The Moneychanger
Daily Commentary
Tuesday, 14 November a.d. 2017 Browse the commentary archive

I'm back from Virginia alive, and there was plenty of entertainment in markets while I was away: silver & gold still rangebound but US dollar index broke and interest rates rising while junk bonds tank. Mmmm.

First look at the slothful, scrofulous US dollar index chart, http://schrts.co/LzhRuX

I've added a bar to show today's trading, 94.54 to 93.74, with a close 54 basis points (0.57%) lower at 93.74. A clean crack of 94 support, a fall out of the congestion zone, and a fall through the uptrend line. Are y'all surprised that the Euro rose 1.06% to $1.1793? Or that the Yen rose 013% to 88.15?

Meanwhile US interest rates, which had fallen to mid-month, gapped up Friday through their 20 DMA to recent resistance (purple line). Y'all don't just sit there staring, interest rates are the jugular vein of markets and the economy. Go look at the chart, http://schrts.co/LzhRuX

Got the picture? Now go look at this junk bond ETF called HYG, http://schrts.co/6xmqJu See how it has tumbled since 23 October? And how it gapped down once it fell through the last low. It's lost 1.5% since 1 November, which doesn't sound like much, but look: it has fallen out of the upward channel, gapped down, and fallen through the 50 DMA. Something's cooking, and it don't smell tasty. Whoops -- junk bonds, being risk-heavy, tend to move the same way as stocks.

Here's the Dow Industrials chart, http://schrts.co/Q6KUW0

Notice that it threw over the upper wedge boundary, then walked through that line sideways. Now it has fallen through the 20 DMA, and about 23,200 it will reach the last spot where it gapped up. In words plain and few, it has rolled over earthward. Mark how volume increaseth as price falls, a promise of lower prices.

Today the Dow lost 30.23 (0.135) to 23,271.57 & the SP500 dropped 5.97 (0.23%) to 2,578.87. Maybe this is no more than a correction. In a manic market blowing off, it's impossible to pinpoint when it will break, but it will, whether soon, before year end, or in first quarter 2018.

Bitcoin behaved very strangely over the weekend. An seething controversy rages within the Bitcoin community between those who want changes made to support more rapid transactions (so Bitcoin can function as currency) and those who don't.. Those who do floated a new cryptocurrency, Bitcoin Cash, that supports more rapid transactions. Over this last weekend trading was nuts. From $7,707.40 on 8 November Bitcoin sank to $5,636.50 on 12 November, down 26.9%. Bitcoin cash, meanwhile surged from $630 to $950 in 24 hours. Today it's at $1,305.60.

I note for all the deaf ears out there that markets often top with a sudden collapse -- say, 26.9% -- followed by a sudden recovery to the old high or even higher. That double top often marks the point of death. And it is typical of topping markets that "cats & dogs fly last." That is, the cats & dogs (the penny stocks, the small stuff) make huge gains -- like up 50% in 24 hours -- as buyers look for something to buy other than blue chips and bid them up.

But durn! I don't know sic' 'em from come here. I'm just a natural born durn fool from Tennessee who don't even know how to spell Eelektronik.

Just about the time you thought silver & gold would break down without remedy, they snapped back. Today gold rose $1,281.50 (.3%) to $1,281.50. Silver added 2.9¢ (0.2%) to 1705.2¢.

Behold, the gold chart, http://schrts.co/sZCTNH

The endless battle with the 20 day moving average continues, but today gold won. Today's jump showed a respectable pop in volume -- so far. MACD and RSI indicators point to higher prices. Still looking over my shoulder. Gold won't be in the clear until it rises first above this range top ($1,300) and next above that purple line at $1,360. Tremors in stocks may be driving money into gold.

Now consider silver, http://schrts.co/o96FnV

Last two days silver tried to break that little green line marking the uptrend, but today decisively turned up and closed above the 20 DMA. So far, so good, but we've been whipsawed here so often in the last month, between 1660¢ and 1725¢ that silver has right nigh worn us to a nubbin.

Here's an excellent article from the Mises Institute, Federal Prosecutors are Running Amok, at http://bit.ly/2zY5s0C This will introduce you to sociopathic behavior by federal prosecutors. Unless you have ever been the victim of their attentions, you would not believe it.

Speaking of lawyers, did y'all hear about the two lawyers who were close friends? One of them suddenly announced to the other one that he had begun teaching Sunday School. The other one was shocked. "What are you doing? You don't even know the Lord's Prayer!"

"Sure I do," said the Sunday School teacher, "Now I lay me down to sleep . . ."

"Wow," said the other lawyer, "I never knew you knew that much about the Bible."

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-Nov-17 Price Change % Change
Gold, $/oz 1,281.50 4.20 0.33%
Silver, $/oz 17.05 0.03 0.17%
Gold/Silver Ratio 75.152 0.119 0.16%
Silver/Gold Ratio 0.0133 -0.0000 -0.16%
Platinum 924.10 -8.30 -0.89%
Palladium 986.95 -4.15 -0.42%
S&P 500 2,578.87 5.97 0.23%
Dow 23,271.57 -30.23 -0.13%
Dow in GOLD $s 375.39 -1.72 -0.46%
Dow in GOLD oz 18.16 -0.08 -0.46%
Dow in SILVER oz 1,364.74 -4.10 -0.30%
US Dollar Index 93.84 -0.54 -0.57%
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: 1,279.50      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,297.41 1,322.36 1,322.36
1/2 AE 0.50 652.04 674.94 1,349.87
1/4 AE 0.25 329.21 343.87 1,375.46
1/10 AE 0.10 134.24 140.11 1,401.05
Aust. 100 corona 0.98 1,241.62 1,254.17 1,279.50
British sovereign 0.24 303.45 316.45 1,344.32
French 20 franc 0.19 236.49 240.49 1,288.13
Krugerrand 1.00 1,282.06 1,292.06 1,292.06
Maple Leaf 1.00 1,287.50 1,303.50 1,303.50
1/2 Maple Leaf 0.50 735.71 671.74 1,343.48
1/4 Maple Leaf 0.25 326.27 342.27 1,369.07
1/10 Maple Leaf 0.10 135.63 139.47 1,394.66
Mexican 50 peso 1.21 1,527.14 1,538.14 1,275.72
.9999 bar 1.00 1,283.98 1,291.50 1,291.50
SPOT SILVER: 17.00      
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 11,722.43 12,008.43 16.80
US 40% silver 1/2s 0.30 4,821.78 4,971.78 16.85
100 oz .999 bar 100.00 1,679.50 1,714.50 17.15
10 oz .999 bar 10.00 171.45 176.45 17.65
1 oz .999 round 1.00 16.80 17.40 17.40
Am Eagle, 200 oz Min 1.00 18.50 20.00 20.00
SPOT PLATINUM: 924.10      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 939.10 969.10 969.10
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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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