The Moneychanger
Daily Commentary
Thursday, 15 December a.d. 2016 Browse the commentary archive

Yikes! My children are coming over tonight to help me decorate for Christmas, & it's getting late. I have way too much to talk about.

One of the newsletters I pay close attention to reported today of the Fed's press conference yesterday that Yellen said she would unwind the Fed's bloated $4.5 trillion balance sheet. I checked & couldn't find that anywhere in the press release (just the opposite) but didn't watch Yellen's press conference (I puke too easily). Nor did I find other articles about that.

Observe minutely: When the Fed BUYS bonds, it INCREASES the money supply. When the Fed SELLS bonds, it DECREASES the money supply, as in "deflation." Were the fed to unwind from its balance sheet all those trillions, say, $3.5 trillion, it bought for QE, it would shrink the money supply, & trigger a deflation that would make the Great Depression look like a printing spree.

'Twould be death to the economy. Is even Janet Yellen that stupid? That evil?

Stocks bounced, but did not indicate they have not entered a correction. Dow rose 59.71 (0.3%) to 19,852.24. S&P500 rose 8.75 to 2,262.03 (up 0.39%). Regardless whether stocks continue to rise, a correction will come first. Stocks' Relative Strength Indicator stands at a 20 year high, begging for a correction.

US dollar index rose 139 basis points, a huge 1.32% to 103.11. That certainly looks like an upside breakout, so it aims for at least 108. Yen & Euro were wrecked today; both broke down way below support, with gaps. Sick, puking sick.

Comex gold plunged $33.50 (2.9%) to $1,127.80. Ahh, but silver collapsed 125.5¢(7.3%) to 1589.7¢.

End of the world? Put you razor away, don't slit your wrists just yet.

No sudden selling occurred today, silver & gold just eroded all the day long. Look at the 13 month gold chart right here,

That bright blue line runs horizontally at about $1,115. It marks the point where in February 2015 gold broke out to the upside. Markets frequently break out, then retrace to the breakout point. Right important that gold holds around $1,110, which y'all will probably see tomorrow.

Go see the silver chart, too, at

That pink line reaches back to the 1583¢ low last June. That's a number we've been watching a while. Support analogous to gold's (February 2015 breakout) stands about 1450¢, should silver not find its footing here.

I've been cogitatin', ruminatin', wondering how in the tarnation thunder the economy will improve with Trump? By his spending more money & fattening the already obese federal deficit? Can real growth come by government spending? Can the tooth fairy make change?

My mind reels on: has the gigantic debt been fixed? Doubt it not, both government & private debt around the globe WILL default, because it is simply too huge to pay. Default will take the shape of an outright default or they will inflate the debt away. But so far, the debt remains, dragging down the economy.

Has the banking or financial system been reformed since 2008? Not that I can see.

So I jes' sit here musin', wondering how Trump could possibly pull it off. Can't figure it, but then I'm just a nat'ral born durn fool from Tennessee, not a Big Thinkin' New York Fuhnancyier like Trump's Goldman Sachs buddies.

Point is, I ain't throwin' away my silver & gold jist yet.

Wait, wait: can't leave this out. 10 year treasury yield has broken upside out of a 34 year downtrend. Interest rates are rising, yet another boon to the economy.

Tomorrow is my 49th wedding anniversary. I married Susan on 16 December 1967.

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
15-Dec-16 Price Change % Change
Gold, $/oz 1,127.80 -33.50 -2.88%
Silver, $/oz 15.90 -1.26 -7.32%
Gold/Silver Ratio 70.944 3.238 4.78%
Silver/Gold Ratio 0.0141 -0.0007 -4.56%
Platinum 892.40 -47.20 -5.02%
Palladium 706.30 -25.25 -3.45%
S&P 500 2,262.03 8.75 0.39%
Dow 19,852.24 59.71 0.30%
Dow in GOLD $s 363.88 11.56 3.28%
Dow in GOLD oz 17.60 0.56 3.28%
Dow in SILVER oz 1,248.80 94.86 8.22%
US Dollar Index 103.11 1.39 1.37%
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: 1,128.00      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,161.84 1,165.79 1,165.79
1/2 AE 0.50 574.77 595.02 1,190.04
1/4 AE 0.25 290.20 303.15 1,212.60
1/10 AE 0.10 118.34 123.52 1,235.16
Aust. 100 corona 0.98 1,100.14 1,109.14 1,131.54
British sovereign 0.24 267.52 280.52 1,191.69
French 20 franc 0.19 208.49 212.49 1,138.14
Krugerrand 1.00 1,142.66 1,152.66 1,152.66
Maple Leaf 1.00 1,138.00 1,152.00 1,152.00
1/2 Maple Leaf 0.50 648.60 592.20 1,184.40
1/4 Maple Leaf 0.25 287.64 301.74 1,206.96
1/10 Maple Leaf 0.10 119.57 122.95 1,229.52
Mexican 50 peso 1.21 1,350.40 1,361.40 1,129.13
.9999 bar 1.00 1,131.95 1,140.00 1,140.00
SPOT SILVER: 15.97      
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 11,772.48 12,058.48 16.87
US 40% silver 1/2s 0.30 4,517.93 4,667.93 15.82
100 oz .999 bar 100.00 1,576.50 1,611.50 16.12
10 oz .999 bar 10.00 161.15 166.15 16.62
1 oz .999 round 1.00 15.77 16.52 16.52
Am Eagle, 200 oz Min 1.00 17.47 18.97 18.97
SPOT PLATINUM: 892.40      
Plat. Platypus 1.00 907.40 937.40 937.40
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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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