The Moneychanger
Weekly Commentary
Friday, 16 December a.d. 2016 Browse the commentary archive
Here's the weekly scorecard:
  9-Dec-16 16-Dec-16 Change % Change
Silver, cents/oz. 1,689.70 1,615.30 -74.40 -4.4
Gold, dollars/oz. 1,159.40 1,135.30 -24.10 -2.1
Gold/silver ratio 68.616 70.284 1.668 2.4
Silver/gold ratio 0.0146 0.0142 -0.0003 -2.4
Dow in Gold Dollars (DIG$) 352.26 361.31 9.05 2.6
Dow in gold ounces 17.04 17.48 0.44 2.6
Dow in Silver ounces 1,169.25 1,228.47 59.21 5.1
Dow Industrials 19,756.85 19,843.41 86.56 0.4
S&P500 2,259.53 2,258.07 -1.46 -0.1
US dollar index 101.51 102.86 1.35 1.3
Platinum 913.70 933.00 19.30 2.1
Palladium 735.15 697.90 -37.25 -5.1

Imagine your hands are tied behind your back and you are roped to a post in front of a man with a baseball bat & he is hitting you with the bat. That's what it felt like for silver & gold this week. Stocks made a lot of noise, but no headway from last week. Probably broke. Palladium fell 5.1% while platinum rose 2.1%. And the US dollar index, vampire on the carotid of the globe, rose to a 14 year high.

For now evidence weighs heavily for a higher dollar index. It has hit the +3% boundary which proves a breakout over resistance, but backed off today 26 basis points (0.25%) to 102.86. Chart is hiding here,

Dollar index needs a close below 101 followed quickly by a close below 98 to break its rally.

Euro & yen are in tatters. Euro chart here, Shows that it has gapped down through support at 105.25 to post its lowest price since 2003. Yen chart is just as ugly, offering to drop to the bowels of the earth.

I want y'all to look at this 36 year chart of the 10 year Treasury note yield,

Your sharp little eyes will immediately search to the chart's right where you will see the yield (interest rate) breaking up through the 34 year downtrend line. Yes, sweetheart, this IS significant, and is happening across all markets. 'Tweren't the Fed did it, either, because it started rising last July. Look at the 30 year bond chart for an illustration of "when yields rise bond prices fall,"

The 30 year bond has lost 16% since the July peak. Looks like the Age of Low Interest Rates & Central Bank Genius is ending.

I repeat what I said yesterday: Evil Janet Yellen is talking about unwinding the Fed's bloated balance sheet, bloated by QE from abut $900 billion to $4.5 trillion. When Fed buys bonds, it adds to the money supply. When Fed sells bonds, it shrinks money supply, as in "deflation." If the Fed tried to unwind that balance sheet too fast, it would crucify the world economy & make the Great Depression look like raging prosperity.

Don't ever forget: evil is not only evil, it is also stupid.

Stocks' Relative Strength Indicator is hitting 20 year highs. 'Bout as overbought as it gets. Here's the Dow chart,

People buy a rising market, whether it makes sense or not. The mania is on, so no point in talking about facts. Some correction will arrive here very soon.

Dow today lost 8.83 to end the week at 19,843.41. S&P500 forked over 3.96 (0.18%) to close at 2,258.07.

Dow in gold chart is here, DiG has risen above last December 16.853 oz high to 17.571 yesterday, and nearly to the uptrend line from the 2011 low -- same line it broke down through in January 2015. Somehow that chart jes' don't look nat'ral to me.

Dow in silver may be found here,

Notice that it has NOT reached its December 2015 1,278 oz high, but closed yesterday at 1,244 oz. Silver has been relatively stronger than gold.

Appears to me these two charts will put in double tops and reverse. If they don't, I have no idea what will happen. I'll go buy me a tin bill and peck in the dirt with the chickens.

Silver & gold rose today, but that really says nothing. Shorts closing out their profitable positions for the week would account for that. Comex silver did rise 25.6¢ (1.6%) to 1615.3¢. Gold rose 0.75% or $7.50 to $1,135.30.

I note in passing that silver did hit that 1585¢ low. Chart shows it higher, but pay no attention to that discrepancy,

That low marked the June low, so becomes support now. However, silver must give SOME sign of turning around. So far, it has been reluctant, yea, negligent in doing that.

