The Moneychanger
Weekly Commentary
Friday, 18 December a.d. 2015 Browse the commentary archive
Here's the weekly scorecard:
  11-Dec-15 18-Dec-15 Change % Change
Silver, cents/oz. 1,385.90 1,408.00 22.10 1.6
Gold, dollars/oz. 1,076.90 1,066.20 -10.70 -1.0
Gold/silver ratio 77.704 75.724 -1.980 -2.5
Silver/gold ratio 0.0129 0.0132 0.0003 2.6
Dow in Gold Dollars (DIG$) 331.42 332.03 0.62 0.2
Dow in gold ounces 16.03 16.06 0.03 0.2
Dow in Silver ounces 1,245.78 1,216.30 -29.48 -2.4
Dow Industrials 17,265.21 17,125.45 -139.76 -0.8
S&P500 2,012.37 2,005.41 -6.96 -0.3
US dollar index 97.55 98.72 1.17 1.2
Platinum 843.50 860.60 17.10 2.0
Palladium 543.95 558.30 14.35 2.6

Stocks' shame this week was not how low they fell, but how high they rose before they fell. Hurricane coming. US dollar index rose, but on wicked volatility & unreason. Fed's plans to raise interest rates by raising its puny discount rate reckoned not with the market. There's the sea, O King Canute, command it to recede! At week's end, metals spake with Babel's voices: silver, platinum, & palladium higher while gold fell. The mystery grows.

I am so glad I'm just a nat'ral born durned fool from Tennessee & not one of the Masters/Mistresses of the Universe at the Fed. I ain't nothin' so don't have to pretend nothin', & if it turns out I ever do somethin', well, I move up, not down. When you're sittin' atop the universe, ain't no way to move but down.

This week's Fern (Federal Reserve Note) trading inspireth this meditation. Reason loudly crieth that the Fed raising its discount rate ought to raise the US dollar index. Rather, when the Fed announced higher rates, the dollar index dropped. Then shot up 144 basis points next day, and backed off 60 bps today to 98.72. Today's close even took the dollar index below the 20 day moving average (DMA). Well, it's still broken out upwards through the short term downtrend line. That implies 'twill move higher. Chart's here, Of course, the dollar moving higher holds no good promise for silver & gold.

Euro rose 0.3 to $1.0865 but remains below the old bottom range boundary that it fell out of in November. Yen, on the contrary, climbed above the analogous bottom range boundary. Rose 0.97% to 82.44 today.

Meanwhile the fecklessness of the Fed's Masters of the Universe is showing shamefully in the 10 year treasury note yield. It's been dropping since the FOMC meeting, down 1.74% today to 2.199%. Junk bonds have broken down badly, & although they tried to rally today, 'twas only death throes. Chart is here, Y'all will find a similar chart in Crude Oil, so forecast your own future.

West Texas Intermediate Crude fell today 0.78% to $35.85, but that's above the last low on 14 December. WTIC hath twice punched into its support line, but last time (August) rallied off that low. It is awfully slow to follow through in obedience to gravity, but assumption says it will eventually. Needs a close above $42.50 to disprove. Copper hasn't broken, either.

Stocks rose 433.88 from last week's close, then gave back that plus another 140 points for the week. Dow today suffered its largest loss since September, slicing off 379.39 or 2.12% to 17,125.45. S&P500 was close behind, losing 36.48 or 1.79% to 2,005.41. Both have fallen through their 200 DMAs, both are falling on sharply rising volume, and both are now nearing the lip of that upside-down bowl formation, where awaiteth them an open manhole & swift trip down the drain. See for yourself, and All these concatenated scream, "Lower, and yet lower!"

Yea, more dramatic still are the Dow in Gold & Dow in Silver, straight down today. Dow in Gold lost 3.47% to end at 16.08 troy ounces. Dow in silver today dropped worse, down 4.95% to 1,215.14 oz, down 63.07 oz. from its high this week. Momentum points down for both, good for silver & gold.

