The Moneychanger
Daily Commentary
Wednesday, 14 December a.d. 2016 Browse the commentary archive

I got back from Dallas a little early, so wanted to write y'all a short commentary just to catch up.

The Fed raised interest rates a gigantic 0.25% today, but -- surprise! --promised three more rate increases next year. That knocked both stocks (higher borrowing costs for companies) and gold in the head.

Dollar index rose 74 basis points (0.73%) to 101.73. Chart's here,

Fish or cut bait moment has arrived for the dollar. Either this is a top doubling with November's similar peak, or it is the last gasp of an attempt to rally. Judging from the other currencies, the dollar will rise further. Yen has broken down through support, losing 1.51% today to 85.43. Euro lost 0.87% to $1.0538, also broken down.

Odd that the dollar rose on this news, so it's not the 1/4% rate rise, but the anticipated three more rises that is driving this. This rally must break tomorrow or go much higher.

Fed once again successfully broke a stock market rally. Killed the seven day winning streak. Dow lost 118.68 (0.6%) to 19,792.53, drawing no closer than 19,996.43 to the magical 20,000. S&P500 dumped 18.84 (0.81%) to 2,253.28. Chart is here,

Note that the "flag at half staff" measurement predicted pretty well the top. It is NOT clear yet that this marks the end of the Trump rally. That would need a ball below 18,300. Wait and see.

Gold closed Comex up $4.60 from yesterday at 1,161.30, silver up 24.1¢ to 1715.2¢. Remember, though, that Comex closes before the Fed flatulates and bloviates. When they Fed unexpectedly announced it intends to raise its discount rate three times next year, stocks and gold fainted. Gold puked up about $20 (1.6%) to $1,142.20. Silver held its previous lows, but still lost 33.2¢ or 2% to 1682¢. Question plaguing me is why will silver not follow gold to new lows for the move. That's a bullish non-confirmation, OR silver has in front of it a hard tumble to catch up to gold.

The Fed threw a giant monkey-wrench into markets today. Like hitting someone on the noggin with a wrench, it induced spasms. Let's see how it settles out tomorrow with a full day of trading.

I have much more to say to y'all about your Swamp Drainer Trump dredging up several Creatures from the Black Lagoon to run his administration, but I'll let y'all's imaginations run riot.

I discovered something on my trip: Large parts of Arkansas and most of Texas are flatter than a fritter. Don't drop a dime -- it might never stop rolling.

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
14-Dec-16 Price Change % Change
Gold, $/oz 1,161.30 4.60 0.40%
Silver, $/oz 17.15 0.24 1.43%
Gold/Silver Ratio 67.706 -0.693 -1.01%
Silver/Gold Ratio 0.0148 0.0001 1.02%
Platinum 939.60 4.10 0.44%
Palladium 735.15 1.90 0.26%
S&P 500 2,253.28 -18.44 -0.81%
Dow 19,792.53 -118.68 -0.60%
Dow in GOLD $s 352.32 -3.52 -0.99%
Dow in GOLD oz 17.04 -0.17 -0.99%
Dow in SILVER oz 1,153.95 -23.46 -1.99%
US Dollar Index 101.73 0.74 0.73%
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: 1,142.20      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,176.47 1,180.46 1,180.46
1/2 AE 0.50 582.01 602.51 1,205.02
1/4 AE 0.25 293.86 306.97 1,227.87
1/10 AE 0.10 119.83 125.07 1,250.71
Aust. 100 corona 0.98 1,113.99 1,122.99 1,145.67
British sovereign 0.24 270.89 283.89 1,205.99
French 20 franc 0.19 211.12 215.12 1,152.20
Krugerrand 1.00 1,157.05 1,167.05 1,167.05
Maple Leaf 1.00 1,152.20 1,166.20 1,166.20
1/2 Maple Leaf 0.50 656.77 599.66 1,199.31
1/4 Maple Leaf 0.25 291.26 305.54 1,222.15
1/10 Maple Leaf 0.10 121.07 124.50 1,245.00
Mexican 50 peso 1.21 1,367.40 1,378.40 1,143.23
.9999 bar 1.00 1,146.20 1,154.20 1,154.20
SPOT SILVER: 16.82      
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 12,455.30 12,741.30 17.82
US 40% silver 1/2s 0.30 4,770.15 4,920.15 16.68
100 oz .999 bar 100.00 1,662.00 1,697.00 16.97
10 oz .999 bar 10.00 169.70 174.70 17.47
1 oz .999 round 1.00 16.62 17.12 17.12
Am Eagle, 200 oz Min 1.00 18.32 19.82 19.82
SPOT PLATINUM: 939.60      
Plat. Platypus 1.00 954.60 984.60 984.60
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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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