The Moneychanger
Weekly Commentary
Thursday, 19 October a.d. 2017 Browse the commentary archive
Here's the weekly scorecard:
  13-Oct-17 19-Oct-17 Change % Change
Silver, cents/oz. 1,735.50 1,720.10 -15.40 -0.9
Gold, dollars/oz. 1,301.50 1,286.90 -14.60 -1.1
Gold/silver ratio 74.993 74.815 -0.177 -0.2
Silver/gold ratio 0.0133 0.0134 0.0000 0.2
Dow in Gold Dollars (DIG$) 363.27 372.07 8.80 2.4
Dow in gold ounces 17.57 18.00 0.43 2.4
Dow in Silver ounces 1,317.87 1,346.61 28.74 2.2
Dow Industrials 22,871.72 23,163.04 291.32 1.3
S&P500 2,553.17 2,562.10 8.93 0.3
US dollar index 92.93 93.03 0.10 0.1
Platinum 945.20 923.20 -22.00 -2.3
Palladium 986.60 953.90 -32.70 -3.3

Tomorrow afternoon I have to drive up to Nashville so I am sending out the weekly summary early.

This ain't as bad as it might look. Notice the glaring disparity between the Dow's performance this week and the S&P500's. I'll mash harder on that button below. Gold & silver had a rotten week afar the surprise reversal of the uptrend on Tuesday, but may be recovering, hoo-ray. Platinum & palladium suffered. Dollar index has a mojo that won't go, although it's trending upward, tediously.

Sorry, because of some change in, I don't' get the updated dollar index chart until about the time I go to sleep, hence I must offer you yesterday's, Today added nothing but instead took away 28 basis points (0.3%) to close at 93.03. This sidling behavior is still forming the right shoulder of an upside-down head & shoulders reversal, with the neckline/breakout point at 94. Rally should climb to 200 day moving average, then peter plumb out by mid-November. Whate'er pain that causeth for silver & gold should be limited, in time at least.

On a 5 day chart the dollar index topped on Tuesday and then again yesterday about the same place. Might have more sidewise to do.

Stocks offer a classic picture of a topping market as breadth and volume shrink. The Dow rose 160 yesterday while other indices barely breathed. Today to Dow rose 5.44 (0.02%) to 23,163.04 and the S&P500 rose 0.84 (get out that jeweler's loupe) or 0.03% to 2,562.10. Meanwhile the Nasdaq fell 0.29%, Nasdaq 100 shrank 0.36%, and the Russell 2000 diminished 0.21% (Whew! I'm clean out of synonyms for "got smaller.")

Think of a long, narrow, up-pointing wedge, like this, Observe, mark, note, scrutinize that "throw-over" through the top boundary line, oft-sighted signal of a topping market. Glance up to the RSI above and note the overboughtness at a heart-stopping 85.46 -- more overbought than antimacassars at an old ladies' convention.

I can't help looking like a nat'ral born durned fool from Tennessee, I still have to say it: stock top draweth nigh. Soon. Soon.

About the time I was thinking about hopping the milk truck and hightailing out of here for parts west, silver & gold turned around. Gold skipped $7.00 (0.5%) to close Comex today at $1,286.90 Silver -- oh, silver, I hate you & I love you -- pole-vaulted 25.8¢ or 1.5% to 1720.1¢.

Go look at this 5 day silver chart, See that bottom around 1690¢ yesterday, & that other bottom today just barely higher? Now look at today's trading, how it leapt through 1700¢, was beaten back, then punched clean through in mighty bounds, even gapping up, before it stopped about 1725¢. That looks like a double bottom reversal, but needs to be paired and firmed by a higher close tomorrow.

Now look at the 5 day gold chart, Not nearly as exciting because it didn't break through the previous peak about $1,288 (Tuesday/Wednesday) but two clean bottoms show at about $1,278, with a fairly strong climb -- through ready and well-armed resistance -- to the top of the last three days trading range. Don't complain that it doesn't look as strong as silver, but rejoice because it certainly confirms silver's move up.

Mathematically silver's relative strength today took the gold/silver ratio DOWN to 74.76 -- go look,

Yet ponder that GAP down on the chart, hurtling the ratio toward the 200 day moving average. Nothing here to take to the bank, exactly, but encouragement as the ratio continues to move in the right direction: DOWN.

On 19 October 1864 25 Confederate soldiers made a surprise attack on St. Albans, Vermont, surprising the bejabbers out of them yankees.

On 19 October 1781 the Siege of Yorktown, Virginia ended with the surrender of British Lt-Gen'l Charles Cornwallis to combined troops of the American Continental Army led by Gen'l George Washington and French troops led by the Come de Rochambeau. Ignoring his higher ups in Britain, after defeats at King's Mountain, SC 9 October 1780) and Cowpens, SC (17 January 1781). In October 1780 the American cause had seemed hopeless, but Cornwallis insisted on moving north to pursue the southern American army, suffered himself to be bottled up between an American and French army on land and a French fleet at sea, and was forced to surrender. Cornwallis dodged the surrender ceremony by feigning illness. It was the last major land engagement of the American Revolution, but it would take more than two years to sign a peace treaty.

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
19-Oct-17 Price Change % Change
Gold, $/oz 1,286.90 7.00 0.5
Silver, $/oz 17.20 0.26 1.5
Gold/Silver Ratio 74.815 0.396 0.5
Silver/Gold Ratio 0.0134 0.0002 1.5
Platinum 923.20 1.30 0.1
Palladium 953.90 -0.15 -0.0
S&P 500 1,286.90 0.84 0.1
Dow 23,163.04 5.44 0.0
Dow in GOLD $s 372.07 -1.91 -0.5
Dow in GOLD oz 18.00 -0.09 -0.5
Dow in SILVER oz 1,346.61 -20.18 -1.5
US Dollar Index 93.03 -0.28 -0.3
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SPOT GOLD: 1,288.80      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,310.71 1,321.02 1,321.02
1/2 AE 0.50 650.34 662.09 1,324.18
1/4 AE 0.25 328.39 335.04 1,340.16
1/10 AE 0.10 132.64 136.64 1,366.43
Aust. 100 corona 0.98 1,253.81 1,263.28 1,288.80
British sovereign 0.24 301.41 306.91 1,303.79
French 20 franc 0.19 238.21 243.21 1,302.69
Krugerrand 1.00 1,298.80 1,306.80 1,306.80
Maple Leaf 1.00 1,290.80 1,300.80 1,300.80
1/2 Maple Leaf 0.50 654.07 666.47 1,332.93
1/4 Maple Leaf 0.25 328.39 335.04 1,340.16
1/10 Maple Leaf 0.10 133.07 137.42 1,374.19
Mexican 50 peso 1.21 1,542.25 1,554.91 1,289.63
.9999 bar 1.00 1,290.80 1,302.80 1,302.80
SPOT SILVER: 17.22      
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 11,990.55 12,276.55 17.17
US 40% silver 1/2s 0.30 4,902.90 5,050.90 17.12
100 oz .999 bar 100.00 1,697.00 1,750.00 17.50
10 oz .999 bar 10.00 170.70 175.70 17.57
1 oz .999 round 1.00 17.17 17.72 17.72
Am Eagle, 200 oz Min 1.00 18.77 19.17 19.17
SPOT PLATINUM: 923.20      
Platinum Platypus 1.00 921.20 968.20 968.20
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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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