The Moneychanger
Daily Commentary
Tuesday, 22 November a.d. 2016 Browse the commentary archive

Another reader wrote asking to count the ways an investor might LOSE money on a bond. Chiefly, (1) Inflation skyrockets, making the principal value plummet. This is why Franz Pick called bonds "certificates of guaranteed confiscation." (2) The bond issue might default: no payback at all. (3) Interest rates soar. If the bond pays 10% on its face but the market rate rises to 15%, the bond will be re-priced so that it pays 15%, i.e., the price would drop.

All three of these forces are alive and well & stalking the bond market today.

Yawn, stock indices made new all time highs again today, same four that made them yesterday: Dow, S&P500, Nasdaq Comp, & Russell 2000. Dow Industrials closed at 19,023.87, up 67.18 (0.35%). S&P500 rose 0.22% or 4.76 to $2,202.94. Formations I pointed out yesterday, rising bearish flags, are still present and still portend a breakdown.

Shoot me, Wall Street! I have to report what I see.

US dollar index did something weird today. Look,

Although it closed higher than yesterday (101.13 against 101.01), it opened & made an intraday low lower than yesterday. Broke down out of the wedge, but still closed a little higher. Never mind what the US dollar index LATER does, here in the next few days it will drop. Time for a correction, pendulum must swing t'other way.

Gold & silver markets are dead. Gold rose 1.40 (0.1%) to $1,211 on Comex. Silver added 11.1¢ (0.7%) to 1662.3¢.

For so many years that memory runneth not to the contrary I have kept the daily Comex closes of silver & gold, even corrected a Comex typo one time. But I confess, I steadfastly refuse even to record the prices for Friday after Thanksgiving. There are virtually no traders, & the imps present might run the stops and take it up or down, but it don't mean a thing. Just preparing y'all for the cosmic meaninglessness of Black Friday markets.

Silver & gold remain at the same crossroad: Gold must not fall below $1,200 nor silver below $1650¢, or they risk falling much further. My operating assumption until contradicted by market action remains that we saw the lows on Friday, 18 November.

If I'm right, there's a buying opportunity here. If I'm wrong, well, I'm just a nat'ral born durn fool from Tennessee anyway.

I heartily thank y'all again for sending me your condolences for Susan's passing. I read every card and email and cherish your compassion, even thought I cannot answer every one.

And here's a tee-tiny little Susan story. Five days before she died I was coming home from a chiropractor's appointment about 10:00 and texted her, "Insane how you delight & satisfy & complete me." She texted back, "Oh, my goodness, how absolutely precious to hear. Thank you so very much. I feel the same way about you."

Am I just telling y'all this to make you feel sorry for me? Not at all. I want you to know how important it is for us to SPEAK LOVE TO EACH OTHER. You and I don't know whether we will live another hour or day or decade, so speak love to others, your spouse, your children, your friends. Tell them how much you love them, & live without regrets.

I won't be sending a commentary tomorrow. Some of my children & their families are coming to my house for Thanksgiving. God grant you all grateful hearts.

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
22-Nov-16 Price Change % Change
Gold, $/oz 1,211.00 1.40 0.12%
Silver, $/oz 16.62 0.11 0.67%
Gold/Silver Ratio 72.851 -0.405 -0.55%
Silver/Gold Ratio 0.0137 0.0001 0.56%
Platinum 941.40 7.70 0.82%
Palladium 743.70 17.70 2.44%
S&P 500 2,202.94 4.75 0.22%
Dow 19,023.87 67.18 0.35%
Dow in GOLD $s 324.74 0.77 0.24%
Dow in GOLD oz 15.71 0.04 0.24%
Dow in SILVER oz 1,144.43 -3.62 -0.32%
US Dollar Index 101.13 0.12 0.12%
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: 1,211.50      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,247.85 1,252.09 1,252.09
1/2 AE 0.50 617.36 639.07 1,278.13
1/4 AE 0.25 311.70 325.59 1,302.36
1/10 AE 0.10 127.10 132.66 1,326.59
Aust. 100 corona 0.98 1,181.57 1,190.57 1,214.62
British sovereign 0.24 287.33 300.33 1,275.81
French 20 franc 0.19 223.93 227.93 1,220.81
Krugerrand 1.00 1,226.04 1,236.04 1,236.04
Maple Leaf 1.00 1,221.50 1,235.50 1,235.50
1/2 Maple Leaf 0.50 696.61 636.04 1,272.08
1/4 Maple Leaf 0.25 308.93 324.08 1,296.31
1/10 Maple Leaf 0.10 128.42 132.05 1,320.54
Mexican 50 peso 1.21 1,453.28 1,464.28 1,214.47
.9999 bar 1.00 1,215.74 1,223.50 1,223.50
SPOT SILVER: 16.62      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 25.00 27.00 35.29
VG+ Peace dollar 0.77 20.00 22.00 28.76
90% silver coin bags 0.72 12,526.80 12,812.80 17.92
US 40% silver 1/2s 0.30 4,711.15 4,861.15 16.48
100 oz .999 bar 100.00 1,642.00 1,677.00 16.77
10 oz .999 bar 10.00 167.70 172.70 17.27
1 oz .999 round 1.00 16.42 16.92 16.92
Am Eagle, 200 oz Min 1.00 18.12 19.62 19.62
SPOT PLATINUM: 941.40      
Plat. Platypus 1.00 956.40 986.40 986.40
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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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