The Moneychanger
Daily Commentary
Wednesday, 31 May a.d. 2017 Browse the commentary archive

A reader wrote inquiring about an article by Craig Roberts & Dave Kranzler entitled, "Is Bitcoin Standing in for Gold?" Read it at

The article speculates that because the gold price is determined not in the physical market but in the futures market where unlimited contracts [supply] can be created out of air, people are piling into Bitcoin as an alternative to gold. Also, the Fed itself may be manipulating Bitcoin higher, only to crash it later and punish the speculators. Fed may even be creating the alternative alternative-currencies which have mushroomed lately. Why? Since it can't create Bitcoin, it can create other currencies to flood the market with supply.

That's all plausible and imaginative, BUT, although I agree that central banks suppress & manipulate silver & gold, they do not, yea, cannot, succeed over the long run. Consider gold 1999 - 2011 rising from $252 to $1,900, and silver from $4.01 to $48.50, all during the height of the manipulation. It worked for a while, then it didn't.

Eventually they lose control of a market. Anyway, they can only control it at the margin and for the very short term. They can't change or reverse the primary trend.

And whether Roberts' & Kranzler's presentation is right or not, last year's Bitcoin graph simply shows a rabid speculation that will eventually blow off & collapse, now or later.

I would rather suffer in the shade with silver & gold for a while, than be fried quickly in the blazing sun of Bitcoin speculation. Eventually silver & gold, which are by nature money, will recover their thrones like an avenging Ulysses flinging arrows and all the bogus, substitute fiat monies like the US dollar and Bitcoin will sink with arrows through their hearts to their intrinsic value, zero.

But what do I know, no mor'n a nat'ral born durn fool from Tennessee?

Lo, the US dollar index fainted again. Lost 34 basis points to day to 96.96. Oooooo. Below 95 ain't good. It had acted like it was forming a bowl bottom (see chart ) but now has fallen near-bout to the bowl bottom again. Remember this chart ends with yesterday's close, not today's, which is lower.

Dow Industrials lost 20.82 (0.1%) to end at 21,008.65. S&P500 slid 1.1 (0.05) to 2,411.80. Looking at the S&P500 chart here, y'all will see that it has followed thru today on what it threatened yesterday. That's another witness to the interpretation that the rally from mid May after the big slide was only a touchback to the breakdown line. Everything points lower.

Silver & gold gainsaid each other, gold rising and silver falling. On Comex gold broke smartly through the $1,265 resistance to rise $9.90 (0.8%) to $1,272. Silver, on the other hand, fell two meager cents to 1736.8¢. Sigh.

Y'all go look at the gold chart here,

Gold is doing what a climbing market is supposed to do, namely, keep pushing through resistance Still, that rising wedge makes me nervous, like storm clouds gathering over an outdoor wedding reception.

Oh, silver!

Silver is struggling to push through 1750¢ and the 50 DMA at 1745¢. Not far overhead silver will meet the 200 DMA, the important one, at 1766¢. Must push through.

Something about this trading feels lukewarm, pedestrian, yet it keeps working its slow way higher. Give silver & gold some credit.

Here's a leetle, quick Susan story. All the years until Susan had her first heart surgery in 2008 we never knew that she had a hole in her heart. That hole in an infant's heart that's supposed to close during birth had never closed. She said later she always wondered why she got so short of breath playing basketball or swimming, but never thought much about it. That gives you an idea how tough and determined she was.

But I always noticed she needed lots of sleep. It caught up with her when we had four and then five children. I usually stayed up reading and went to bed after her, and many a night I would come to bed only to find her kneeling beside the bed, head on her arms, utterly asleep. She had knelt down to pray but all the day's labor had caught up with her. I would gently lift her up into bed.

Men, that's the kind of devotion your wives show to your children, to you, to God. Love your wives, and let them know you do.

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
31-May-17 Price Change % Change
Gold, $/oz 1,272.00 9.90 0.78%
Silver, $/oz 17.37 -0.02 -0.12%
Gold/Silver Ratio 73.238 0.654 0.90%
Silver/Gold Ratio 0.0137 -0.0001 -0.89%
Platinum 943.00 5.50 0.59%
Palladium 810.00 9.85 1.23%
S&P 500 2,411.80 -1.11 -0.05%
Dow 21,008.65 -20.82 -0.10%
Dow in GOLD $s 341.42 -3.02 -0.88%
Dow in GOLD oz 16.52 -0.15 -0.88%
Dow in SILVER oz 1,209.62 0.19 0.02%
US Dollar Index 96.96 -0.34 -0.35%
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SPOT GOLD: 1,268.00      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,281.95 1,310.48 1,310.48
1/2 AE 0.50 646.17 668.87 1,337.74
1/4 AE 0.25 326.25 340.78 1,363.10
1/10 AE 0.10 133.04 138.85 1,388.46
Aust. 100 corona 0.98 1,231.71 1,240.71 1,265.77
British sovereign 0.24 300.73 313.73 1,332.74
French 20 franc 0.19 234.37 238.37 1,276.74
Krugerrand 1.00 1,275.61 1,285.61 1,285.61
Maple Leaf 1.00 1,276.00 1,292.00 1,292.00
1/2 Maple Leaf 0.50 729.10 665.70 1,331.40
1/4 Maple Leaf 0.25 323.34 339.19 1,356.76
1/10 Maple Leaf 0.10 134.41 138.21 1,382.12
Mexican 50 peso 1.21 1,514.94 1,525.94 1,265.61
.9999 bar 1.00 1,272.44 1,280.00 1,280.00
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 12,240.80 12,526.80 17.52
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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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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