The Moneychanger
Weekly Commentary
Friday, 18 November a.d. 2016 Browse the commentary archive
Here's the weekly scorecard:
  11-Nov-16 18-Nov-16 Change % Change
Silver, cents/oz. 1,736.40 1,661.30 -75.10 -4.3
Gold, dollars/oz. 1,223.50 1,208.50 -15.00 -1.2
Gold/silver ratio 70.462 72.744 2.282 3.2
Silver/gold ratio 0.0142 0.0137 -0.0004 -3.1
Dow in Gold Dollars (DIG$) 318.44 322.74 4.30 1.4
Dow in gold ounces 15.40 15.61 0.21 1.4
Dow in Silver ounces 1,085.44 1,135.73 50.29 4.6
Dow Industrials 18,847.66 18,867.93 20.27 0.1
S&P500 2,164.45 2,181.90 17.45 0.8
US dollar index 99.06 101.38 2.32 2.3
Platinum 941.00 919.50 -21.50 -2.3
Palladium 684.15 727.25 43.10 6.3

I reckon Wall street, and maybe America, worships Mammon, so they need their own catechism to train their worshippers, a Mammon-Catechism. First question ought to be, "What is the chief end of central banking? Answer: "The chief end of central banking is to profit the banks, bleed the nation, and control the economy forever."

'Twas a good week for stocks, sort of, an unequivocally good week for the US dollar index, a great week for palladium, and a rotten week for gold, silver, & platinum. How many wise gurus on Wall Street expected a Trump victory to spark a stock market rally?

Let us think first about fiat currencies, those bloodsucking vampires sucking on the carotid arteries of the world, evil angels of statism & banking arrogance.

The US dollar index hit a 13 year high at 101.38, rising 38 basis points today (0.38%). Behold, the chart,

The dollar's Trump rally, grounded upon expectations of higher interest rates, has painted a dramatic rising wedge on the chart's face. It hath reached the heavy resistance at 100.50 & tried to pierce that ceiling. I observe merely -- not knowing a thing in the world and being only a nat'ral born durned fool from Tennessee -- that them rising wedges right regularly break DOWN. I recall also the 3% rule, that a breakout hasn't occurred until a market goes 3% past the last high. For the US dollar index that would be 103.07. Now may be the dollar index will merely correct here, then poke right through that resistance & climb for the wild blue yonder, but either way expect it to correct.

To give y'all an idea how manipulated currency exchange rates really are, here's a picture of the Euro priced in US dollars for the last 24 months,

Notice anything about the highs? Right, they all end about 115. Notice that the lows mostly like about 108, with one sharp fall to 105-ish? Central banks are corralling the rate into a range.

Here's the yen back to 2014,

Here the range top is about 100 cents to 100 yen, with a wild range down to 79.50. All that steep decline rested on Japanese government/central bank announcement they would cheapen the currency. For its steep rise back to 100 this year the yen can probably thank its "safe haven" status. Now it's been pushed off a cliff rolled in chains. Gapped below its 200 day moving average and appears headed for 85 again.

Please ponder interest rates with me. Fed policy since 1980 (that's 36 years, for you arithmetically challenged folks) has suppressed interest rates. When you've been pushing down a spring that long, what happens when you let go? Something like this,

Here appeareth the yield on the US 30 year treasury bond. Mark that it hath risen off its all-time low in July, broken out of the range, and now gapped up through the downtrend from 2014, headed for the downtrends from 2011 and 1980. Bear in mind that bonds move opposite to yields, so try to picture what this rise has done to bond prices. You can see that here,

This pictures the 30 year bond PRICE, which has tumbled down, down, down since the July high. Yep, we may get a rebound here, but it appears the 36 year trend has a wooden stake through its heart.

Y'all bear in mind that the US bond market is about twice the size of the stock market. Far more people to panic when the avalanche hits. Y'all button up those snowsuits!

Stocks today edged down, but not so far as to lose their small gains for the week. Dow Industrials dropped 35.89 (0.19%) to 18,867.93. S&P500 misplaced 5.22 (0.24%) to end at 2,181.90. Behold the Dow chart,

That little flaggy looking thang stuck right on upper resistance line of the Jaws of Death formation could be a "pennant" that might mark the half way point of the rise, OR it might be a reversal formation. Notice that the RSI is way overbought, volume has shrunk, and the MACD is agonizingly overbought.

