The Moneychanger
Daily Commentary
Wednesday, 27 January a.d. 2016 Browse the commentary archive

A reader asked me to comment on socialism & Bernie Sanders.

Socialism rests on two presuppositions: that the eighth commandment is no longer valid, and that the state can correct social or economic inequities. Both are false & can only produce evil consequences.

Theft with good intentions, by the state, remains theft & perverts government's purpose. Socialism institutionalizes both theft & envy, thus shattering the 10th commandment, too.

The state -- civil government -- cannot create or produce anything. It can only (1) punish evildoers and (2) reward well-doers. Anything else it tries will end in catastrophe, as you see all around you already. The road to hell is paved with good intentions.

Bernie Sanders may be sincere about stealing other people's money to frame the government-run economy he wants. That only proves he has no discernment whatever or morality. Besides, sincerity is never a criterion for truth. Adolf Hitler & Joseph Stalin were both sincere.

The curse of socialism has landed on us because the Church and individuals refuse to help the poor. If the Church did its job relieving the poor, & if masters (employers) cared for their servants' (employees') welfare according to the 8th commandment's positive duties (promote their well-being), the poor would be cared for and scarce.

That's what I think about socialism: it is theft and envy grounded on cheap, wicked sentimentality posturing as goodness. Central banking, by the way, is socialism, too -- socialism for Big Money.

Again today the Fed illustrated its ability to roil markets. With the usual mumbling the Fed blew hot and cold out of both sides of its mouth. Stocks had held up well until the Fed statement at 2:00, when a giant vacuum cleaner hose snaked up out of the Earth's Core and began sucking them down. Dow lost 222.77 (1.38%) to 15,944.46, casting any rally in doubt. S&P500 dropped 20.68 (1.09%) to 1,882.95. Bad, bad juju, Janet. You ought to just keep your mouth closed.

US dollar index also hit the skids, dropping through the bottom boundary of that rising wedge (bad, bad) and closing at 98.95, barely above its 50 DMA (98.89) but below the 20 DMA (98.97). This is not yet fatal, but another 20 basis points and it will be. Euro rose 02.24% and may have broken out upwards, but the Yen dropped 0.2%. Go figure.

That central bank socialism really works, don't it? Just like a rattan steam engine.

Gold backed off $5.60 (0.5%) at $1,116.10 at the 12:30 Comex close, but soon as the Fed's news hit the wires, jumped up $10 to $1,125.60. Silver on Comex fell 10.4¢ or 0.7% to 1444¢ but rose only 2¢ in the aftermarket.

Let's focus on gold, because silver is the follower right now. It reached up and touched the downtrend line from the October 2012 high. Nearly reached the 200 DMA at $1,133.64, but not quite. Expect gold to show itself strong tomorrow. Very strong. Maybe strong enough for the Nice Government Men -- bless their tinted-window white Plymouths! -- to want to hit gold on the head. Doesn't matter, gold is ready to rumble.

Y'all have had your signal: you ought to be buying silver & gold.

On 27 January 1825 Congress approved the Indian Territory (present-day Oklahoma), opening the way for forced relocation of the Five Civilized Tribes on the Trial of Tears. Never trust congress offering to do you a favor.

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
27-Jan-16 Price Change % Change
Gold, $/oz 1,116.10 -5.60 -0.50%
Silver, $/oz 14.44 -0.10 -0.72%
Gold/Silver Ratio 77.292 0.168 0.22%
Silver/Gold Ratio 0.0129 -0.0000 -0.22%
Platinum 880.40 5.20 0.59%
Palladium 500.55 8.80 1.79%
S&P 500 1,882.95 -20.68 -1.09%
Dow 15,944.46 -222.77 -1.38%
Dow in GOLD $s 295.31 -2.63 -0.88%
Dow in GOLD oz 14.29 -0.13 -0.88%
Dow in SILVER oz 1,104.19 -7.42 -0.67%
US Dollar Index 98.95 -0.18 -0.18%
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: 1,125.60      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,158.24 1,171.75 1,171.75
1/2 AE 0.50 573.55 593.75 1,187.51
1/4 AE 0.25 289.58 302.51 1,210.02
1/10 AE 0.10 118.08 123.25 1,232.53
Aust. 100 corona 0.98 1,094.49 1,103.49 1,125.78
British sovereign 0.24 266.95 279.95 1,189.27
French 20 franc 0.19 211.73 215.73 1,155.47
Krugerrand 1.00 1,141.36 1,151.36 1,151.36
Maple Leaf 1.00 1,135.60 1,149.60 1,149.60
1/2 Maple Leaf 0.50 647.22 590.94 1,181.88
1/4 Maple Leaf 0.25 287.03 301.10 1,204.39
1/10 Maple Leaf 0.10 119.31 122.69 1,226.90
Mexican 50 peso 1.21 1,348.88 1,359.88 1,127.88
.9999 bar 1.00 1,129.54 1,137.60 1,137.60
SPOT SILVER: 14.46      
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 11,804.65 12,162.15 17.01
US 40% silver 1/2s 0.30 4,147.70 4,309.70 14.61
100 oz .999 bar 100.00 1,471.00 1,496.00 14.96
10 oz .999 bar 10.00 146.10 151.10 15.11
1 oz .999 round 1.00 14.56 15.02 15.02
Am Eagle, 200 oz Min 1.00 15.96 17.21 17.21
SPOT PLATINUM: 880.40      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 895.40 925.40 925.40
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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.

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