The Moneychanger
Daily Commentary
Wednesday, 20 September a.d. 2017 Browse the commentary archive

It is an irony stuffed with gallows humor that the institution billed & installed as "stabilizing" turns out to be the most DEstabilizing force in markets & economy. Yuck, yuck.

Federal Reserve Open Mouth committee announced today it was not raising its federal funds rate this month while threatening again to raise it later this year. Also said that it would begin shrinking its balance sheet, which under threat of 2008's crisis ballooned from about $0.95 trillion to $4.5 trillion today. And this sent me scrambling for zeros to put to the right of my decimal point: Fed will begin reducing its balance sheet by $10 bn a month, gradually raising it over a year to $50 bn a month.

Right. $10 bn of the $3.55 trillion increase is 0.28169%, and would work off the excess in a speedy 355 months. If they sell off $50 bn worth of bonds, that would reduce the overage by 1.4% and take 71 months, which I call for generosity's sake six years.

But this is mere minnows biting the ankles. Real issue is that the Fed by blowing up its balance sheet created oceans and seas and Great Lakes of new money, to which markets and economy have become addicted. A boom, after all, is fueled by debt and all the money we use must be borrowed into existence. Now the Fed, which professes to fear deflation more than Count Dracula fears sunlight, crucifixes, and silver bullets, is fixing to DEFLATE the money supply by selling bonds off its balance sheet.

Dad durn, if it don't take a knotted rope brain to come to that conclusion, I am Janet Yellen.

Never mind, what did markets thing? Precisely at 2:00's announcement, the US dollar index rocketed skyward, up 58 basis points for the day (0.6%) to 92.22. 'Tain't much, especially since a relief rally was due anyhow.

But that cursed announcement was enough to knock down silver & gold. On Comex they closed higher, silver up 5.6¢ to 1725.1¢ & gold up 45.80 to $1,312.00. But recall that Comex closes at 12:30 eastern time while the announcement was blathered out at 2:00. Had the same effect as it did on the dollar index, 'cept upside-down. Gold and silver both tumbled, gold as low as $1,297.45 silver to 1699.1¢.

Rest easy, that's pretty good. Back trading as I write this at $1,301.35 and 1718.5¢. Remember I have been expecting that today or tomorrow would mark the low. Well, gold hit $1,297.45, a smidgen above the bottom of the $1,296 to $1,306 support.

If tomorrow they slip lower but remain above that support, it's buy time. If they break that support, wait to see where they'll land. If they're higher tomorrow, that's a buy, too.

SUSAN'S CORN BREAD. Several of y'all wrote asking for Susan's cornbread recipe I mentioned yesterday. Easier to give it to everybody at once. You'll need

2 cups yellow organic corneal

2 eggs & enough buttermilk to fill the measuring cup to 2 cups (right in with the eggs)

1 teaspoon baking powder

one-half teaspoon baking soda

one-half teaspoon salt.

one-third cup hot bacon grease or lard. Forget Crisco or olive oil. Won't work.

Here's what you have to get straight: you MAY NOT put flour or sugar in this mix. You may add jalapeno peppers or pork cracklins, maybe a little shredded cheese ON RARE OCCASIONS. But the secret and key is that you must cook in cast iron, whether you use those cornbread stick pans like my grandmother used or a 9 or 10" skillet like Susan used. ONLY if you heat that cast iron a long time before you cook the cornbread will you get the scrumptious, bodacious crust all over the cornbread.

Put your skillet on to heat. Turn the oven on to preheat at 400 degrees for 25 minutes. When about 15 minutes are left, put the skillet with the grease into the oven. Or, you can heat the skillet on the stovetop 10 minutes until the grease is nearly smoking or sizzles when you drop a drop of water into it.

Meanwhile, mix the cornmeal, banking powder, baking soda and salt and buttermilk/egg mixture. Put about half the grease into that mix and stir it in.

Next pour the cornbread batter into the hot skillet. It MUST sizzle and steam when you do. Stick the skillet into the oven and bake at 400 degrees for 25 minutes.

Is it ready? Susan used to test the middle with her fingertip to see if it was done clean through. Must be firm.

When you take the skillet out of the oven, have a large cutting board ready. Very carefully (it's hot!) slam the skillet face down on the board. The whole cake of cornbread ought to come out. If some of the crust sticks to the cast iron, just scrape it out.

I'm telling y'all, this cornbread is so good it'll make your tongue slap your jaws!

Argentum et aurum comparanda sunt —
Silver and gold must be bought.

— Franklin Sanders, The Moneychanger

Your source for gold and silver. Read our latest reviews and testimonials.
Market Snapshot See more charts and market data
20-Sep-17 Price Change % Change
Gold, $/oz 1,312.00 5.80 0.44%
Silver, $/oz 17.25 0.06 0.33%
Gold/Silver Ratio 76.054 0.090 0.12%
Silver/Gold Ratio 0.0131 -0.0000 -0.12%
Platinum 944.90 -5.50 -0.58%
Palladium 911.55 5.85 0.65%
S&P 500 2,508.24 1.59 0.06%
Dow 2,212.59 41.78 1.92%
Dow in GOLD $s 34.86 0.51 1.47%
Dow in GOLD oz 1.69 0.02 1.47%
Dow in SILVER oz 128.26 2.01 1.59%
US Dollar Index 92.22 0.59 0.64%
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: 1,301.35      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,309.16 1,319.16 1,319.16
1/2 AE 0.50 656.68 668.43 1,336.85
1/4 AE 0.25 331.59 338.24 1,352.96
1/10 AE 0.10 133.94 137.94 1,379.36
Aust. 100 corona 0.98 1,266.02 1,275.58 1,301.35
British sovereign 0.24 304.35 309.85 1,316.26
French 20 franc 0.19 240.53 245.53 1,315.12
Krugerrand 1.00 1,311.35 1,319.35 1,319.35
Maple Leaf 1.00 1,301.35 1,311.35 1,311.35
1/2 Maple Leaf 0.50 660.44 672.84 1,345.67
1/4 Maple Leaf 0.25 331.59 338.24 1,352.96
1/10 Maple Leaf 0.10 134.36 138.71 1,387.14
Mexican 50 peso 1.21 1,553.35 1,564.35 1,297.46
.9999 bar 1.00 1,303.35 1,315.35 1,315.35
SPOT SILVER: 17.19      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 21.00 24.00 31.37
VG+ Peace dollar 0.77 14.50 17.50 22.88
90% silver coin bags 0.72 12,037.74 12,323.74 17.24
US 40% silver 1/2s 0.30 4,892.87 5,040.87 17.09
100 oz .999 bar 100.00 1,693.60 1,746.60 17.47
10 oz .999 bar 10.00 170.36 175.36 17.54
1 oz .999 round 1.00 17.14 17.69 17.69
Am Eagle, 200 oz Min 1.00 18.74 19.14 19.14
SPOT PLATINUM: 944.90      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 942.90 989.90 989.90
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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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