Here's the S&P500 chart, with a surprise,

Outlined in green is one monster rising wedge or bearish flag begging to break down. But like I said, I ain't no more'n a nat'ral born durn fool from Tennessee, & I ain't no match for them New Yahk trained smarties with their shiny, pointy-toed shoes. Durn, I'm so poor I have to paint my bare feet black & lace up my toes.

Comex gold dropped $8.00 (0.7%) to close at $1,208.50. Low came at $1,201.10. Silver lost 14.8¢ (0.9%) to 1661.3¢. Low saw 1643¢.

Today marks the theoretical end of that cycle I've been watching for the low, but cycles can extend. You need a very rubbery measuring rod for cycles. Anyhow, gold has about fulfilled my downside target at $1,200 resistance (with a possible spike to $1,190). Lo, the chart,

Silver is a bit trickier. Analog of gold's $1,200 support is the May low at 1583¢. However, silver has clung to that lower channel line. Considering what I expect of silver -- at least matching the 12.5 times rise from 2001 - 2011 from the December 2015 low, that is, $168.75 -- that further 60¢ to 1600¢ doesn't seem to amount to much.

Next week is liable to be quiet. Don't y'all take your eyes off the horizon and the prize: silver & gold bottomed in December 2015 and have begun a rally that will last 5 years or more. THIS is the time to buy,

Now y'all can quit reading here if you don't want to hear me wax sentimental. Today I found two poems I had written to Susan on Valentine's Day. She had framed them. Here's what I wrote to her in 2010:

How many times I've said it, and yet

Some few things are never said enough.

Their mystery

Remains untouched by time,

Beyond weak interest's tiring,

Past age or frailty or growing stale,

Their newborn beauty never ages,

Their wonder charms us still as much

As when our eyes beheld them first.

Love is that mystery,

Love that wonder

That traces lineage & source

Not to mortality or time

But to the One-in-Three

Before all time began.

And to our frailty God condescends

To grant a body for our dull sight

That in this earthly love we might find his light;

So that by you, my love, both soul and body might

To heaven ascend.

But I repeat myself: I love you.

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
18-Nov-16 Price Change % Change
Gold, $/oz 1,208.50 -8.00 -0.7
Silver, $/oz 16.61 -0.15 -0.9
Gold/Silver Ratio 72.744 -0.475 -0.6
Silver/Gold Ratio 0.0137 -0.0001 -0.9
Platinum 919.50 -23.10 -2.5
Palladium 727.50 -1.85 -0.3
S&P 500 2,181.90 -5.22 -0.2
Dow 18,867.93 -35.89 -0.2
Dow in GOLD $s 322.74 1.55 0.5
Dow in GOLD oz 15.61 0.07 0.5
Dow in SILVER oz 1,135.73 7.89 0.7
US Dollar Index 101.38 0.38 0.4
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: 1,207.10      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,244.52 1,247.54 1,247.54
1/2 AE 0.50 615.11 636.75 1,273.49
1/4 AE 0.25 310.57 324.41 1,297.63
1/10 AE 0.10 126.64 132.18 1,321.77
Aust. 100 corona 0.98 1,177.28 1,186.28 1,210.25
British sovereign 0.24 286.28 299.28 1,271.38
French 20 franc 0.19 223.11 227.11 1,216.45
Krugerrand 1.00 1,224.00 1,234.00 1,234.00
Maple Leaf 1.00 1,217.10 1,231.10 1,231.10
1/2 Maple Leaf 0.50 694.08 633.73 1,267.46
1/4 Maple Leaf 0.25 307.81 322.90 1,291.60
1/10 Maple Leaf 0.10 127.95 131.57 1,315.74
Mexican 50 peso 1.21 1,448.00 1,459.00 1,210.09
.9999 bar 1.00 1,211.32 1,219.10 1,219.10
SPOT SILVER: 16.54      
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 12,394.53 12,680.53 17.74
US 40% silver 1/2s 0.30 4,686.08 4,836.08 16.39
100 oz .999 bar 100.00 1,633.50 1,668.50 16.69
10 oz .999 bar 10.00 166.85 171.85 17.19
1 oz .999 round 1.00 16.34 16.84 16.84
Am Eagle, 200 oz Min 1.00 18.04 19.54 19.54
SPOT PLATINUM: 919.50      
Platinum Platypus 1.00 934.50 964.50 964.50
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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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