The Moneychanger
Daily Commentary
Tuesday, 30 May a.d. 2017 Browse the commentary archive

Kansas and the wedding were beautiful, my grandsons well-behaved & charming, but I am some kind of glad to be at home in Dogwood Mudhole -- something about Tennessee won't let go of me. I was encouraged to meet many young couples with three, four, or five children -- encouraged & reminded of Susan and me at that time in our lives. Can't get away from her.

I can't stand people who always say, "I told you so," but I must offer a little follow up to my warnings about parabolic rises and Bitcoin. Let me refresh your memories: parabolic rises 100% of the time end in crashes. Parabolic rises are those straight up rises on a graph. Always collapse. Always. 100% of the time.

On 25 May Bitcoin hit a new all-time high at $2,466.56. By 27 May it had sunk to $2,018.7, down 18.2% in two days. That looks like the killer break, but with a market as goofy & insubstantial as Bitcoin (it makes cotton candy look like cement), you can't tell. One year ago, on 25 May 2016, Bitcoin cost $449.23 -- it has multiplied 5.5 times since then. Merciful heavens, folks, in the teeth of all those nice people who keep telling me "It's different this time," this is a speculative frenzy and a parabolic blow off. Today Bitcoin's at $2,248.10, on its way to its long term resting place: zero.

Waiting for the US dollar index to make a move, I might as well have stayed away another week. Today it's at 97.30, down six basis points (0.06) from Friday, which is to say unchanged. However, on this chart you can see that the dollar index appears to be making a bowl, which would be a bottom and reversal. However, that's not clear yet. I apologize that this chart's last entry is Friday, but for some reason StockCharts isn't posting closing data on the dollar index until after I send out my commentary.

Euro chart you may find here,

Since early April the euro has trended up and appears to want to climb higher. However, because criminal central banks manipulate all currency exchange rates, that might change at an time for political reasons.

And here is the yen chart,

The yen drew a rising wedge, usual fatal, broke out to the upside in April, then collapsed down through the wedge's bottom boundary in May. It has since climbed back up into the wedge. When a market hangs over a chasm by a gnat's eyelash then pulls back and climbs, I call that strong. Yen could confirm that by pushing through its 200 day moving average above at 91.39.

After collapsing on 17 May, stocks shot right back. Look here at the Dow, With the high on 1 March last week's high forms a potential double top. A climb through last week's high at 21,083 would work much higher, but this chart doesn't say that will happen. Rather, the Dow nervously broke down, then traded back up to the downtrend line which it broke down through, and last two days has weakened. That looks like a breakdown with a touchback to me.

Comex gold backed up $6.00 (down 0.5%) to $1,262.10. Silver disagreed, gaining 10.5¢ (0.6%) to 1738.8¢.

Here's the gold chart,

Gold spent four days moving forward, proved its aim on higher prices by touching and holding the 200 DMA down below, and has now attacked the $1,265 level with a close Friday at $1267.10. Yet a rising wedge haunts that chart, & come what may, gold must overcome this $1,265 level. Looking out a little farther, once gold cracks that level, it will run for $1,306 and then shoot past that. Just be patient.

Y'all will find a silver chart here,

Silver today reached its 50 day moving average but is still mired -- around here they says "mard" -- beneath 1735¢ - 1750¢. It's absolutely essential to the bullish case that silver conquer 1866¢.

RSI & MACD have moved away from oversold, but the last three days' rise has been confirmed by rising volume.

Finally, glance at this gold/silver ratio chart,

Here all is well as a rally in silver and gold demands a fall in the ratio. That fall has progressed from the May peak at 76.47 to today's 72.63. The fall has displayed lower lows and lower highs, a textbook downtrend. Still, it needs to fall below that 50 DMA at 72.04. I'm like a nagging wife: I always want MORE.

On 30 May 1381 Wat Tyler's Rebellion began in England. A tax collector arrived in Essex to collect unpaid poll taxes and apparently that was the last straw for the peasantry. The Black Death hit England in 1348 and killed at least half of the population, in some places 90%. That made land cheap and labor dear, and the peasants & serfs were tired of their economic conditions. Wages were driven up, which made landowners unhappy. The English government tried to fix these trends with legislation, but of course that never works. All these resentments and trends finally met in the attempt to collect the unpaid poll tax. Later Wat Tyler surfaced to lead the revolt, and John Ball to preach to it. Ball asked the crowds, "When Adam delves & Eve span, who was then a gentleman?" On 13 June the Rebels entered London, burning & looting & generally beating the kings troops. They even took the Tower of London, but by late June they were on the run, and the executions began.

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
30-May-17 Price Change % Change
Gold, $/oz 1,262.10 -6.00 -0.47%
Silver, $/oz 17.39 0.11 0.61%
Gold/Silver Ratio 72.585 -0.788 -1.07%
Silver/Gold Ratio 0.0138 0.0001 1.09%
Platinum 943.00 -21.80 -2.26%
Palladium 810.00 19.10 2.41%
S&P 500 2,412.91 -2.91 -0.12%
Dow 21,029.47 -50.81 -0.24%
Dow in GOLD $s 344.44 0.80 0.23%
Dow in GOLD oz 16.66 0.04 0.23%
Dow in SILVER oz 1,209.42 -10.29 -0.84%
US Dollar Index 97.30 -0.06 -0.06%
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: 1,263.00      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,275.63 1,305.31 1,305.31
1/2 AE 0.50 643.62 666.23 1,332.47
1/4 AE 0.25 324.97 339.43 1,357.73
1/10 AE 0.10 132.51 138.30 1,382.99
Aust. 100 corona 0.98 1,226.85 1,235.85 1,260.81
British sovereign 0.24 299.54 312.54 1,327.70
French 20 franc 0.19 233.44 237.44 1,271.79
Krugerrand 1.00 1,268.05 1,278.05 1,278.05
Maple Leaf 1.00 1,271.00 1,287.00 1,287.00
1/2 Maple Leaf 0.50 726.23 663.08 1,326.15
1/4 Maple Leaf 0.25 322.07 337.85 1,351.41
1/10 Maple Leaf 0.10 133.88 137.67 1,376.67
Mexican 50 peso 1.21 1,508.97 1,519.97 1,260.65
.9999 bar 1.00 1,267.42 1,275.00 1,275.00
SPOT SILVER: 17.42      
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 12,276.55 12,562.55 17.57
US 40% silver 1/2s 0.30 4,947.15 5,097.15 17.28
100 oz .999 bar 100.00 1,722.00 1,757.00 17.57
10 oz .999 bar 10.00 175.70 180.70 18.07
1 oz .999 round 1.00 17.22 17.82 17.82
Am Eagle, 200 oz Min 1.00 18.92 20.42 20.42
SPOT PLATINUM: 943.00      
Plat. Platypus 1.00 958.00 988.00 988.00
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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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