The Moneychanger
Daily Commentary
Thursday, 14 September a.d. 2017 Browse the commentary archive

My family & I (6 of 7 children and 14 of 15 grandchildren) were headed for vacation on Fripp Island, South Carolina. God changed our schedule with Hurricane Irma, so we rented a place at Branson, Missouri, a.k.a. Hillbilly Las Vegas -- tourist commercialism taken to new levels above the stratosphere even for Americans. It's all right: we found a great house to rent with plenty of room & everybody loves each other and gets along and so far nobody's scandalized the neighbors by running down the road naked. I'm happy, but of course miss Susan. The Fripp Trip was a highlight of her year.

I couldn't resist a quick commentary to y'all, since it has been a tumultous week. Y'all -- don't lose your perspective. Remember that bull markets always try to shake off all riders and bear markets try to maul as many investors as possible. Y'all are watching gold & silver shake off the uncertain and the stock bear lure his prey into his den.

Ponder first the US dollar index, vampire on the world's economic carotid,

Dollar this week made a new low below 91 (90.99) but turned up therefrom & has since reached its 20 DMA (92.51), where yesterday it closed. Today it backed off 45 basis points to 92.06, but is (I believe) only validating the rise by pulling back without breaking 92. Some rally, however short term, is in motion. Dollar index MUST clear 94 before it deserves any respect atall.

Stocks next. They had an explosive week. Dow rallied 535 points with plentiful gaps up. Behold the chart,

Context first, then comments. In a late stage bull market rallies can be sudden, sharp, & violently volatile, driven by short covering terror. So it's conceivable that stocks might rally to a new high by a big margin very quickly, maybe 23,000 or higher, just to suck in the maximum number of victims. But this should be short-lived, and The Dow's face, decorated with today's new all time high is yet scarred and marred by a potential double top (yellow line & red arrows). Won't know whether it will rise higher or fail until it tips its hand. Either way, THIS IS A TOPPING MARKET and the only wise course is to get out from under it.

Today the Dow & S&P500 looked tired as they gainsaid each other: Dow rose 45.30 (0.2%) to 22,203.48 while the S&P500 fell back 2.75 (0.11%) to 2,495.62. Other indices also fell, whispering the lie to the Dow's gain.

Dow in Gold will also instruct our minds,

After completing the First Down Leg of its reversal (y'all pay attention to what I just said, don't race over that) it naturally would react upward. Now it hath reached its 20 DMA (16.60 oz) and today closed above that at 16.70 oz. The big barrier blocking further rises is the 200 DMA and resistance at the old high, now flowing together about 16.83 oz. That ought to stop the rise.

Now silver & gold. Gold this week has fallen from $1,346 to $1,324.70 today, after an intraday low of $1,319.50. Today saw silver & gold gainsay each other like stock indices. Comex gold gain $1.30 (0.1%) to $1,324.70 while silver mislaid 7.4¢ (0.42%) to 1769.8¢.

Gold first, so look here,

Ya'll may find this horrifying, I find it splendid. Gold has fallen away from the trading channel's top to it's bottom and the 20 DMA (now $1,318.40). The red arrow points to the flowing together of that 20 DMA and the downtrend line from the 2011 high, which should strongly support the price. I think it will turn around with a spike toward $1,310. Possible, but in my worthless nat'ral born durned Tennessee fool opinion not likely, is testing support at $1,296 - $1,306. Right now gold has set y'all up for a bargain, low risk buy.

Silver hath not suffered near as bad a pummeling as gold, leastways, not yet. Look:

A few more down days will take silver to the red arrow where the 20 DMA & the uptrend from the July 10 low meet. Lo, with markets many thing are possible, but if my target is correct, silver will only suffer for a few more days at most. Worst case outcome is a hair-pulling fall to the 200 DMA at 1710¢. My forecast is that silver will stop above 1750¢, but the possibility exists it might drop to that lower mark.

Either way, this is shooting bass in a rainbarrel. Market falls from the upper trading channel boundary to the lower, you've got to buy it.

On 14 September 1814 Francis Scott Key, detained aboard a British ship in Baltimore harbor, wrote "The Star Spangled Banner" about the british bomardment of American Fort McHenry. Key was a devout Episcopalian who nearly becamse a priest instead of a lawyer, & and avid poet, author also of many hymns. His legal career included pro bono (free) work for slaves as well as prosecution (as D.C. US Attorney) of abolitionists. He helped found the American Colonization Society, which sought to end slavery by freeing slaves and sending them back to Africa. Key's wife, Mary Tayloe Key, to whom he wrote many of his poems, bore him twelve children. I have heard but cannot now find the reference that Key would write poems for her to use as papers to roll up her hair on. Don't know whether that's true, but 'tis a pretty picture of love.

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
14-Sep-17 Price Change % Change
Gold, $/oz 1,324.70 1.30 0.10%
Silver, $/oz 17.70 -0.07 -0.42%
Gold/Silver Ratio 74.850 0.385 0.52%
Silver/Gold Ratio 0.0134 -0.0001 -0.51%
Platinum 982.10 -2.20 -0.22%
Palladium 919.95 -19.40 -2.07%
S&P 500 2,495.62 -2.75 -0.11%
Dow 22,203.48 45.30 0.20%
Dow in GOLD $s 346.48 0.37 0.11%
Dow in GOLD oz 16.76 0.02 0.11%
Dow in SILVER oz 1,254.58 7.77 0.62%
US Dollar Index 92.06 -0.45 -0.49%
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SPOT GOLD: 1,332.55      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,339.21 1,377.19 1,377.19
1/2 AE 0.50 679.09 702.92 1,405.84
1/4 AE 0.25 342.87 358.12 1,432.49
1/10 AE 0.10 139.81 145.91 1,459.14
Aust. 100 corona 0.98 1,293.10 1,302.10 1,328.41
British sovereign 0.24 316.03 329.03 1,397.77
French 20 franc 0.19 246.30 250.30 1,340.65
Krugerrand 1.00 1,339.21 1,349.21 1,349.21
Maple Leaf 1.00 1,340.55 1,356.55 1,356.55
1/2 Maple Leaf 0.50 766.22 699.59 1,399.18
1/4 Maple Leaf 0.25 339.80 356.46 1,425.83
1/10 Maple Leaf 0.10 141.25 145.25 1,452.48
Mexican 50 peso 1.21 1,590.46 1,601.46 1,328.24
.9999 bar 1.00 1,337.21 1,344.55 1,344.55
SPOT SILVER: 17.82      
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 12,491.05 12,777.05 17.87
US 40% silver 1/2s 0.30 5,065.15 5,215.15 17.68
100 oz .999 bar 100.00 1,762.00 1,797.00 17.97
10 oz .999 bar 10.00 179.70 184.70 18.47
1 oz .999 round 1.00 17.62 18.22 18.22
Am Eagle, 200 oz Min 1.00 19.32 20.82 20.82
SPOT PLATINUM: 982.10      
Plat. Platypus 1.00 997.10 1,027.10 1,027.10
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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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