The Moneychanger
Daily Commentary
Tuesday, 1 August a.d. 2017 Browse the commentary archive

Colorado was enjoyable & beautiful, I even went into a silver mine and came back with a chunk of silver ore (90 oz/ton), but I was glad to get back to Tennessee.

I've run short of time today (sounds stupid, since every day has the same 24 hours), so I have to review markets quickly.

The US dollar index is sinking out of sight. Sure, it rose 23 basis points today (0.25%) to 92.95, but who cares? Since June it has sunk from 95.22, a massive 207 basis points, now at its lowest price since April 2016. Here's a 3-year chart,

Y'all, I'm bumfuzzled. This looks like a broadening top, completed by that head & shoulders top in 2017 and the following breakdown & plunge. But a reader sent me a chart that jerked me up short, claiming as it did that the last three years have been forming an upside-down head and shoulders, which would roughly make that top boundary of the megaphone the neckline. If that's accurate, the dollar index might rally to 110.

On the other hand, the dollar index has been careening down a cliff with no brakes or parachute. A close below 91.88, the 2016 low, breaks the dam or a cascade all the way to the 80s. Meanwhile silver & gold are signaling strong rallies coming, which won't square with a rallying dollar.

Well, which is it? Durned if I know, I'm jes a nat'ral born durn fool from Tennessee. If I had any sense I'd be a pollytician in Washington making big money taking bribes from banks.

Let the market tell us. If it breaks that 2016 low, oh! And then closes below 90, that would attract short sellers from around the globe. Jes wait, the market will speak.

I'm fixin' to show y'all five stock index charts, all displaying similar topping patterns & one non-confirming.

Here's the Dow Industrials, hittin' new highs,

The Dow & the Dow alone has broken out above the megaphone formation. Any misstep could throw it through that uptrend from November 2016. Overbought, thy name is the Dow's RSI.

Ri'chere is the S&P500,

Mark the megaphone or broadening top. Mark the rising wedge formed within that megaphone by the uptrend line from November 2016. Same pattern as the Dow, but not confirming the Dow's breakout.

Lo, the Nasdaq Composite chart,

Once again, megaphone top, mighty nigh to the rising uptrend from Nov. 2016.

Now here is the Nasdaq 100, with another broadening top & rising wedge

How about the Russell 2000, with another broadening top and rising wedge.

Durn. I wish I was at least tol'rably intellergent, then I might could parse what it means when the charts for 5 stock indices all show deadly topping formations, but I'm such a durn fool I can't reach up over that hump.

Silver today fell back 2.2¢ to 1672.8¢, safely above the 1650¢ resistance. Gold closed Comex $6.00 higher at $1,272.60.

Behold the silver chart,

Few words are required. It made that exhaustion crisis selling low on July 7, then hath clumb ever since, smashing the downtrend line from the July 2016 high and now touching the uptrend from the December 2015 low converging with the downtrend line from the April 2017 high.

Party time! And the Commitments of traders show a smaller net commercial short position than at any time since the December 2015 low -- actually, it is now smaller than that. It's a gigantic silver bull trap for silver shorts. Their terror when silver begins rising will provide the rally's first tank of gas.

Now gold,

After that exhaustion low on 7 July, gold has rallied and rallied, up past the downtrend line from the June high, through the 200 DMA, the 20 & 50 DMAs, an now thru the downtrend line from the July 2016 high. What more do I want? A close above $1,300, followed by rapid progress through $1,325. And gold will get that, although right here it might take a little breather before it does.

I keep having Susan Flashbacks. That what I call reminders -- seeing a place or person -- that trigger a memory. Puts me in a trance for a few seconds, not sad, just transported to another place where I can't hear people talking to me. All I can think about is Susan.

These aren't all heartbreaking or sad. Almost all are fun, and some downright funny. A few years ago a doctor friend told me to take 400 mg of niacin to improve circulation in my ear, maybe sharpen my hearing. Of course, niacin stimulates peripheral circulation so that in 20 minutes or less you turn beet read and itch all over.

Susan was, well, let's not say "tight" but let's say "super-frugal." She went to buy niacin, and found a great deal on it. Didn't notice she'd bought 1,000 mg capsules instead of 100 mg capsules. One morning she asked me how many capsules I took. When I said four, she took four of her Bargain niacin. Not 400 mg but 4,000 mg, and she was crimson until 4:00 p.m. She was madder'n a wet wasp, but she took it like a champ 'cause she couldn't blame it on me. I still stayed real quiet till the red wore off.

Argentum et aurum comparanda sunt —
Silver and gold must be bought.

— Franklin Sanders, The Moneychanger

Your source for gold and silver. Read our latest reviews and testimonials.
Market Snapshot See more charts and market data
1-Aug-17 Price Change % Change
Gold, $/oz 1,272.60 6.00 0.47%
Silver, $/oz 16.73 -0.02 -0.13%
Gold/Silver Ratio 76.076 0.458 0.61%
Silver/Gold Ratio 0.0131 -0.0001 -0.60%
Platinum 946.50 8.80 0.94%
Palladium 898.40 7.90 0.89%
S&P 500 2,476.35 6.05 0.24%
Dow 21,963.92 72.80 0.33%
Dow in GOLD $s 356.78 -0.50 -0.14%
Dow in GOLD oz 17.26 -0.02 -0.14%
Dow in SILVER oz 1,313.00 6.07 0.46%
US Dollar Index 92.95 0.25 0.27%
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: 1,268.00      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,277.51 1,310.48 1,310.48
1/2 AE 0.50 639.84 653.02 1,306.04
1/4 AE 0.25 324.67 331.27 1,325.06
1/10 AE 0.10 134.94 137.58 1,375.78
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 1,274.34 1,284.34 1,284.34
Maple Leaf 1.00 1,273.07 1,283.07 1,283.07
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 1,266.00 1,278.00 1,278.00
SPOT SILVER: 16.66      
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 11,729.58 12,015.58 16.81
US 40% silver 1/2s 0.30 4,736.23 4,884.23 16.56
100 oz .999 bar 100.00 1,655.50 1,695.50 16.96
10 oz .999 bar 10.00 165.55 286.56 28.66
1 oz .999 round 1.00 16.61 17.04 17.04
Am Eagle, 200 oz Min 1.00 17.41 18.66 18.66
SPOT PLATINUM: 946.50      
Plat. Platypus 1.00 964.50 986.50 986.50
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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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