The Moneychanger
Weekly Commentary
Friday, 2 June a.d. 2017 Browse the commentary archive
Here's the weekly scorecard:
  26-May-17 2-Jun-17 Change % Change
Silver, cents/oz. 1,728.30 1,748.70 20.40 1.2
Gold, dollars/oz. 1,267.00 1,276.80 9.80 0.8
Gold/silver ratio 73.309 73.014 -0.295 -0.4
Silver/gold ratio 0.0136 0.0137 0.0001 0.4
Dow in Gold Dollars (DIG$) 343.94 343.34 -0.60 -0.2
Dow in gold ounces 16.64 16.61 -0.03 -0.2
Dow in Silver ounces 1,219.71 1,212.69 -7.02 -0.6
Dow Industrials 21,080.28 21,206.29 126.01 0.6
S&P500 2,415.82 2,439.07 23.25 1.0
US dollar index 97.36 96.67 -0.69 -0.7
Platinum 959.80 951.70 -8.10 -0.8
Palladium 786.95 837.95 51.00 6.5

Friends, here's a little news story to enlighten those who continue to insist that silver & gold markets are not manipulated. See

Operating on my nat'ral born durn Tennessee fool theory that vanishingly few people plead guilty to criminal charges unless the prosecution has 'em dead to rights, I believe that Deutsche Bank Singapore trader David Liew actually performed all those manipulations in gold, silver, platinum, & palladium futures that he pled guilty to on 2 June 2017 in Chicago federal court. I believe that all those other traders he testified did similar misdeeds really did them. Given the premises & manifold bank guilty pleas, I conclude the big banks really do manipulate metals markets as well as interest rate markets & heaven knows what else. They really are criminal enterprises.

So why buy silver & gold if the markets are manipulated? Because thy can only be manipulated at the margin for the short term, and not against the primary (15-20 year) trend. They can make ripples, but they can't turn back the tide.

Speaking of waters, notice that the little fish, the traders, are charged criminally but the big fish, the Big Banks, get off with a wrist-pitty-pat fine. For some mysterious reason, the yellow-bellied US Justice Department never charges the real criminals, the banks' managers & executives. The Spanish have a word for the reason: enchufe -- connections.

'Twas a good week for stocks, but a better week for silver, gold, & palladium, and a rotten week for the US dollar index.

Looking closer, take a gander at the US Dollar index chart,

US dollar index had a chance to turn up, but muffed it and closed the week at a new low for the move, 96.67, down 47 basis points today (0.48%). Dollar's trouble came when the yankee government jobs report announced only 138,000 new jobs last month, short of economist's expectations and lower than April. Yields dropped, and since yields are a chief driver of currency exchange rates, the prospect of lower interest on dollars pulled the rug out from under the dollar and kicked it through a trap door in the floor.

Just to keep up, here's the euro chart,

Y'all can see the euro is on a tear with runaway gaps above and below the late April - early May trading. Tain't fatally overbought, but it's looking awfully long in the tooth.

Here's the yen chart,

The yen has lurched back & forth in that range bounded by blue lines, breaking out upward once then collapsing to break out downward. It has since recovered and is trading tamely above the bottom boundary. Lots more room to rise.

Y'all look at the yield on the 10 year treasury note,

Done broke plumb down, closing today beneath the 200 day moving average. Pointing lower, but if the Fed raises rates this month, well, it'll rise again. One thing you can say for sure about Janet Yellen and all them Fed governors: their cornbread ain't all the way done in the middle.

Stocks made new all time highs yesterday and again today. Dow added 62.11 (0.3%) today for a close at 21,206.29 S&P500 also worked its way to a new all time high at 2,439.07, 9.01 (0.4%) higher than yesterday.

What can I say? I expect stocks will go higher still, making the bubble bursting later this year ever so much more spectacular.

Dow in gold chart is instructive,

All indicators point lower in a trend of lower lows and lower highs. Closed today slap on the 50 DMA at 16.56 oz. I want to see it close below that bottom green boundary to confirm a reversal downward.

In all the hoopla about rising stocks, it's worth looking at the BKX bank stock index. This reflects the public's confidence in the financial system, and it looks like confidence is draining away: BKX hath these four times knocked on that green support line about 88. More times it knocks, more likely it is that the trap door will open.

Richer yet in information is the Gold/BKX spread. Gold rises when the public loses confidence in the financial system, and the Gold/BKX spread captures that flow. It's right here, Gold/BKX bottomed in March and now stands above all is moving averages except the 200. A close above 14.40 will break it free to spread its wings & fly.