Y'all ponder the gold chart,

After that magnificent July - July 2015 rally, it has retraced its steps all the way to the breakout point at $1,115. If that doesn't hold? Well, there's support at last December's lows around $1,050. So far gold has remained tight-lipped about any plans to fly again.

Mercy, don't I know that oversold can always get oversolder, but how far can the Gold- Bank Stock Index fall? Look here,

This chart moves UP (gold gains against the BKX) when confidence in the financial system wanes, and DOWN (gold loses against the BKX) when confidence waxes. Durned if it ain't about as waxy as anybody's ever seed it. That just has to be overdone & ready for a slingshot reversal.

On 16 December 1967 I married Susan Askew at Good Shepherd Episcopal Church in Memphis. The church was packed, and we celebrated Holy Communion with the service. As the service rolled on, a friend of mine standing in the back whispered to another friend, "Shucks! It doesn't take but 45 minutes to crown the Queen of England!" I didn't care, I was having a great time.

After the reception some friends thought it would be a clever idea to handcuff us together. We were supposed to go on a scavenger hunt to find the key, until I threatened to dismember the main culprit. I was serious. As we left the Church somebody had thrown a handful of rice that hit Susan in the eye, leaving one of us blinded and both of us handcuffed. No wonder I lost my patience, but after that rough start we had a peaceful trip, unhandcuffed, to New Orleans & stayed at the Royal Orleans Hotel.

If you count the time from May 6, 1967, our first date and the night I decided to marry Susan, we walked together on this earth 18,056 days. Count from our wedding and it's only 17,832 days. The worst of those days was better than any I'd ever known before or since. I don't think I would ever have learned love without Susan. Her love taught me God's love, and I will never exhaust my thanksgiving to God for that woman.

Treasure your wife or husband. They really are a gift from God, & you can tell 'em I said so.

Y'all enjoy your weekend.

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
16-Dec-16 Price Change % Change
Gold, $/oz 1,135.30 7.50 0.7
Silver, $/oz 16.15 0.26 1.6
Gold/Silver Ratio 70.284 0.453 0.6
Silver/Gold Ratio 0.0142 0.0002 1.6
Platinum 933.00 40.60 4.5
Palladium 706.30 -8.40 -1.2
S&P 500 2,258.07 3.96 0.2
Dow 19,843.41 -8.33 -0.0
Dow in GOLD $s 361.31 -2.52 -0.7
Dow in GOLD oz 17.48 -0.12 -0.7
Dow in SILVER oz 1,228.47 -20.31 -1.6
US Dollar Index 102.86 -0.26 -0.3
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: 1,133.40      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,168.54 1,171.37 1,171.37
1/2 AE 0.50 577.52 597.87 1,195.74
1/4 AE 0.25 291.59 304.60 1,218.41
1/10 AE 0.10 118.90 124.11 1,241.07
Aust. 100 corona 0.98 1,105.40 1,114.40 1,136.91
British sovereign 0.24 268.80 281.80 1,197.13
French 20 franc 0.19 209.49 213.49 1,143.49
Krugerrand 1.00 1,148.13 1,158.13 1,158.13
Maple Leaf 1.00 1,143.40 1,157.40 1,157.40
1/2 Maple Leaf 0.50 651.71 595.04 1,190.07
1/4 Maple Leaf 0.25 289.02 303.18 1,212.74
1/10 Maple Leaf 0.10 120.14 123.54 1,235.41
Mexican 50 peso 1.21 1,356.86 1,367.86 1,134.50
.9999 bar 1.00 1,137.37 1,145.40 1,145.40
SPOT SILVER: 16.07      
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 11,847.55 12,133.55 16.97
US 40% silver 1/2s 0.30 4,548.90 4,698.90 15.93
100 oz .999 bar 100.00 1,587.00 1,622.00 16.22
10 oz .999 bar 10.00 162.20 167.20 16.72
1 oz .999 round 1.00 15.87 16.62 16.62
Am Eagle, 200 oz Min 1.00 17.57 19.07 19.07
SPOT PLATINUM: 933.00      
Platinum Platypus 1.00 948.00 978.00 978.00
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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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