The Moneychanger
Daily Commentary
Monday, 20 November a.d. 2017 Browse the commentary archive

I'm just glad I wasn't here to send out a commentary on Friday. I would have been warbling and burbling about breakouts in silver & gold -- they really happened -- which were reversed today. Mercy.

First there are Comrade Merkel's problems in Germany: she can't form a governing coalition after her poor results in the recent elections, and doesn't want to try it with a minority government. So if she can't get what she wants by Friday out of the other parties, she pitches a tantrum and calls for new elections.

But Germany is supposed to be the very stability of the European Union. What happens when the foundations are shaken? The euro drops, for one thing, down 0.52% today to $1.1731, and the US dollar index rises, up 42 basis points (0.4%) to 93.99.

But, but Friday Silver & Gold both performed wondrously. Silver sliced through standing 1725¢ resistance on good volume and rose 30.2¢ (1.8%) to 1735.8¢. Breakout, plain and simple. Gorgeous.

Friday gold jumped $18.4 or 1.4% to close at $1,295.80. True, not above the $1,300 point I keep insisting on, but above the 50 day moving average & right up against the downtrend line from the July High. And a higher close than seen since 23 October, nearly a month. And, the clincher: a higher weekly close for the second week running.

What could be wrong with all that?

To begin with, the Merkel imbroglio raising the US dollar index. Next, how about somebody dumping about $2 billion worth of gold contacts in seconds today about 11:00? Yep, somebody sold 15,000 gold contracts in under two minutes. Gold obligingly fell from $1,292 to $1,276 by 3:00, most of that gapping straight down.

Spurred by the dollar's gains? Hardly. Those began about 4:00 a.m. from 93.58 and climbed to 94 by 3:00 p.m. today. Certainly a rising dollar puts downward pressure on gold, but it doesn't dump 15,000 contracts (1.5 million oz) on the market all at once.

So Comex gold lost $21.20 (1.64%) to close at $1,274.60 while silver lost 3.06% or 53.1¢ to 1682.7¢. All the gains were wiped out.

Look at gold's chart, After Friday's trading everything was in place for higher prices -- MAD, RSI, volume, moving average alignment -- but today wiped the slate clean of all gains and left gold stranded below the 20 DMA again. By the way, the Commitments of traders are not favorable, either. Fall to $1,240 or lower is possible.

And here is silver, Friday blew through the 200 DMA and the top of the range at 1725¢ on lukewarm volume but rising indicators. Plus it closed higher for the third week. Today sank silver below all its moving averages and took it back to the uptrend line from December 2015.

Now here is a 19 month silver chart, Notice that until September the Downtrend line from the July 2016 high imprisoned silver. Then in September it broke out, ran quickly past 18, and fell back to kiss the downtrend line where it had broken out. It has also remained above that downtrend line. If silver falls through the bottom of the present range at 1660¢, it will fall toward that line as the next support, call it targeting 1610¢.

Look at the gold/silver ratio chart, I've redrawn the lines here into what seems a falling wedge. Those usually break out Upside. If that's what the ratio is telling us, then lower silver & gold prices are coming soon.

Bitcoin today closed at $8,275.69, up 3% and at another new all time high. Stocks rose slightly, grudgingly. Dow Industrials rose 72.09 (0.31%) to 23,430.33. S&P500 edged up 3.29 (0.13%) to 2,582.14.

Say, I've got an idea: Why not chase a rising market? Why don't we sell all our stocks & gold & silver and houses and cars and children and buy Bitcoin? That way we could ALL get rich & live happily ever after. What? What do you mean, "Won't work." Don't you know Bitcoin is the wave of the future. Sheesh! What a troglodyte.

On 20 November 1817, my this day in history website informs me, the first "Mississippi showboat" left Nashville. This is odd, since Nashville is a couple of hundred miles from the Mississippi on the Cumberland River. Mercy, 200 year old fake news!

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
20-Nov-17 Price Change % Change
Gold, $/oz 1,274.60 -21.20 -1.64%
Silver, $/oz 16.83 -0.53 -3.06%
Gold/Silver Ratio 75.747 1.096 1.47%
Silver/Gold Ratio 0.0132 -0.0002 -1.45%
Platinum 920.40 -31.00 -3.26%
Palladium 987.50 -6.60 -0.66%
S&P 500 2,582.14 3.29 0.13%
Dow 23,430.33 72.09 0.31%
Dow in GOLD $s 380.00 7.37 1.98%
Dow in GOLD oz 18.38 0.36 1.98%
Dow in SILVER oz 1,392.42 46.75 3.47%
US Dollar Index 93.99 0.42 0.45%
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: 1,275.70      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,294.84 1,318.44 1,318.44
1/2 AE 0.50 650.10 672.93 1,345.86
1/4 AE 0.25 328.24 342.84 1,371.38
1/10 AE 0.10 133.84 139.69 1,396.89
Aust. 100 corona 0.98 1,237.94 1,250.44 1,275.70
British sovereign 0.24 302.55 315.55 1,340.49
French 20 franc 0.19 235.79 239.79 1,284.37
Krugerrand 1.00 1,279.53 1,289.53 1,289.53
Maple Leaf 1.00 1,283.70 1,299.70 1,299.70
1/2 Maple Leaf 0.50 733.53 669.74 1,339.49
1/4 Maple Leaf 0.25 325.30 341.25 1,365.00
1/10 Maple Leaf 0.10 135.22 139.05 1,390.51
Mexican 50 peso 1.21 1,522.60 1,533.60 1,271.96
.9999 bar 1.00 1,280.16 1,287.70 1,287.70
SPOT SILVER: 16.88      
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 11,708.13 11,994.13 16.78
US 40% silver 1/2s 0.30 4,786.38 4,936.38 16.73
100 oz .999 bar 100.00 1,667.50 1,702.50 17.03
10 oz .999 bar 10.00 170.25 175.25 17.53
1 oz .999 round 1.00 16.68 17.28 17.28
Am Eagle, 200 oz Min 1.00 18.38 19.88 19.88
SPOT PLATINUM: 920.40      
Plat. Platypus 1.00 935.40 965.40 965.40
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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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