The Moneychanger
Daily Commentary
Wednesday, 1 November a.d. 2017 Browse the commentary archive

Well, I'm wrong if I do and wrong if I don't! Yesterday's gold and silver weakness led me to expect lower prices, but today the whole precious metals sector exploded upward.

Pale, pasty, ever had a callus on those hands Janet Yellen announced today that the Fed wouldn't raise interest rates. That has all the Fed watchers assuming the fed WILL raise their discount rate in December. Well, mebbe. Anyhow, maybe that's what markets are feeding on, that expectation of a December rate increase, because the dollar index rose 25 basis points today to 94.70. In theory the Fed's NOT raising rates ought to have bumped the dollar down, a little anyway. That it didn't implies speculators are expecting a December increase.

Yen & Euro are suffering. Yen down 0.42% at 87.61 today looks like it's about to break support about 87.35 and fall off a cliff, if it turneth not up here, http://schrts.co/UuqBFa Euro has been falling since early September, reaching for new lows all the time. Today closed down 0.21% at 1.1621.

Here's a neat item a reader sent me (thank you very much!), a stock market indicator I knew not of. It is the spread between bullish and bearish percentage by Investors Intelligence, a measure of market optimism. This week it reached its widest level since early 1987, not long before the Black Monday crash. This week showed 63.5% bullish against a mere 14.4% bearish. Spread above 30 points (that one is 49.1) "calls for defensive measures." Difference between bulls & bears hasn't been this high in 30 years, right before the Dow crashed 22% on 19 Oct. 1987. Read the whole article at http://cnb.cx/2imCUTz

Stocks made great gains early in the day but gave back two-thirds of them by day's end. Dow rose 57.77 (0.25%) to 23,435.01. S&P500 rose 4.1 (.16%) to 2,579.36.

Just to keep everybody straight on the record, measuring from the 31 December 2016 closes through yesterday, here are the results:

Dow Jones Industrials +18.3%

S&P500 +15%

Gold +10.2%

Silver + 4.4%

Platinum + 1.6%

Palladium + 43.6% [sic]

Speaking of the white metals, Platinum today rose $17.20 to $933 while Palladium leapt $19 to close at $999.25. Those are markets I no longer follow but I have been noticing out of the corner of my eye palladium gaining on platinum. Here's a chart of the Palladium price minus the platinum price, http://schrts.co/r4iKMj

Astounding. From the low in July 2016 at negative $502.30 the spread has risen to positive $81.45.

Today on Comex gold sprang up $7.10 (0.6%) to $1,274.10 while silver vaulted an eye-popping 48.7¢ (2.93%) to 1713.5¢.

Impressive as today may be, it didn't break either one out of the trading range ruling since mid-September.

Gold put its feet on that roughly $1262 support and reached up to touch the 20 day moving average -- yawn. The rise from last Friday's close is, well, it's a rise but without accomplishing much yet. Go look, http://schrts.co/os9eSJ It rose, too, in the teeth of a little dollar rise, but probably was rising off the same event, the Fed's announcement.

Silver's performance was as pretty as you might ask for, jumping off 1660¢ support to pierce overhead the 20 DMA, uptrend line from the Dec 2015 Low, touch the 50 DMA, an close on top of the 200 DMA. YET, yet, it remains in the same 1725¢ - 1660¢ range. Must break above that, must confirm intent tomorrow. Chart's right here, http://schrts.co/o96FnV

By the way, this trading looks like panicked short covering.

Most hopeful of all was the dramatic gap down in the gold/silver ratio, http://schrts.co/kh9gOy Collapsed from 76.119 to 74.370 today, leaving a big gap behind and threatening to fall trough the 200 DMA at 73.48. That would negate that suspected upside-down head and shoulders formation on the chart.

All the balls have been thrown up in the air. I had a neatly sewn up package of lower US dollar index into mid November, further falls in silver & gold till then, followed by their upward reversal. Today even the Dow in Gold and Dow in Silver dropped, but that ratio is most persuasive, suggesting way too much negative sentiment in silver & a large short position getting spooked. However, the position shown in Commitments of Traders doesn't show an extreme short position. So I don't know what drove today, other than somebody got scared.

Gold's five day chart shows a market that double bottomed around $1,269 on Monday and Wednesday. Then last night about 3 a.m. Eastern time gold shot up from $1,270 to $1,276 then gapped up to $1,279-$1,280. However, after that it dropped off rapidly -- some invisible hand?

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
1-Nov-17 Price Change % Change
Gold, $/oz 1,274.10 7.10 0.56%
Silver, $/oz 17.13 0.49 2.93%
Gold/Silver Ratio 74.370 -1.749 -2.30%
Silver/Gold Ratio 0.0134 0.0003 2.35%
Platinum 932.00 17.20 1.88%
Palladium 999.25 19.00 1.94%
S&P 500 2,579.36 4.10 0.16%
Dow 23,435.01 57.77 0.25%
Dow in GOLD $s 380.22 -1.19 -0.31%
Dow in GOLD oz 18.39 -0.06 -0.31%
Dow in SILVER oz 1,367.91 -36.55 -2.60%
US Dollar Index 94.70 0.25 0.26%
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: 1,275.65      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,293.51 1,304.99 1,304.99
1/2 AE 0.50 643.70 656.96 1,313.92
1/4 AE 0.25 328.22 342.03 1,368.13
1/10 AE 0.10 137.66 139.36 1,393.65
Aust. 100 corona 0.98 1,241.01 1,250.39 1,275.65
British sovereign 0.24 298.34 305.24 1,296.68
French 20 franc 0.19 235.78 238.91 1,279.67
Krugerrand 1.00 1,285.65 1,293.65 1,293.65
Maple Leaf 1.00 1,279.65 1,289.65 1,289.65
1/2 Maple Leaf 0.50 647.39 659.79 1,319.58
1/4 Maple Leaf 0.25 325.04 331.69 1,326.74
1/10 Maple Leaf 0.10 131.71 136.06 1,360.61
Mexican 50 peso 1.21 1,526.52 1,539.05 1,276.48
.9999 bar 1.00 1,277.65 1,289.65 1,289.65
SPOT SILVER: 17.16      
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 11,983.40 12,340.90 17.26
US 40% silver 1/2s 0.30 4,885.20 5,033.20 17.06
100 oz .999 bar 100.00 1,706.00 1,744.00 17.44
10 oz .999 bar 10.00 170.10 178.10 17.81
1 oz .999 round 1.00 17.16 17.66 17.66
Am Eagle, 200 oz Min 1.00 18.76 19.11 19.11
SPOT PLATINUM: 932.00      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 930.00 977.00 977.00
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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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