With a vengeance today silver & gold soared out of yesterday's pit. Silver added 39.7 cents (2.9%) to end at 1408c on Comex. Gold added $15.40 (1.5%) to $1,066.20.

Before I say anything, hold it against this context: to confirm any rally intent, gold must throw a leg over $1,080 then step out smartly. Likewise silver is simply spewing cheap talk at any price below 1440c. Both must give some positive confirmation of a turnaround or they will continue to slide.

Having said that, can I dredge up something hopeful? Well, yes. Silver & gold have both formed nearly 3 year falling wedges, a formation that usually breaks out upward. MACD indicator for both points up. Both have completed about two-thirds of patterns that MIGHT be upside-down head & shoulders.

Dredging deeper, Palladium seems to have double bottomed with lows at 520 (August) & 522.55 (December). Look here, Platinum may have finally found its feet at $825. At least both ended the week higher, which was some improvement.

So gold & silver show some hopeful signs, but no definitive turnaround. My suspicion that we have been watching bottoming since November remains a suspicion without enough evidence for an indictment. All I have going for me is the Fed's perpetual, in-bred, suicidal inflationary stupidity, the bond markets starting to tank, and a stock market crash around the corner. In light of all that, who'd want to own silver or gold?

Only a Tennessee fool like me, I reckon.

On 18 December 1878 was born Joseph Dzhugashvili, better known as Joseph Stalin. Hard to say how many deaths he caused total, but 60 million is probably a low number. It does at least give a flavor of his bloodthirsty twisted cruelty. Can't often say this, but mankind would have been better off if somebody had dropped Joseph out a third story window when he was born.

Y'all enjoy your weekend.

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
18-Dec-15 Price Change % Change
Gold, $/oz 1,066.20 15.40 1.5
Silver, $/oz 14.08 0.40 2.9
Gold/Silver Ratio 75.724 1.073 1.4
Silver/Gold Ratio 0.0132 0.0004 2.9
Platinum 860.60 16.10 1.9
Palladium 558.30 1.50 0.3
S&P 500 2,005.41 -36.48 -1.8
Dow 17,125.45 -730.39 -4.1
Dow in GOLD $s 332.03 -19.20 -5.5
Dow in GOLD oz 16.06 -0.93 -5.5
Dow in SILVER oz 1,216.30 -88.67 -6.8
US Dollar Index 98.72 -0.60 -0.6
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: 1,066.00      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,097.98 1,109.71 1,109.71
1/2 AE 0.50 543.15 562.32 1,124.63
1/4 AE 0.25 274.24 286.49 1,145.95
1/10 AE 0.10 111.83 116.73 1,167.27
Aust. 100 corona 0.98 1,036.53 1,045.53 1,066.65
British sovereign 0.24 252.82 265.82 1,129.22
French 20 franc 0.19 200.51 204.51 1,095.42
Krugerrand 1.00 1,079.33 1,089.33 1,089.33
Maple Leaf 1.00 1,076.00 1,090.00 1,090.00
1/2 Maple Leaf 0.50 612.95 559.65 1,119.30
1/4 Maple Leaf 0.25 271.83 285.16 1,140.62
1/10 Maple Leaf 0.10 113.00 116.19 1,161.94
Mexican 50 peso 1.21 1,276.17 1,287.17 1,067.57
.9999 bar 1.00 1,069.73 1,078.00 1,078.00
SPOT SILVER: 14.11      
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 11,375.65 11,733.15 16.41
US 40% silver 1/2s 0.30 3,970.70 4,120.70 13.97
100 oz .999 bar 100.00 1,436.00 1,461.00 14.61
10 oz .999 bar 10.00 142.60 147.60 14.76
1 oz .999 round 1.00 14.21 14.67 14.67
Am Eagle, 200 oz Min 1.00 15.61 16.86 16.86
SPOT PLATINUM: 860.60      
Platinum Platypus 1.00 875.60 905.60 905.60
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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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