The Moneychanger
Weekly Commentary
Friday, 8 September a.d. 2017 Browse the commentary archive
Here's the weekly scorecard:
  1-Sep-17 8-Sep-17 Change % Change
Silver, cents/oz. 1,771.90 1,802.70 30.80 1.7
Gold, dollars/oz. 1,324.50 1,346.00 21.50 1.6
Gold/silver ratio 74.750 74.666 -0.084 -0.1
Silver/gold ratio 0.0134 0.0134 0.0000 0.1
Dow in Gold Dollars (DIG$) 343.17 334.77 -8.40 -2.4
Dow in gold ounces 16.60 16.19 -0.41 -2.4
Dow in Silver ounces 1,240.90 1,209.17 -31.73 -2.6
Dow Industrials 21,987.56 21,797.79 -189.77 -0.9
S&P500 2,476.55 2,461.43 -15.12 -0.6
US dollar index 92.85 91.33 -1.52 -1.6
Platinum 1,007.30 1,015.30 8.00 0.8
Palladium 981.15 936.95 -44.20 -4.5

First week of September has been hard on the big markets, kind to the little things. Dow lost 0.9% this week & S&P500 lagged not far behind, losing 0.6%. US dollar made a new low for the move today after losing a monstrous 152 basis points (1.6%) this week. Ready to tumble into the abyss. Good week for gold and silver, up 1.6% plus but mighty overbought.

US dollar index is hanging over the cliff by one tiny hangnail. New low today hit 90.99, while today's close was a new low close. Breaking 92 may send the dollar into freefall, without a parachute. Something rotten in Denmark. Look, if you dare,

Euro rose a modest 0.1 to $1.2035, not quite clean through $1.20 resistance. Yen was the big gainer, up 0.54% to 92.73.

There's no sign the US Dollar Index is about to turn around. Why is the Fed willing to tolerate this? Involuntary, perhaps? But good for gold & silver.

Here's a picture of the interest rate differential between Europe & the US. It shows the yield on the US 10 year Treasury versus the German equivalent. Red line plots the US dollar index. Notice that the dollar's exchange rate tracks the interest rate differential pretty well. It ought to, since interest rate differentials chiefly determine currency exchange rates. With the interest differential dropping and the euro rising, not much reason left to buy dollars. But this is the pie the Fed baked, because their teasing the market about raising interest rates then jerking back their chicken-livered plans has wounded the dollar.

At first when you're rolling downhill you go slow -- then you build up speed & can't stop. So stocks have been slowly rolling downhill, but they're about to pick up speed. Today they gainsaid each other, Dow up 13.01 (0.06%) to 21,797.79 but S&P500 down 3.67 (0.14%) to 2,461.43. Confusion & strife abound, not a good sign.

Notice on this Dow chart, how the 50 day moving average has been catching Dow declines. When you keep pounding on that door, eventually you smash through.

Look at the Dow in Gold, LO! How are the mighty fallen! The plunge from the July high qualifies as a waterfall or cascade. When it reaches support at 15.80 oz and breaches it, the waterfall will sink to subterranean caverns.

Dow in Silver, isn't far behind. Has broken the trendline & the 200 DMA and is plunging toward support at 1,100 oz.

Before we leave stocks, ponder the Gold/Bank Index spread, It's the price of gold divided by the Bank Stock Index, so it gauges confidence in the financial system. When confidence in banks is high, the spread drops. When confidence falters, the spread rises.

Starting with the plot, this week it has twice gapped up (red arrows). It has also gapped up through resistance at 14.66 which stopped it in April and June, but not in September. The spread also stands above all it moving averages, which are bullishly aligned. MACD has turned up. Only fly on this cake is the overbought RSI up top.

Somebody's nervous -- confidence in the banks is melting.

Both silver & gold have stalled. Comex silver rose 1.1¢ to 1802.7¢ and gold rose 90¢ to $1,346.

Gold chart shows gold sticking through the top channel boundary, Now raise your eyes to the RSI and behold its overboughtness. That's warning some correction will arrive shortly -- unless Gold busts through $1,350 and runs on to $1,377. Y'all are tired of hearing me say it but its true: overbought can get overboughter.

Silver's chart, hasn't changed since yesterday: still bumping against the top channel boundary, still overbought on the RSI. Might break through and run for 1866¢, but more likely to stop and blow a while.

I'm leaving tomorrow for vacation and won't publish another commentary until 18 September 2017, assuming no hurricane gets me. I'll miss y'all, but y'all will be glad I took a vacation.

We've been going to the same sea island off South Carolina since 2009, & this will be the first year without Susan. She loved having all her children and grandchildren around her and planning & throwing a week long party. Monday makes eleven months since she suddenly died. Bad as I miss her, one thing I don't have to ask any questions about: I know she'd want us to go, and to have a bodacious good time. I'm not about to disappoint her.

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
8-Sep-17 Price Change % Change
Gold, $/oz 1,346.00 0.90 0.1
Silver, $/oz 18.03 0.01 0.1
Gold/Silver Ratio 74.666 0.049 0.1
Silver/Gold Ratio 0.0134 0.0000 0.1
Platinum 1,015.30 0.00 0.0
Palladium 955.10 -18.15 -1.9
S&P 500 2,461.43 -3.67 -0.1
Dow 21,797.79 13.01 0.1
Dow in GOLD $s 334.77 0.01 0.0
Dow in GOLD oz 16.19 0.00 0.0
Dow in SILVER oz 1,209.17 -0.02 -0.0
US Dollar Index 91.33 -0.32 -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: 1,347.00      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,349.69 1,359.69 1,359.69
1/2 AE 0.50 679.73 693.71 1,387.41
1/4 AE 0.25 353.33 362.01 1,448.03
1/10 AE 0.10 143.35 146.15 1,461.50
Aust. 100 corona 0.98 1,310.43 1,320.33 1,347.00
British sovereign 0.24 319.46 332.46 1,412.33
French 20 franc 0.19 248.97 252.97 1,354.95
Krugerrand 1.00 1,348.35 1,358.35 1,358.35
Maple Leaf 1.00 1,347.00 1,357.00 1,357.00
1/2 Maple Leaf 0.50 774.53 707.18 1,414.35
1/4 Maple Leaf 0.25 343.49 360.32 1,441.29
1/10 Maple Leaf 0.10 142.78 146.82 1,468.23
Mexican 50 peso 1.21 1,607.70 1,608.70 1,334.25
.9999 bar 1.00 1,349.00 1,361.00 1,361.00
SPOT SILVER: 18.15      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 21.00 24.00 31.37
VG+ Peace dollar 0.77 14.50 17.50 22.88
90% silver coin bags 0.72 12,691.25 12,977.25 18.15
US 40% silver 1/2s 0.30 5,177.25 5,325.25 18.05
100 oz .999 bar 100.00 1,825.00 1,850.00 18.50
10 oz .999 bar 10.00 181.00 339.42 33.94
1 oz .999 round 1.00 18.15 18.50 18.50
Am Eagle, 200 oz Min 1.00 19.15 20.30 20.30
SPOT PLATINUM: 1,015.30      
Platinum Platypus 1.00 1,025.30 1,060.30 1,060.30
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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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