The Moneychanger
Daily Commentary
Thursday, 3 August a.d. 2017 Browse the commentary archive

A friend of mine is a third generation commodity trader, and one of the most superb long term, strategic thinkers I know. Today he sent me an email I want to share with you, about a new restaurant in Silicon Valley.

"Before the legendary (end-1989) Nikkei stock market crash the Japanese are still living through, the big news for some time was the lavish Japanese banquets that featured soup & other foods laced with gold leaf. There has always been a gold leaf soup in their cuisine, but this episode was to the extreme.

"When I kept reading about it, I cashed in everything and bought Nikkei Dow Put Warrants hand over fist. I stayed for the long haul. The profits totally supported my family & me for well over a year.

"Now Silicon Valley is savoring the same lavish diet. If past is prologue, the next Silicon Valley specialty will be eating crow. http://bit.ly/2vm1BYV "

To pinpoint the fall's extent from 39,000 the Nikkei dropped to 20,200 in 1990, to 14,195 in 1992, down, down, down to 7,604 in 2004, to a final low of 6,995 in 2009. That's a total loss of 82%.

Today markets didn't make any statements or resolve any issues, but then limbo can last some long while.

Stock indices busily gainsaid the Dow Industrials. Dow rose 9.86 (0.04%) to 22,026.10, barely new all time high. Other indices dropped, including the S&P500 which fell 5.41 (0.22%) to 2,472.16. Thus nothing has changed, and the fretting tension abides between the making-new-highs Dow Industrials and refusing-to-make-new-highs other indices. It's a highly unstable state that likely will resolve by falling toward the ground like a dropped egg.

The US dollar index just can't scrape up enough gumption to do anything. Fell again today seven basis points (0.08%) to 92.71. Yet since we know that central banks ALL manipulate their exchange rates, the question arises, WHY? Why does the Fed want a lower dollar, which is to say, a higher euro and yen? Or are other circumstances restraining them from propping up the dollar?

Down on my ridge in Tennessee I sure don't know, but I do know they all lie, so I wouldn't believe 'em if they told me I'd won the lottery until I held the green cash in my hand.

I was musing today about the Federal Reserve and associated banks & powers in the world. We think of evil as smart for some reason, when the one thing we know about evil & evil people is that they are stupid. Inevitably they fall into the Gideon trap, fighting with each other and destroying themselves. It's really a cosmic joke, so we ought to laugh. Now don't argue with me. Just picture Janet Yellen in your mind. Laughing is easy. Easier still when you add Mario Draghi & the rest of those feckless clowns.

See -- the load is beginning to lighten already.

Lo, gold lost four bucks (0.3%) to close Comex at $1,267.80. Silver fell 10.3¢ (0.6%) to 1659.4¢.

Y'all ponder with me the gold chart a moment, http://schrts.co/kaqjVd

From the 10 July low gold has (I believe, I reckon, I guess) completed a leg up. Daily trading today punched into that sharp uptrend line, which itself is begging for a little correction. Might fall back to the 50 DMA ($1,253.41) or might just move sideways between $1,260 and $1,265. Breath-catching might take a few days, even a week. I am still watching the much more important milestone at $1,300. Gold is just dancing in circles until it bursts through that $1,300 wall. I expect that shortly, by the way.

Now silver, http://schrts.co/o96FnV

Think back on that gold chart & notice that the moving averages are bullishly aligned: 50 DMA above the 200 DMA, although the 20 DMA is not co-operating and lounging below the 50. Silver's chart shows a different picture, with the 20 below the 50 which is below the 200. Silver is in a weaker technical position, but we know that more volatile silver can change all that in a heartbeat.

Anyway, silver has bumped into the downtrend line from the April high, right where it hits the uptrend line from the 2015 low. No surprise silver is stalling at all this resistance, and it needs a break anyway. Y'all just be patient, remembering that silver & gold are in their seasonal low period. Patience will pay: there's a big rally coming.

My daughter Liberty asked me to do her a favor, and since she's my daughter of course I will. She's selling a pair of Tahitian black pearl earrings, 9.5 mm on 18k posts. This might be a favor for you if you need a REALLY fine gift for someone. See http://bit.ly/2hsJWbU

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
3-Aug-17 Price Change % Change
Gold, $/oz 1,267.80 -4.00 -0.31%
Silver, $/oz 16.59 -0.10 -0.62%
Gold/Silver Ratio 76.401 0.232 0.30%
Silver/Gold Ratio 0.0131 -0.0000 -0.30%
Platinum 961.60 11.80 1.24%
Palladium 897.20 -11.20 -1.23%
S&P 500 2,472.16 5.41 0.22%
Dow 22,026.10 9.86 0.04%
Dow in GOLD $s 359.14 1.29 0.36%
Dow in GOLD oz 17.37 0.06 0.36%
Dow in SILVER oz 1,327.35 8.78 0.67%
US Dollar Index 92.77 -0.18 -0.19%
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: 1,267.70      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,277.21 1,310.17 1,310.17
1/2 AE 0.50 639.68 652.87 1,305.73
1/4 AE 0.25 324.59 331.19 1,324.75
1/10 AE 0.10 134.90 137.55 1,375.45
Aust. 100 corona 0.98 1,231.42 1,240.42 1,265.47
British sovereign 0.24 300.65 313.65 1,332.43
French 20 franc 0.19 234.31 238.31 1,276.45
Krugerrand 1.00 1,275.31 1,285.31 1,285.31
Maple Leaf 1.00 1,272.77 1,282.77 1,282.77
1/2 Maple Leaf 0.50 728.93 665.54 1,331.09
1/4 Maple Leaf 0.25 323.26 339.11 1,356.44
1/10 Maple Leaf 0.10 134.38 138.18 1,381.79
Mexican 50 peso 1.21 1,514.58 1,525.58 1,265.31
.9999 bar 1.00 1,265.70 1,277.70 1,277.70
SPOT SILVER: 16.59      
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 11,643.78 11,929.78 16.69
US 40% silver 1/2s 0.30 4,715.58 4,863.58 16.49
100 oz .999 bar 100.00 1,648.50 1,688.50 16.89
10 oz .999 bar 10.00 164.85 284.23 28.42
1 oz .999 round 1.00 16.54 16.97 16.97
Am Eagle, 200 oz Min 1.00 17.34 18.59 18.59
SPOT PLATINUM: 961.60      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 979.60 1,001.60 1,001.60
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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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