The Moneychanger
Daily Commentary
Thursday, 4 May a.d. 2017 Browse the commentary archive

A kind friend sent me the answer to my rant yesterday about the rotten central banking system. Pretty simple, really, Psalm 37:1&2: "Fret not thyself because of evildoers, neither be thou envious against the workers of iniquity. For they will soon be cut down like the grass, & with as the green herb." Amen & Amen. Lookin' & longin' for the Mower!

With further plunges today of 1.5%+ silver & gold must be nearing lows. Worse, they plunged while the Dollar Index was falling. Lo, the chart hideth here,

Dollar today traded to a new high for the move, then closed waaay lower, giving up eight days' gains and falling again through 99 support. It lost 43 basis points (0.44%) to 98.65. Another lower close tomorrow will guarantee a lower dollar.

Stocks are confused, the Dow down & the S&P500 up. Dow lost 6.43 (0.3%) to 20,951.47 but the S&P500 rose 1.39 (0.06%) to 2,389.52. Although both look wesk enough right now to expect another tumble, I still expect to see higher prices, even new highs, later. Part of the reason for that is changing my mind about the Dow in Gold and Dow in Silver. Chart here,

I'm now thinking this rascal has one more leg up. If that's accurate, it will carry to a new high.

Anyway, the stock market is not frenzied enough for a top. At the top there won't be any hesitation, no indices gainsaying each other, all will be buying & grinning & guffawing at reality. not quite there yet.

Comex silver skidded 24.3¢ to 1624.4, down 1.5%. Gold collapsed $19.90 (1.6%) to $1,226.50. Lo, the Gold chart,

Owch! It burst that uptrend line from the December low. Tomorrow will tell whether that's a one day event, but I expect we've just about seen the whole of gold's decline.

Wish I could say that about silver. Yes, back in March it also pierced that downtrend line from the July 2016 high & stayed there four days -- and I expect that line to hold, mostly. Yet 1600¢ beckons. Look at the silver chart,

RSI is about as oversold as it has been in a long, long time, way more oversold than it was at the December 2016 turnaround. Still, there's no other evidence much for a turnaround yet.

Well, that's not precisely so. Here's a whisker blowing in the wind: premium on US 90% silver coin rose again today, second day in a row. Also, look at this Gold/Silver Ratio chart,

After rising eight straight days, and really for a whole month, the Ratio today fell. Can't make too much hay out of one day, but there it is all the same, up above that gap that has not yet identified itself as an exhaustion or a runaway gap.

Here's a chart that haunts me,

It's the Gold/Silver Ratio from 2007 through 2008. After the Ratio low (gold & silver price high) in the spring it broke out upside and I discounted it. Well, I shouldn't have because it was discounting -- foreseeing -- the great financial panic that took the ratio to 85. Yes, I know this chart shows the high at 93.73, but it's an end of day continuous contract chart and simply doesn't get the ratio right. However, the form of the graph is what I want y'all to see, with the breakout & sudden rise.

No, I'm not saying Financial Armageddon lurks around the bend, but whenever I see the ratio climbing that thought does cross my mind. Maybe for nothing, after all, Ratio went to 85 in March 2016 without catastrophe.

On 4 May 1796 was born Horace Mann, in Massachusetts, who became a pestiferous politician and imposer state-run education. I won't call it "public education" because the public was already educating itself just fine, privately, thank you very much. In 1803 one of the DuPonts moving to America mentioned that over 90% of the people could read. Mann was active in imposing the totalitarian Prussian education system on Massachusetts, whence it was later imposed on the rest of the US. I don't know if state-run education could really work or not, but I am sure what we have today doesn't work, unless you understand from its history that it works exactly the way the oligarchs and politicians who promoted it desired, namely, to produce docile workers and voracious consumers. Education ain't the point.

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
4-May-17 Price Change % Change
Gold, $/oz 1,226.50 -19.90 -1.60%
Silver, $/oz 16.24 -0.24 -1.47%
Gold/Silver Ratio 75.505 -0.094 -0.12%
Silver/Gold Ratio 0.0132 0.0000 0.12%
Platinum 905.30 3.30 0.37%
Palladium 800.50 1.35 0.17%
S&P 500 2,389.52 1.39 0.06%
Dow 20,951.47 6.43 0.03%
Dow in GOLD $s 353.12 5.74 1.65%
Dow in GOLD oz 17.08 0.28 1.65%
Dow in SILVER oz 1,289.80 19.40 1.53%
US Dollar Index 98.65 -0.43 -0.43%
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SPOT GOLD: 1,226.30      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,242.24 1,252.24 1,252.24
1/2 AE 0.50 618.78 646.87 1,293.75
1/4 AE 0.25 309.39 328.95 1,315.82
1/10 AE 0.10 123.76 134.03 1,340.35
Aust. 100 corona 0.98 1,191.20 1,200.20 1,224.45
British sovereign 0.24 288.67 293.67 1,247.54
French 20 franc 0.19 228.95 232.95 1,247.72
Krugerrand 1.00 1,231.21 1,241.21 1,241.21
Maple Leaf 1.00 1,236.30 1,247.30 1,247.30
1/2 Maple Leaf 0.50 705.12 643.81 1,287.62
1/4 Maple Leaf 0.25 312.71 328.04 1,312.14
1/10 Maple Leaf 0.10 129.99 133.67 1,336.67
Mexican 50 peso 1.21 1,465.12 1,476.12 1,224.29
.9999 bar 1.00 1,224.30 1,237.30 1,237.30
SPOT SILVER: 16.27      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 22.50 25.50 33.33
VG+ Peace dollar 0.77 15.00 18.00 23.53
90% silver coin bags 0.72 11,454.30 11,811.80 16.52
US 40% silver 1/2s 0.30 4,607.90 4,757.90 16.13
100 oz .999 bar 100.00 1,607.00 1,652.00 16.52
10 oz .999 bar 10.00 160.70 166.20 16.62
1 oz .999 round 1.00 16.07 16.67 16.67
Am Eagle, 200 oz Min 1.00 17.42 18.42 18.42
SPOT PLATINUM: 905.30      
Plat. Platypus 1.00 915.30 928.30 928.30
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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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