The Moneychanger
Weekly Commentary
Friday, 21 July a.d. 2017 Browse the commentary archive
Here's the weekly scorecard:
  14-Jul-17 21-Jul-17 Change % Change
Silver, cents/oz. 1,588.40 1,641.00 52.60 3.3
Gold, dollars/oz. 1,226.60 1,254.30 27.70 2.3
Gold/silver ratio 77.222 76.435 -0.787 -1.0
Silver/gold ratio 0.0129 0.0131 0.0001 1.0
Dow in Gold Dollars (DIG$) 364.66 355.66 -9.00 -2.5
Dow in gold ounces 17.64 17.20 -0.44 -2.5
Dow in Silver ounces 1,362.23 1,315.06 -47.18 -3.5
Dow Industrials 21,637.74 21,580.07 -57.67 -0.3
S&P500 2,459.27 2,472.54 13.27 0.5
US dollar index 95.12 93.97 -1.15 -1.2
Platinum 920.90 934.70 13.80 1.5
Palladium 865.75 849.35 -16.40 -1.9

At last a good week for silver & gold! Silver jumped up 3.3% and gold 2.3%. Wasn't such a good week for the US dollar index, down 1.2% & threatening to sink out of sight. Stocks barely moved this week, Dow a smidgen lower, S&P500 a smidgen higher.

US dollar index just can't stop tumbling. Out of the last 10 days, it has fallen seven. Today it made a fresh new low for the move, down 28 basis points (0.3%) to 93.97. It traded as low as 93.85. Headed for next support at 92.50. For perspective, look at this 39 month chart,

Y'all will see that since early 2015 that 93 - 92.5 has been the lower boundary of the range. Dollar index has now retraced its way back toward that level. Since the peak that began 2017, the dollar index has been drawing out a falling right triangle. Other thing being equal, and they never are with currencies, that pattern usually breaks down. The dollar index must climb above 95.25 to change the dismal outlook.

The euro meanwhile is running hog wild. Closed today at the top of its range and up 0.26% on the day at $1.1663. Look for yourself, If the euro can pierce $1.1750 overhead it would revere the last 2-1/2 years' sorry performance.

Today the yen closed above its 200 DMA at last, rising 0.66% to 89.97. Clearly the weak dollar is helping the yen, too. Charts right here. Notice the rally from 11 July,

US interest rates keep falling, indicating that the market thinks Yellar Janet has lot her nerve about raising interest rates again any time soon.

Stocks spun wheels this week. Dow scratched off 31.71 (0.15%) today to close at 21,580.07. S&P500 lost a bare 0.91 (0.04%) to 2,472.54. S&P chart is right here,

For all their new highs, stocks have managed to avoid taking advantage of them. Here they've stalled again at the top megaphone boundary. If stocks can't attract buyers when they have run up this high, maybe they're run out of buyers. That would explain the stumbling & stuttering.

Now to silver & gold. On Comex silver rose 11.1¢ (0.7%) to 1641¢ and gold rose $9.50 (0.8%) to $1,254.30. Gold broke its captivity under $1,245 but silver can't yet breach the all important 1650¢ barrier.

The monthly gold chart shows gold coiling up in an even sided triangle, barely above its 20 month moving average ($1,241.15). Actually, the moving averages are bullishly aligned, as the 20 MMA has just crossed above the 50 MMA and both are miles above the 200 MMA ($918.73).

On the weekly chart Gold has just climbed ABOVE its 200 WMA ($1,231.70) but needs to conquer a downtrend line above at about $1,260. Up above at $1,350 looms the downtrend from 2011.

The three month chart here, shows that gold punctured its 50 day moving average today ($1,249.48) and is headed for resistance at the downtrend line from last July's high. This demands a close above $1,260. It might manage that next week.

On silver's monthly chart we see it poked into the 200 MMA (1540¢) in the last month, but bounced up. Weekly chart is right here, It looks rotten, but is improving. That spike down on 7 July probably was the selling washout, and silver has climbed smartly since them. Still, it remains below the 200 WMA (1754¢). That's the target silver needs to conquer. Don't let this chart cast you down. Remember that silver always rises faster and falls further than gold, so this picture is what we ought to expect. Recall also those improving Commitments of Traders reports that show traders' position near where they were in December 2015 when silver was bottoming. Add to all this the gold/silver ratio moving the direction we want -- down. Want to see the chart?

