The Moneychanger
Weekly Commentary
Friday, 3 March a.d. 2017 Browse the commentary archive
Here's the weekly scorecard:
  24-Feb-17 3-Mar-17 Change % Change
Silver, cents/oz. 1,833.90 1,769.70 -64.20 -3.5
Gold, dollars/oz. 1,256.90 1,225.50 -31.40 -2.5
Gold/silver ratio 68.537 69.249 0.712 1.0
Silver/gold ratio 0.0146 0.0144 -0.0002 -1.0
Dow in Gold Dollars (DIG$) 342.45 353.95 11.51 3.4
Dow in gold ounces 16.57 17.12 0.56 3.4
Dow in Silver ounces 1,135.38 1,185.72 50.34 4.4
Dow Industrials 20,821.76 20,983.66 161.90 0.8
S&P500 2,367.34 2,378.80 11.46 0.5
US dollar index 100.09 101.55 1.46 1.5
Platinum 1,026.50 992.00 -34.50 -3.4
Palladium 771.65 767.85 -3.80 -0.5

Well, HERE'S a surprise. Just as Europe closed yesterday "somebody" sold over $2 billion notional ilver futures, about 115 million ounces at one pop. Surprise, surprise, silver dropped 72¢ & gold dropped $17. All just "natural," "free market" trading, right? Sure, sure, profit-maximizing sellers always dump everything they haveto sell on the market at once, so they can drive down the price and receive less. Sure enough makes sense to me.

Recall that in April 2013 "somebody"" sold so much gold that the price drop was a seven-sigma event. What does that mean? Sigma is one standard deviation in a normal curve, a measure of data variability. Three sigma covers 97.7% of possible data. Seven sigma events are as improbable as you being mashed by a Hereford bull falling from a clear sky.

To secure his ill-gotten gains, that misbegotten somebody saw that silver & gold closed lower on Comex, after which they promptly recovered. Yeah, buddy! Free markets.

Out of her crooked mouth today spake the Fat Lady. Lo, Mother Janet raised the ante from "modestly accommodative" monetary possibly to "moderately accommodative." Widespread interpretation of this ripe compost is that the Fed will raise its discount rate next month.

For the dollar index, it was a case of "buy the rumor, sell the news." Behold the chart, http://schrts.co/fhx9TW

Yes, yes, that 66 basis point (0.64%) dive to 101.55 was the selling -- nullifying, nixing, and aborting the dollar index's threatened invalidation of the head and shoulders top. No, it's not a bankable turn just yet, it needs to confirm by falling below 100.7 and that little even-sided triangle outlined in blue. But it doth appear that shall come.

Stocks fared not well today. Dow mislaid 19.31 points (0.09%) somewhere to close at a lower 20,983.66. S&P500 backed up 3.12 points (0.03%) to 2,378.80.

Gold fell $6.40 (0.5%) on Comex to $1,225.50. Silver dropped 8/10 of 1¢ to 1769.7¢.

'Twas all painting the tape. In the aftermarket gold surged to $1,234.00 and silver to 1795¢, moves strongly stinking of scared shorts closing out the week's positions. Both three day charts leave me persuaded that yesterday's drop has ended.

Aww, why stop there? On the WEEKLY chart gold has been relentlessly treading toward its 200 week moving average, now about $1,241. It closed above that last week, below this week, but be calm, it is working its way through, like a fat boy squeezing through blackberry briars -- not too fast. Same yardstick applied to silver shows the same picture. Silver's 200 week moving average now stands at 1799c. Momentum for both metals is up, higher, excelsior!

Trumps talk of removing regulations from the Big Banks so they could, like hyenas returning to gnaw a dead gnu, resume feeding on the American public, sent the Bank Index (BKX) soaring. I watch the Gold/BKX spread because it reveals whether public confidence is flowing toward the financial & monetary system or away. Here's the chart, http://schrts.co/ZztMhp

Watch out! The spread rises when confidence flows into gold, falls when confidence flows toward the stinking banks. (I'm so sorry. That just slipped out. 'Scuse me.) Y'all can see that the spread bottomed at about 12 in December, traded sideways, then bottomed again on 1 March at 12.46. Until gainsaid, I'm calling that a double bottom and expecting higher prices. My expectation will be confirmed by a rise above 13.62, the last high.

