The Moneychanger
Daily Commentary
Monday, 21 December a.d. 2015 Browse the commentary archive

It is Christmas week, and I won't be publishing commentaries on Christmas Eve or Christmas Day, in case any of y'all thought I was insane.

More I think about it, the crazier the Fed's plan to tighten money supply in the face of a recession & declining economy becomes. They may really sink the ship this time.

Stocks regained today about a third of what they lost Friday -- not a sterling achievement. S&P500 gained 15.6 (0.78%) to 2,021.15 while the Dow added 123.07 (0.72%) to 17,251.62. It's nothing more than a bitty bounce off the lip of that upside-down bowl, preparatory to falling through. Look at a 15 month Dow chart here, and a 3 month S&P500 chart here, The coming step through the manhole will be obvious. Weeping, wailing, gnashing of teeth, & sharp sorrow will follow.

Dow in Gold & Silver punched further down, despite stocks' rising. Dow in gold has again fallen out of the bearish rising wedge formed since mid-2013, the one that falsely broke out to the downside in August. It traded back up into the wedge, but now has fallen out again, and below that uptrend line from August 2013. Indicators nearly unanimously point down, like the spirit of Christmas past. Feast your eyes here,

Dow in Silver traded down in October through its uptrend from August 2013 & below its 200 DMA and acted as if it intended to visit the earth's core. It reversed upwards, goosed by evil spirits in stocks, and even made a new high for the move, higher than July. That I interpret as a double top. Now it has been falling straight down, and is below its 20 DMA and just about to plunge through that uptrend line and the 50 Day moving average. Lo, and behold,

Dow in gold closed today down 0.68% to 15.96 troy ounces. Dow in silver diminished 0.93% to 1,205.14 troy ounces.

US Dollar index gave itself the lie today by dropping 31 basis points to 98.42, slicing through its 20 day moving average (tripwire of momentum change to downward). We need a lower low to confirm the Fern (Federal Reserve note) really is a cooked gander, but the oven is heating up, the pan is ready, and the bird has been plucked.

Ten year treasure note yield shrank 0.9% to 2.197%. Looks like the Fed's higher interest rates aren't rising. Also, it wonders me how they will pull out enough money supply, say, a trillion bucks or so, to get those interest rates up? How exactly will they do that with an economy as fragile as bone china?

An old friend of mine & customer of over 15 years called chiding & castigating me today for being so negative toward gold & silver. I told her as I'll tell y'all, they've beaten me up so many times with false turnarounds that now I am biting the double eagle before I accept it as genuine. I want proof.

And the last two days I've gotten it.

In the bloodbath on 17 December gold lost $27.20 & silver 53.5¢. In two trading days since gold has gained back $31.10 and silver 61.8¢. Ever watched a fight where one of the boxers kept getting knocked down but kept rising from his knees and jumping up to get his licks in? That's how this trading looks.

Gold today shot up $15.70 (1.47%) to close ABOVE $1,080 at $1,081.90. In fact, Comex shows the day's high at $1,081.50 but the settlement at $1,081.90. Silver closed near the days 1433¢ high, up 22.1¢ (1.57%) at 1430.1

These closes meet half my test for metals, namely, closes above $1,080 AND above 1440¢. Picky, yes, but "Ahh, take the cash & let the credit go/Nor heed the rumble of a distant drum," as Omar Khayyam said.

There's more & better. Gold has posted a double bottom at (intraday) $1,045.40 and $1,046.80. Look for yourself, More, gold is now knock-knocking at overhead resistance just above $1,080, and today punched through its 20 DMA. MACD, ROC, RSI all point up. Now this is a goofy holiday week and on Wednesday nobody will be trading, so those few black-shirted take-no-prisoners traders who show up are liable to run the stops down below, but that will be only an anomaly. Otherwise should be a calm week.