One other little sign: premiums on USS $20 gold coins seems to have bottomed in the last month. They had reached 21 year lows, so any improvement is noticeable, and points to demand picking up.

I hate using lurid words like "epic" or "epochal" or "historic," but I am tempted because my opinion keeps hardening. I believe July 7 marked the lows for this move, and this fall will see a spectacular rally. Of course, that means you have to buy now while the market is dull and not spectacular.

I will be travelling next week, out to Colorado to visit my son who lives in Aspen, so I'll miss y'all. Y'all probably wont miss me as I have waxed remarkably dull lately. Not sad, just don't have much to say. I have a stack of pictures on my desk from October 1974 when our first baby Liberty was born. I told y'all Susan trained like an Olympic athlete for that birth, and Mrs. Cheap checked out of the hospital less than 24 hours later to avoid a bill. She kept it under $300, for her the Nobel Prize of Frugality.

The pictures leave me quiet and thoughtful -- pictures of Susan dozing with Liberty in the crook of her arm or nursing Liberty under the sheet. We lived in Little Rock at the time and my grandparents lived about 45 minutes north in Conway. First time we took Liberty up there my grandmother fixed up a wicker clothes basket as a cradle. Susan took a picture from the side of Liberty's arms & feet sticking up out of the basket. All those pictures make you wonder if you did enough, if you loved enough, if you really grasped what you had and how good God had been to you.

Odd, I'm not so much sad at losing Susan any more as simply filled with an intense longing for her. That's what makes me want to grab husbands by the ears and shake 'me and say, "Don't miss what God has given you!"

But if I start grabbin' people by the ears, they'll put me in the looney bin sure enough!

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
21-Jul-17 Price Change % Change
Gold, $/oz 1,254.30 9.50 0.8
Silver, $/oz 16.41 0.11 0.7
Gold/Silver Ratio 76.435 0.574 0.8
Silver/Gold Ratio 0.0131 0.0001 0.7
Platinum 934.70 4.20 0.5
Palladium 849.35 -3.25 -0.4
S&P 500 2,472.54 -0.91 -0.0
Dow 21,580.07 -31.71 -0.1
Dow in GOLD $s 355.66 -3.20 -0.9
Dow in GOLD oz 17.20 -0.15 -0.9
Dow in SILVER oz 1,315.06 -10.90 -0.8
US Dollar Index 93.97 -0.28 -0.3
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: 1,254.70      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,271.01 1,296.73 1,296.73
1/2 AE 0.50 633.12 646.17 1,292.34
1/4 AE 0.25 321.26 327.79 1,311.16
1/10 AE 0.10 133.52 136.13 1,361.35
Aust. 100 corona 0.98 1,218.79 1,227.79 1,252.59
British sovereign 0.24 297.57 310.57 1,319.34
French 20 franc 0.19 231.91 235.91 1,263.58
Krugerrand 1.00 1,262.23 1,272.23 1,272.23
Maple Leaf 1.00 1,260.97 1,270.97 1,270.97
1/2 Maple Leaf 0.50 721.45 658.72 1,317.44
1/4 Maple Leaf 0.25 319.95 335.63 1,342.53
1/10 Maple Leaf 0.10 133.00 136.76 1,367.62
Mexican 50 peso 1.21 1,499.05 1,510.05 1,252.43
.9999 bar 1.00 1,252.70 1,264.70 1,264.70
SPOT SILVER: 16.55      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 20.50 24.50 32.03
VG+ Peace dollar 0.77 14.50 17.50 22.88
90% silver coin bags 0.72 11,583.00 11,869.00 16.60
US 40% silver 1/2s 0.30 4,705.25 4,853.25 16.45
100 oz .999 bar 100.00 1,645.00 1,685.00 16.85
10 oz .999 bar 10.00 164.50 283.08 28.31
1 oz .999 round 1.00 16.50 16.93 16.93
Am Eagle, 200 oz Min 1.00 17.30 18.55 18.55
SPOT PLATINUM: 934.70      
Platinum Platypus 1.00 952.70 974.70 974.70
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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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