The Moneychanger
Daily Commentary
Monday, 30 October a.d. 2017 Browse the commentary archive

Whoa! I survived a trip from lower middle Tennessee to Dayton, Ohio, down to Rome, Georgia, and back to Dogwood Mudhole, in spite of all the Left Lane Squatters in four states. And even without Susan to guide me, I successfully navigated the whole way. But that little woman who lives in my cell phone & announces the turns for my map program gets mad at me after about 3 hours. Turns a cold shoulder and refuses to speak ot me further. Love that technology..

Logjams in markets began to break up this week. Chiefly, the US dollar index broke through 94 with a mighty leap, no surprise. Here 'tis, less today's entry. Today the dollar fell back 47 basis points (0.5%), but after hitting that downtrend from the December 2016 high, that's no surprise.

Expect the dollar index to punch through that downtrend line and jump quickly toward the 200 day moving average, now about 97. This will be fast & furious, but will not stick to your ribs. It is not a change of trend, but merely a countertrend rally after a long fall. Yes, yes, this will cause indigestion & embarrassment in gold and silver, but should pass quickly. Don't be fooled by transient strength in the scrofulous, scabby US dollar index: it's still an I Owe You Nothing.

Speaking of IOU Nothings, Bitcoin may have a limited number of coins, but there's no limit to the number of competing cryptocurrencies, now counting 1,222 with a total market capitalization of $169 bn. Of that, 69% belongs to Bitcoin, 88% to the five largest. I wish I could trust this market, but it is both parabolic and backed by nothing but electron flows and computer nerds. Alas, I am a technophobic troglodyte.

Stocks continue to stutter toward a high. Friday the S&P500 made a new all-time high, but the Dow didn't. Momentum indicators are rolling over gavityward.

Today the Dow lost 85.45 (0.36%) to close at 23,348.74. S&P500 backed up 8.24 or 0.32% to 2,572.83. Mania is in full cry, full heat, and must burn out its fever. Not long, I 'spect.

Part of what happened to the dollar last week and to gold was the rumor that Trump might appoint long-time Fed apparatchik Jerome Powell to replace Janet Yellen, as opposed to someone else less predictable and less inclined to continue the Fed's present path. Market seems to have believed momentarily that would be good for gold as interest rates fell, but the lackluster rise of the last two days suggests we ought to brace ourselves for lower prices still.

Today gold rose $5.90 (0.5%) for the day, but at $1,274.10 still closed $3.30 lower than it closed on Friday, 20 October. In other words, a week of moving backward. Silver today rose 9.5¢ (0.6%) to 1680.2¢. That's still 20¢ lower than Friday a week ago.

Gaze a moment upon this gold chart,

Call that price where gold has bounced up twice $1,262, Roughly the 200 DMA. If it breaks that, it will fall further, toward $1,210. On the other hand, if it continues to rise through the 20 day moving average ($1,282.75) and the 50 DMA ($1,301.21) then gold would say the last two days' bounce was a credible witness to higher prices coming. But until that happens . . .

Call silver's line in the sand 1660¢. Breaking that will be stepping through an open manhole. Silver has to climb above 1725¢ to gainsay the likelihood of lower prices.

Shoot me not! I am only the messenger.

On 30 October 1862 that great humanitarian Dr. Richard Gatling patented his machine gun.

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
30-Oct-17 Price Change % Change
Gold, $/oz 1,274.10 5.90 0.47%
Silver, $/oz 16.80 0.10 0.57%
Gold/Silver Ratio 75.830 -0.078 -0.10%
Silver/Gold Ratio 0.0132 0.0000 0.10%
Platinum 918.90 8.30 0.91%
Palladium 964.05 4.40 0.46%
S&P 500 2,572.83 -8.24 -0.32%
Dow 23,348.74 -85.45 -0.36%
Dow in GOLD $s 378.82 -3.16 -0.83%
Dow in GOLD oz 18.33 -0.15 -0.83%
Dow in SILVER oz 1,389.64 -13.02 -0.93%
US Dollar Index 94.35 -0.47 -0.50%
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: 1,273.60      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,291.43 1,302.89 1,302.89
1/2 AE 0.50 642.66 655.90 1,311.81
1/4 AE 0.25 327.69 341.48 1,365.94
1/10 AE 0.10 137.44 139.14 1,391.41
Aust. 100 corona 0.98 1,239.02 1,248.38 1,273.60
British sovereign 0.24 297.86 304.76 1,294.63
French 20 franc 0.19 235.40 238.53 1,277.62
Krugerrand 1.00 1,283.60 1,291.60 1,291.60
Maple Leaf 1.00 1,277.60 1,287.60 1,287.60
1/2 Maple Leaf 0.50 646.35 658.75 1,317.50
1/4 Maple Leaf 0.25 324.51 331.16 1,324.65
1/10 Maple Leaf 0.10 131.50 135.85 1,358.49
Mexican 50 peso 1.21 1,524.06 1,536.58 1,274.43
.9999 bar 1.00 1,275.60 1,287.60 1,287.60
SPOT SILVER: 16.82      
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 11,665.23 11,951.23 16.72
US 40% silver 1/2s 0.30 4,783.43 4,931.43 16.72
100 oz .999 bar 100.00 1,671.50 1,709.50 17.10
10 oz .999 bar 10.00 166.65 174.65 17.47
1 oz .999 round 1.00 16.82 17.32 17.32
Am Eagle, 200 oz Min 1.00 18.42 18.77 18.77
SPOT PLATINUM: 918.90      
Plat. Platypus 1.00 916.90 963.90 963.90
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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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