The Moneychanger
Daily Commentary
Thursday, 7 January a.d. 2016 Browse the commentary archive

Oftimes rudimentary comparisons sing a loud tune. For instance, ponder these movements of the first four trading days of 2016:

Dow Industrials, down 910.93 or 5.2%

S&500, down 100.85 or 4.9%

Dow Transports, down 513.32 or 6.8%

Russell 2000, down 71.32 or 6.3%

Wilshire 5000, down 1,078.33 or 5.1%

Nasdaq Composite, down 317.98 or 6.4%

Nasdaq 100, down 287.55 or 6.3%

Gold up $47.40 or 4.5%

Silver up 56 or 4.1%

Platinum down $15.30 or 1.7%

Palladium down $67.80 or 12.1%

US dollar index, down 0.38 or 0.4%

Res ipsa loquitur -- the thing speaks for itself, & loudly.

Merciful heavens, I feel like a tomcat in a tuna-fish processing plant. There's so much good stuff lying around I just don't know where to start.

The Dow Jones Industrial Average has suffered its worst four-day year's start on record, down 5.2%. Today the low slid 442.88 (2.6%) but the Dow recovered to down "only" 392.41 or 2.32%, closing at 16,514.10. S&P500 dove 47.17 or 2.37% to 1,943.09, 100 points lower than it ended 2015.

But y'all don't listen to me, a nat'ral born durned fool from Tennessee. Y'all listen to that bril-yunt academishun-ess, Janet Yellen, and she'll explain to you how the US economy is jes' a-boomin'. My goodness, what WOULD we do without a central bank to stabilize the economy?

Shanghai stock exchange suffered its shortest trading day in history today as, following Tuesday's pattern, it dropped another 7%. This market is even more tightly government-controlled than the US stock market (they'll make you disappear if you short stocks) that not much point exists in talking about it, other than as a symptom of stocks & economies crumbling around the globe. Chart's at

But I am interested in talking about the S&P500/Russell 2000 spread, the S&P500 divided by the Russell 2000. As bull markets age, small cap stocks (Russell 2000) tend to outperform large cap (S&P500). They also trend to evaporate faster after a market tops. $SPX:$RUT trended roughly down (the spread is a fraction with the $SPX as the numerator & $RUT as the denominator) from 2009 forward. In March 2014 the spread turned up and has trended that way ever since. You can see it here, This augurs much lower prices for all stocks. And by the way, the Dow Transports have broken down to 6,995.39 today, also signaling lower prices for stocks generally. Nasdaq 100 & Nasdaq Comp have both been gapping down.

Did I forget to mention the Dow in Gold & Silver? Durn.

Dow in Gold has crumbled like feta cheese, down from 16.60 ounces of 30 December 2015 to 15.46 oz today, down 6.9%. 200 Day Moving Average stands nearby at 15.38 oz, ready to signal the COLOSSAL fall.

Dow in silver has pierced its 20 & 50 DMAs and today also the uptrend line from August 2013. Today it made a lower low than Augusts, closing at 1,208.04 oz, down 4.8% from 30 December. Both have made their tops and changed trend to downward, and need only close below their 200 DMAs to confirm finally.

Both the Dow Industrials & S&P500 closed way below the lip of that upside-down bowl that triggered that August plunge. Volume is rising.

For reasons not yet clear, the US Dollar index plumb passed out today, losing 98 basis points (0.99%) to 98.32, closing below its 20 & 50 DMA's. It seems awfully reluctant to get to that Kryptonite resistance at 100.70. A close below 97.83 speeds the fall. Looks wrecked to me.

Euro closed back up inside its trading range today. It rose 1.4% to $1.0932. Has traded into an even-sided triangle but not yet broken out. China's troubles have sent the Yen gapping, leaping, and flying, above the 11 month trading range & at its highest price since August, 85.01, up 0.8% today. Since 'tis in full rally mode, y'all can expect the Nice Government Men to knock it in the head any time.

Yesterday something strange happened with the white metals, platinum & palladium. While gold rose, platinum lost $21.90 or 2.5% & palladium collapsed $51.35 (9.6%). Media says palladium collapsed on Chinese economic prospects.

