The Moneychanger
Daily Commentary
Wednesday, 20 January a.d. 2016 Browse the commentary archive

Stock markets are getting ugly, so let's shoot straight: the only way to stay out of a bar fight is to leave the bar before the fight begins. Given the way things unfolded in Greece lately, if another crisis erupts you will likely have trouble getting any money larger than chicken feed out of your bank account. Everybody ought always have sufficient cash to cover three months' cash needs for your family. If you don't, get it. Ditto all those other supplies preppers wax loud about. If you don't have 'em, get 'em. I don't mention getting physical silver & gold or firearms, since that is already obvious to y'all.

You can play the short side of stocks with bear ETFs or options. If you understand such things, I remind you that you always make more money short than long, because markets fall faster than they rise.

As of today, since the first of the year the Dow has fallen 9.5%, the S&P500 9%, the Dow Transports 11.8%, Euro Stoxx600 11.9%, DJ World index 9%, Shanghai 15.9%, and the Nikkei 13.7%. For the year the Dow in silver is down 11.9% and the Dow in gold down 13.3% (meaning stocks have lost that much against metals.)

Most eye catching is the $BKX bank stock index, down 15% on the year. The Gold/BKX spread has gained 22.7%, i.e., gold has gained that much on the BKX. This offers the most alarming view of the stock market rout, since people are piling out of bank stocks and into gold faster even than stocks are falling, and that flight has only barely begun.

According to the New York Times, that prints all the news that fits, global stock markets have lost $3.6 trillion since 2016 dawned.

By the way, in the New York Times today appeared another article, 6 Tips for Investors When the Stock Market Tumbles. Y'all will be surprised: Tip No. 1, stay in the market. Tip # 2, stay in the market. Tip #3, stay in the market. Tip # 4, stay in the market. Tip #5, stay in the market. Tip # 6, stay in the market.

Y'all will hear this same siren song from every guru on every side, but like Ulysses, you'd better tie yourself to the mast and stop your ears with beeswax, because after 6-1/2 years of an money-creation-based rally & unspeakable overvaluation, the sirens on Stock Island do not have your best interests at heart. For them, you are what's for supper.

But don't listen to me. I'm only a nat'ral born durn fool from Tennessee, & I can hardly spell duhrivvatuv.

Stocks today had one of their worst days of 2016. At one point the Dow had peeled off 585 points (3.5%), against its worst previous loss on 7 January of 392.41. This selling set off with the opening bell, and persisted until the low about 1:00 scared the NGM out of their hiding places behind the baseboards & sent them scurrying to buy. Best they could do was trim the loss to 249.07 (down 1.56%) for the day, & a close at 15,766.95. S&P500 (but not the Dow) closed below its August low (1,867). Down 21.96 (1.17%) to 1,859.37. Oooooo. Breaking that August low is like your horse breaking a leg in the Sahara Desert -- when you're alone.

Dow in gold plunged 3.24% to 14.25 oz, a new low for the move & challenging the August/September lows. A close below the August low at 13.74 oz will be the last confirmation. Look,

Dow in silver fell 2.5% to $1,113.86 ounces. A close below 1,180 oz breaks it down through the bottom of the 12 month trading range. A fall through 1,050 oz breaks the uptrend from the 2011 [sic] low. Behold,

US dollar index behaveth curioser & curioser. With stocks tanking you'd expect the dollar to rally, but you'd expect wrong. At days end it was only one basis point lower than yesterday, but that don't near about tell the whole story. The low came at 98.68, punching through the 50 & 20 day moving averages, but it managed to climb back. Top since last week has been 99.30, so if the dollar can't better that, or continues to fall, there are worse things in the closet than even I suspect.

Gold shot up about opening (8:30 Eastern) and never looked back. Shot up again about 1:00 p.m. High reached $1,109.90, and Comex closed $17.20 (1.6%) higher at $1,107.10. Silver stalled at 1423¢, then fell back to close at 1414.7¢, only 3.7¢ (0.26%) higher.

Silver & gold are moving in the right direction, but must break through that crust of resistance at $1,113 and 1440¢. Silver at last closed above its 20 (1402¢) and 50 (1410¢) day moving averages. 1425¢ has several times blocked its progress, but stocks are stoking a powerful head of steam under both metals. Today or tomorrow gold should breach that resistance, and that will pull silver along.

Did I mention it's probably time to buy silver & gold? Or you can wait for breakouts.

On 20 January 1801 John Marshall was appointed Chief Justice of the US supreme court by the lame duck Federalist president, John Adams, and the lame duck congress, before Jefferson could take office and appoint a non-Federalist. The appointment was a disaster, as Marshall the centralizer strengthened the federal government's power against the states in a number of cases, the worst being Marbury v. Madison (1803) & the doctrine of judicial review. As Jefferson lamented, allowing the constitution to mean whatever the court says it means would make the constitution "a mere thing of was in the hands of the judiciary, which they may twist and shape into any form they please." We live with the poisonous results today.

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
20-Jan-16 Price Change % Change
Gold, $/oz 1,107.10 17.20 1.58%
Silver, $/oz 14.15 0.04 0.26%
Gold/Silver Ratio 78.257 1.014 1.31%
Silver/Gold Ratio 0.0128 -0.0002 -1.30%
Platinum 817.90 -10.80 -1.30%
Palladium 487.75 -9.05 -1.82%
S&P 500 1,859.37 -21.96 -1.17%
Dow 15,766.95 -249.07 -1.56%
Dow in GOLD $s 294.40 -9.37 -3.08%
Dow in GOLD oz 14.24 -0.45 -3.08%
Dow in SILVER oz 1,114.51 -20.57 -1.81%
US Dollar Index 99.18 -0.01 -0.01%
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: 1,102.40      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,132.16 1,147.60 1,147.60
1/2 AE 0.50 561.71 581.52 1,163.03
1/4 AE 0.25 283.61 296.27 1,185.08
1/10 AE 0.10 115.65 120.71 1,207.13
Aust. 100 corona 0.98 1,075.17 1,084.17 1,106.07
British sovereign 0.24 261.45 274.45 1,165.89
French 20 franc 0.19 207.36 211.36 1,132.09
Krugerrand 1.00 1,117.83 1,127.83 1,127.83
Maple Leaf 1.00 1,112.40 1,126.40 1,126.40
1/2 Maple Leaf 0.50 633.88 578.76 1,157.52
1/4 Maple Leaf 0.25 281.11 294.89 1,179.57
1/10 Maple Leaf 0.10 116.85 120.16 1,201.62
Mexican 50 peso 1.21 1,322.41 1,333.41 1,105.92
.9999 bar 1.00 1,106.26 1,114.40 1,114.40
SPOT SILVER: 14.15      
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 11,650.93 12,008.43 16.80
US 40% silver 1/2s 0.30 4,054.78 4,216.78 14.29
100 oz .999 bar 100.00 1,439.50 1,464.50 14.65
10 oz .999 bar 10.00 142.95 147.95 14.80
1 oz .999 round 1.00 14.25 14.71 14.71
Am Eagle, 200 oz Min 1.00 15.65 16.90 16.90
SPOT PLATINUM: 817.90      
Plat. Platypus 1.00 832.90 862.90 862.90
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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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