 1.43% or 253.25 to 17,495.84. S&P dove 1.50% or 31.18 to 2,041.89.

Technically they simply hit the upside-down bowl's bottom above, failed to push through, and fell back today below the 200 DMA (17,551 & 2062). Now they've established a series of three lower highs & three lower lows, which defines a downtrend. One day soon, maybe next month, they'll fall off the cliff.

Dow in gold rose today above its 20 DMA (16.66 troy oz) & closed at 16.66 tr. Oz. That remains well below the November 16.85 tr. Oz. high.

Dow in silver, thanks to silver's recent weakness, hit a new high for the move today at 1,278.47, against the last high at 1,274.08 troy ounce. Trying to move higher.

US Dollar Index, which averages the value of the scrofulous, scurvy Fern (Federal Reserve note) against other currencies, also fell yesterday, down 0.34% to 97.88. As a "sell the news" move, that made sense. However, today the dollar index shot up 144 basis points (1.47%) to 99.32, punching through the short term downtrend line & reversing direction to UP. Euro sank 0.77% today to $1.0825 while the Yen lost 0.36% to 81.53.

What makes no sense in an atmosphere of competitive currency devaluation, is why the Fed would keep the Fern high? And we KNOW that currencies do not float freely, but are subject to all sorts of exchange rate manipulation by central banks. We have to conclude that the dollar is high because the Fed wants it high, it the WHY that escapes me. I suppose, as usual, they are sacrificing US interests -- that would be yours & mine -- for "higher" interests.

Merely as an interesting aside, West Texas Intermediate Crude has not collapsed, as so many expect. It did make a new low for the post-June decline, but that was earlier in the week and not by much. Yesterday it fell, today it rose. http://schrts.co/Pm7Ec8 Nor has copper fallen out of bed.

Silver & gold rose yesterday, and gave it all back & then some today. Like Superman facing Kryptonite, gold couldn't conquer $1,080 yesterday. Today it lost $27.20 (2.5%) to $1,050.80. Silver slid 53.50 cents (3.8%) to 1368.3c.

On the daily chart the two metals held hands. About 10:00 gold fell through a trap door at 1,065, & by noon had reached $1,048.35. Rest of the day it flattened out, stunned by the fall, I reckon, remaining above $1,050 but progressing not at all.

$1,044.50 was the February 2010 reaction low. From that platform gold reached $1,900 in 18 months, never looking back. That came after the March 2008 high at $1,034 and the 2008 intraday low at $681. How much support $1,044.50 will offer today is anybody's guess.

Silver's daily chart shows a collapse about 10:00 from 1400c to a low at 1369c. Remember that I described to you a falling wedge on both metals' charts. It began in mid-2013. Gold in November touched that wedge's bottom boundary, but silver did not. Today gold again touched that boundary. http://schrts.co/ztegbq Silver is now moving toward that bottom boundary, about 1320c.http://schrts.co/gvz8Ko

More than that 5 year old support, I would expect both metals to turn up from this bottom wedge boundary. But then, I don't tell 'em what to do, they tell me.

Dear friends, the Fed is lost. They have gotten this far on bluster & braggadocio that would do PT Barnum proud, but they are by no means as clever as PT. Stocks are set up to crash, and will in 2016. Bonds are unravelling from the bottom up.

Which would you rather own, gold at $1,050 and silver at 1365c or the Dow at 17,500? I'm just a nat'ral born durn fool from Tennessee that don't know live stock from a share of stock, but I can answer that question pretty quick. When it comes to a question of trusting the Fed & the financial system or silver & gold, I got no question.

The New Orleans city council today voted to remove Confederate monuments, including that of General Robert E. Lee in Lee Circle. Those who are not ignorant of Lee's history know that he was one of the greatest soldiers North America ever produced, and one of the humblest and most consistent Christians.

Don't let truth stand in the way. Against the South a Revolutionary purge is taking place, and we are watching a terror as certain as the Terror of the French & Russian revolutions, driven by the same motive, to silence or destroy its opposition At present it has not begun the bloodletting, but that is an easy step away. The guillotine is always ready.

If you believe the attack on the South has anything to do with race or slavery, you are wholly ignorant. Those are accidental rationalizations and marketing. The Revolutionaries are attacking the most fundamental virtues & values of Western civilization, values that were once American.

When the Revolutionaries have finished with us, they'll come for you.

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-15 Price Change % Change
Gold, $/oz 1,050.80 -27.20 -2.52%
Silver, $/oz 13.68 -0.54 -3.76%
Gold/Silver Ratio 76.796 0.977 1.29%
Silver/Gold Ratio 0.0130 -0.0002 -1.27%
Platinum 844.50 -31.30 -3.57%
Palladium 556.80 -14.15 -2.48%
S&P 500 2,041.89 -31.80 -1.53%
Dow 17,495.84 -253.25 -1.43%
Dow in GOLD $s 344.19 3.83 1.12%
Dow in GOLD oz 16.65 0.19 1.12%
Dow in SILVER oz 1,278.66 30.30 2.43%
US Dollar Index 99.32 1.44 1.47%
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: 1,051.30      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,082.84 1,088.10 1,088.10
1/2 AE 0.50 535.65 554.56 1,109.12
1/4 AE 0.25 270.45 282.54 1,130.15
1/10 AE 0.10 110.28 115.12 1,151.17
Aust. 100 corona 0.98 1,022.24 1,031.24 1,052.07
British sovereign 0.24 249.33 262.33 1,114.41
French 20 franc 0.19 197.75 201.75 1,080.61
Krugerrand 1.00 1,064.44 1,074.44 1,074.44
Maple Leaf 1.00 1,061.30 1,075.30 1,075.30
1/2 Maple Leaf 0.50 604.50 551.93 1,103.87
1/4 Maple Leaf 0.25 268.08 281.22 1,124.89
1/10 Maple Leaf 0.10 111.44 114.59 1,145.92
Mexican 50 peso 1.21 1,258.58 1,269.58 1,052.98
.9999 bar 1.00 1,054.98 1,063.30 1,063.30
SPOT SILVER: 13.67      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 22.50 26.00 33.99
VG+ Peace dollar 0.77 17.50 20.00 26.14
90% silver coin bags 0.72 11,057.48 11,414.98 15.97
US 40% silver 1/2s 0.30 3,839.43 3,989.43 13.52
100 oz .999 bar 100.00 1,391.50 1,416.50 14.17
10 oz .999 bar 10.00 138.15 143.15 14.32
1 oz .999 round 1.00 13.77 14.23 14.23
Am Eagle, 200 oz Min 1.00 15.17 16.42 16.42
SPOT PLATINUM: 844.50      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 859.50 889.50 889.50
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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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