BOTTOM LINE: Rough week when "Somebody," Nice Government Men or merely Big Bank Predators, smashed silver but failed. Strength, dear Readers, that shows strength. Expect silver to keep on rising toward 1900¢, yea, mayhap higher. A close below this week's low about 1770¢ would contradict that. Time to buy them metals: next five years they'll rise.

Here's a Tiny Happy: check out Redwood City Seed Company at http://bit.ly/2mP23Yj The owners are even less tech-friendly than I am, so you cannot order from their website, but their seeds are so unique, especially hot peppers, that you will jump any hoops to get them. I'm ordering Tepins (Susan's favorite), Pequins, Anchos, de Arbols, Serranos, Japones, & Tabasco. There's nothing bad in their whole catalog, which you can download from their vestigial website.

For about five years my young friend Stuart M. led long camping-hiking trips for a summer camp in western North Carolina. The camp had a strict "no purpling" rule, i.e., reds (boys) and blues (girls) must not mix unchaperoned at night.

You can imagine this was a nightmare for Stuart, leading backpacking camping trips for spoiled rotten, rich urban teenagers. His solution was both elegant and effective.

First night out he would gather them all around and warn them about the greatest danger in the woods. "You see, a number of years ago some monkeys escaped from a circus in Ashville, and multiplied into a now-feral breed, the Appalachian Pine Monkey. You can hear their laughing call, 'Haw, Haw, Haw!' {The call, of course, of the plentiful pileated woodpecker, & with any luck one would fly through the nearby woods during Stuart's explanation.]

"The Appalachian Pine Monkey is not generally aggressive, except for one circumstance: the smell of human teenage hormones drives them crazy. You are safe in your tent, but if they catch you in the woods they attack wildly, throwing their feces at you and then scratching your eyes out. Under no circumstance go out of your tent at night."

The Appalachian Pine Monkey worked so well the first year Stuart kept on using it for the next four. Then he changed jobs, guiding canoe trips in South Carolina. Came the day a young teenage group arrived from the North Carolina camp where Stuart had once worked. While they were putting the canoes into the river, a pileated woodpecker laughed raucously through the woods.

Suddenly a 13-year old boy sought out Stuart with a look of genuine concern on his face: "Do you have Appalachian Pine Monkeys here?"

"No, no," Stuart assured him, "they're only up in North Carolina ."

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
3-Mar-17 Price Change % Change
Gold, $/oz 1,225.50 -6.40 -0.5
Silver, $/oz 17.70 -0.01 -0.0
Gold/Silver Ratio 69.249 -0.361 -0.5
Silver/Gold Ratio 0.0144 -0.0000 -0.0
Platinum 992.60 4.20 0.4
Palladium 767.85 -1.40 -0.2
S&P 500 2,381.92 14.04 0.6
Dow 20,983.66 -19.31 -0.1
Dow in GOLD $s 353.95 1.55 0.4
Dow in GOLD oz 17.12 0.08 0.4
Dow in SILVER oz 1,185.72 -0.55 -0.0
US Dollar Index 102.16 0.38 0.4
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GOLD Fine Tr.Oz. BID ASK $/oz
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VG+ Peace dollar 0.77 16.00 18.00 23.53
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US 40% silver 1/2s 0.30 5,103.50 5,253.50 17.81
100 oz .999 bar 100.00 1,785.00 1,810.00 18.10
10 oz .999 bar 10.00 181.00 186.00 18.60
1 oz .999 round 1.00 18.20 18.50 18.50
Am Eagle, 200 oz Min 1.00 18.95 20.20 20.20
SPOT PLATINUM: 992.60      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Platinum Platypus 1.00 987.60 1,032.60 1,032.60
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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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