Gold rose another $15.80 or 1.5% today to end Comex at $1,107.70. This came atop yesterday's $13.50 (1.3%) rise and close above $1,088 resistance. Silver yesterday gained a silly 8/10¢ and today added 37.8¢ (2.7%) to 1433.5¢

'Twas gold's third try at $1,088 yesterday, and it punched through its 50DMA and $1,088 resistance like Forrest punching through Sooey Smith's lines at Brice's Crossroads. Today came the mopping up with a further $15.80 rise. Exactly the sort of trading gold needed to exhibit. Next challenge comes at $1,125. Above that lies the greater challenge, the 200 DMA at $1,140.20, running in the same stream bed as the downtrend line from the October 2012 high.

Ladies & gentlemen, this is getting' excitin'! Looks like gold has left behind an upside-down head & shoulders bottoming pattern. Look at it here,

Only little gnat in this fine-smelling ointment is silver's close below 1440¢ today. That ought to come tomorrow: silver closed slap on its 50 DMA. Also has completed a similar upside-down H&S. Volume is rising strongly for both silver & gold, confirming a rally. Chart's here,

What in the world are y'all waiting for? You've got the buy the breakouts. Y'all write down my words now, 2016 is the year for silver & gold. Write that down, see if I have to eat the paper later.

Just to prove that low-life, blood-sucking banking is no new invention, on 7 January 1782 the Bank of North America opened in Philadelphia. Short of any real money (specie), they tried to give their solvency credibility by hiring two men to roll bags of silver across the lobby, stash them in the dumbwaiter, unload them in the basement, then sneak them back upstairs where they would roll them across the lobby to the dumbwaiter again.

Today they pull the same trick without having to hire the muscle men. They mount the whole charade through computers, electrons, and the Federal Reserve.

Ain't technology great?

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
7-Jan-16 Price Change % Change
Gold, $/oz 1,107.70 15.80 1.45%
Silver, $/oz 14.34 0.38 2.71%
Gold/Silver Ratio 77.272 -0.961 -1.23%
Silver/Gold Ratio 0.0129 0.0002 1.24%
Platinum 876.40 9.70 1.12%
Palladium 493.00 9.25 1.91%
S&P 500 1,943.09 -47.17 -2.37%
Dow 16,514.10 -392.41 -2.32%
Dow in GOLD $s 308.18 -11.89 -3.71%
Dow in GOLD oz 14.91 -0.58 -3.71%
Dow in SILVER oz 1,152.01 -59.32 -4.90%
US Dollar Index 98.32 -0.98 -0.99%
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: 1,108.70      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,136.42 1,154.16 1,154.16
1/2 AE 0.50 564.93 584.84 1,169.68
1/4 AE 0.25 285.23 297.96 1,191.85
1/10 AE 0.10 116.31 121.40 1,214.03
Aust. 100 corona 0.98 1,079.14 1,088.14 1,110.12
British sovereign 0.24 262.95 275.95 1,172.24
French 20 franc 0.19 208.55 212.55 1,138.44
Krugerrand 1.00 1,123.67 1,133.67 1,133.67
Maple Leaf 1.00 1,118.70 1,132.70 1,132.70
1/2 Maple Leaf 0.50 637.50 582.07 1,164.14
1/4 Maple Leaf 0.25 282.72 296.58 1,186.31
1/10 Maple Leaf 0.10 117.52 120.85 1,208.48
Mexican 50 peso 1.21 1,325.96 1,336.96 1,108.86
.9999 bar 1.00 1,112.58 1,120.70 1,120.70
SPOT SILVER: 14.29      
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 11,500.78 11,858.28 16.59
US 40% silver 1/2s 0.30 4,096.08 4,258.08 14.43
100 oz .999 bar 100.00 1,453.50 1,478.50 14.79
10 oz .999 bar 10.00 144.35 149.35 14.94
1 oz .999 round 1.00 14.39 14.85 14.85
Am Eagle, 200 oz Min 1.00 15.79 17.04 17.04
SPOT PLATINUM: 876.40      
Plat. Platypus 1.00 891.40 921.40 921.40
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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.

Other Important Information

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