Look at the weekly gold chart,

Gold has risen above the trend line from mid 2013, then proved that with two touchbacks, marked by red arrows. However, the strategic goal is to defeat that downtrend line from the August 2011 high. To that end gold has yet to rise above the blue downtrend line from the July 2016 high. Moving averages are almost lined up bullishly, with the 50 above the 200 but the 20 remains below the 200 still. Progress.

Behold the silver weekly chart,

Moving average alignment -- 50 above the 20 above the 200 -- is better but the 20 still needs to cross above the 50. But look, it is above the 200 week moving average and challenging the 50 WMA. Competent. Diligent. Moving up.

Today gold finally slipped its $1,265 chains. On Comex it rose $9.80 (0.8%) to $1,276.80. Silver jumped 24.4¢ (.14%) to 1748.7¢, still not quite punching through 1750¢. Sometimes y'all may think I sound obscure because I don't stop to explain everything. But recognize that when I write "still not quite punching through 1750¢" after I have so long pounded on the importance of that target, is the equivalent of the sniffing & eye rolling you'd get if you tried to serve a master sommelier box wine.

Y'all go look at the daily gold chart,

The yield drop that knocked the US dollar index in the mud put jet fuel in the metals' tanks. Now gold has reached the next weak resistance about $1,280, but the focus is on $1,306. Gold failed in April at $1,297.40. To fail there again would be like turning up drunk at the front door two nights in a row. Once is a weakness, two is a habit. It would spell bad juju for gold. That's what I mean when I say gold "needs to conquer $1,306."

Lo, here is silver,

Silver looked puking sick yesterday when it punched into that uptrend line, but recovered today to conquer the 50 DMA at 17.44. Next I want to see silver crack that 200 DMA, now 1764¢, and march for 1800¢.

Gold/Silver ratio chart lurks right here, Notice that it continues to fall as silver and gold rise. That's what we want.

Today drew off most of the suspicions and fears I had about the silver & gold rise. It still needs some Geritol tonic or something stronger to get moving, but steady & slow ain't so bad.

I HATE trying to pick movies on Netflix or Amazon. Susan used to do that for me. It's like visiting a porn shop. Let your cursor hover over a movie and naked women pop up. Mercy, give me a break. I usually just settle for subtitled Chinese sword fighting movies. At least everybody has on clothes. But even a blind hog finds an acorn now & then, an last night I somehow landed on Day of the Siege about the 1683 Ottoman siege of Vienna. Polish King Jan Sobieski saved the day for the sorry Hapsburgs. Worth watching.

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
2-Jun-17 Price Change % Change
Gold, $/oz 1,276.80 9.80 0.8
Silver, $/oz 17.49 0.24 1.4
Gold/Silver Ratio 73.014 0.550 0.8
Silver/Gold Ratio 0.0137 0.0002 1.4
Platinum 951.70 24.40 2.6
Palladium 837.95 10.95 1.3
S&P 500 2,430.06 18.26 0.8
Dow 21,206.29 62.11 0.3
Dow in GOLD $s 343.34 -1.61 -0.5
Dow in GOLD oz 16.61 -0.08 -0.5
Dow in SILVER oz 1,212.69 -13.56 -1.1
US Dollar Index 96.67 -0.47 -0.5
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: 1,276.60      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,290.64 1,319.37 1,319.37
1/2 AE 0.50 650.56 673.41 1,346.81
1/4 AE 0.25 328.47 343.09 1,372.35
1/10 AE 0.10 133.94 139.79 1,397.88
Aust. 100 corona 0.98 1,240.06 1,249.06 1,274.29
British sovereign 0.24 302.77 315.77 1,341.40
French 20 franc 0.19 235.96 239.96 1,285.26
Krugerrand 1.00 1,282.98 1,292.98 1,292.98
Maple Leaf 1.00 1,284.60 1,300.60 1,300.60
1/2 Maple Leaf 0.50 734.05 670.22 1,340.43
1/4 Maple Leaf 0.25 325.53 341.49 1,365.96
1/10 Maple Leaf 0.10 135.32 139.15 1,391.49
Mexican 50 peso 1.21 1,525.22 1,536.22 1,274.13
.9999 bar 1.00 1,281.07 1,288.60 1,288.60
SPOT SILVER: 17.48      
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 12,283.70 12,569.70 17.58
US 40% silver 1/2s 0.30 4,964.85 5,114.85 17.34
100 oz .999 bar 100.00 1,728.00 1,763.00 17.63
10 oz .999 bar 10.00 176.30 181.30 18.13
1 oz .999 round 1.00 17.28 17.88 17.88
Am Eagle, 200 oz Min 1.00 18.98 20.48 20.48
SPOT PLATINUM: 951.70      
Platinum Platypus 1.00 966.70 996.70 996.70
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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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