Silver also has posted a double bottom at 1381¢ & 1362, or is forming an upside-down head and shoulders. Either way the indicators all point up, silver rose today up through its 20 DMA, & 'tis knocking at overhead resistance at 1440¢. SMOKIN'!

Durn, I forgot to mention that the Commitments of Traders reports just get more and more bullish for both metals. And the US dollar's pump is sucking air. Looky here, I forgot something else. That Gold/Silver ratio is collapsing, nearly to the 200 DMA, as it should be if silver & gold intend to rise. Y'all can view that right here,

Okay, my friend CS, NOW HEAR THIS: It appears silver & gold have bottomed, although I want silver to confirm tomorrow by blasting through 1440¢. And REGARDLESS what metals do in the next week, the Fed has made sure the correction is behind us and that next year will be the Year of Silver & Gold, with paper money hiding in a toad hole.

I'm always so mealy-mouthed. Did I make that plain enough?

By the way, American Eagle one ounce, one-fourth ounce, and one-tenth ounce gold coins are experiencing rising premiums. This happens in December almost every year because the socialist US Mint can't adjust production to meet demand for the new year's mintages. Avoid those high premiums, they will return to normal when the 2016s come out in mid-January.

On 21 December 1991 the Soviet Union formally dissolved as 11 of the 12 republics signed a treaty forming the Commonwealth of Independent States. Was it real, or Memorex? Perestroika, or a brilliant strategic deception? Ask Anatoliiy Golitsyn.

On 21 December 1620 the Mayflower pilgrims landed at Plymouth Rock. The southern colony at Jamestown, Virginia had already been settled for ten years, and thriving.

On 21 December 1945 General George Patton died after injury in a car accident. Real, or Memorex?

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
21-Dec-15 Price Change % Change
Gold, $/oz 1,081.90 15.70 1.47%
Silver, $/oz 14.30 0.22 1.57%
Gold/Silver Ratio 75.652 -0.072 -0.10%
Silver/Gold Ratio 0.0132 0.0000 0.10%
Platinum 881.10 20.50 2.38%
Palladium 552.75 -5.55 -0.99%
S&P 500 2,021.15 15.60 0.78%
Dow 17,251.62 123.07 0.72%
Dow in GOLD $s 329.63 -2.47 -0.74%
Dow in GOLD oz 15.95 -0.12 -0.74%
Dow in SILVER oz 1,206.32 -10.19 -0.84%
US Dollar Index 98.42 -0.31 -0.31%
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: 1,079.60      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,111.99 1,123.86 1,123.86
1/2 AE 0.50 550.09 569.49 1,138.98
1/4 AE 0.25 277.74 290.14 1,160.57
1/10 AE 0.10 113.25 118.22 1,182.16
Aust. 100 corona 0.98 1,049.76 1,058.76 1,080.14
British sovereign 0.24 256.04 269.04 1,142.92
French 20 franc 0.19 203.07 207.07 1,109.12
Krugerrand 1.00 1,093.10 1,103.10 1,103.10
Maple Leaf 1.00 1,089.60 1,103.60 1,103.60
1/2 Maple Leaf 0.50 620.77 566.79 1,133.58
1/4 Maple Leaf 0.25 275.30 288.79 1,155.17
1/10 Maple Leaf 0.10 114.44 117.68 1,176.76
Mexican 50 peso 1.21 1,292.45 1,303.45 1,081.08
.9999 bar 1.00 1,083.38 1,091.60 1,091.60
SPOT SILVER: 14.27      
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 11,450.73 11,808.23 16.52
US 40% silver 1/2s 0.30 4,016.43 4,166.43 14.12
100 oz .999 bar 100.00 1,451.50 1,476.50 14.77
10 oz .999 bar 10.00 144.15 149.15 14.92
1 oz .999 round 1.00 14.37 14.83 14.83
Am Eagle, 200 oz Min 1.00 15.77 17.02 17.02
SPOT PLATINUM: 881.10      
Plat. Platypus 1.00 896.10 926.10 926.10
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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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