The Moneychanger
Daily Commentary
Monday, 27 November a.d. 2017 Browse the commentary archive

I see that Bitcoin stands at $9,527 today, up 41% from $6,750 on 1 November 2017. Not bad for 26 days' trading. Up 855% this year..

I am reminded that on 21 January 1980 with some friends I opened a gold & silver scrap buying operation. First day we bought $30,000 worth of stuff, second day $60,000, and the third day $90,000 (1980 dollars worth 3 times 2017 dollars, remember!). We had a hypothetical 50% margin in it, that is, we would make 50% every time we sold. I did a back of the envelope calculation and figured I'd be a millionaire by year-end.

I remember the date, 21 January 1980, because later I looked back & saw that was the day silver and gold topped, at $50.35 and $861. (Silver had first crossed $10 on 27 August 1979, same day gold crossed $400.)

I believe that was also the day the silver futures exchange imposed new rules to kill the longs: no new long contracts, no new shorts, could only sell to liquidate existing longs, etc., all calculated to bail exchange members out of their losing short squeeze. Another lesson I learned along the way: Exchanges are set up to benefit their members. When the members get squeezed, they change the rules.

So we wound up with 10,000 oz of silver when refineries were backed up nine months and wouldn't fix the price until after the melt. The Comex had just fixed things so that we couldn't hedge any of that silver inventory by selling futures contracts.

By 1 May 1980 silver had fallen to $12.65, greed had consumed everybody in our operation (it even infected Susan), and we split up. Instead of a million bucks, I ended up with two bags of 90% silver.

After that blow-off it took silver 21 years to reach a bottom in November 2001 at $4.02. It lost 92% of peak value. Gold hit bottom after only 19 years, 71% lower at $253 on 25 August 1999.

Rule of thumb is that after blowing off, a market will lose 50% to 95% of peak value.

What does that say about Bitcoin? Same parabolic curve, same result. 'Tain't different this time, or any time.

TODAY'S MARKETS

The US dollar index continues to slide. Here's a chart through 24 November, http://schrts.co/mogvDx It has smashed through the uptrend line and the 50 day moving average, and now I must question whether it will even be able to reach the target implied by its upside-down head & shoulders (97). A weaker dollar calls into doubt any lower silver & gold prices. Dollar index today rose 14 Basis points (0.15%) to 92.85.

The lower dollar hath already worked wonders for the euro and yen. Euro has broken out of its down trend and stayed there two days. http://schrts.co/HcRUv0 Yen has long since broken out of its intermediate downtrend. Look http://schrts.co/UuqBFa

Stocks have stalled. Dow today rose alone, 22.79 (0.1%) to 23,580.78. S&P500 lost 1 point to 2,601.42. Both are thumping the ceiling weakly, but remember the holiday mania, the Santa Clause rally, Wall Street always expects. Might become another self-fulfilling prophecy this year.

I have just about changed my mind about silver and gold. Need higher closes to confirm it yet, but from here it seems silver & gold will NOT spike lower. Low is probably behind us, but closes above 1725¢ and $1,300 (okay, $1,297) must confirm that.

On Comex today, where they take no prisoners, silver lost 8.1¢ to close at 1702¢, clinging tooth-wise above 1700¢. Gold added $2.80 to $1,294.40.

Behold a five day gold chart, http://bit.ly/1JUd5zx You see matching double bottoms on 24 November and over the weekend, then gold's steep climb out of that $1,287 hole to challenge $1,300. Direction is UP.

The five day silver chart here, http://bit.ly/1kGK1Vz is more ambiguous than the gold chart, but still shows a rally off Friday's low. Today silver tried 1718¢ but wasn't ready yet to hold on. 1700¢ now becomes the floor. Long as silver doesn't crack that floor, trend will remain up.

Y'all know these trend changes to upward in gold and silver are only tender shoots, liable to be blasted by bad weather. But shoots they are, poking their heads through the snow. Both look more hopeful than they have for 2-1/2 months.

You may know a newly pregnant mom who is suffering from pregnancy nausea. Susan never had it with the first three, but with the last four she lived on crackers. Follow this link http://bit.ly/2ibhY5J to a great article about help for pregnancy nausea so cheap and simple you'll hardly believe it: Vitamin C & Vitamin K, or simply ginger. Be kind: forward this article to the suffering. I used to feel so sorry for Susan.

A CHRISTMAS REMINDER: Silver & gold make EXTRAORDINARILY WELCOME Christmas gifts. Nobody ever turns them down, from one ounce silver rounds to one ounce gold coins and everything in between. Call us, 888) 218-9226.

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Market Snapshot See more charts and market data
27-Nov-17 Price Change % Change
Gold, $/oz 1,294.40 2.80 0.22%
Silver, $/oz 17.02 -0.08 -0.47%
Gold/Silver Ratio 76.052 0.524 0.69%
Silver/Gold Ratio 0.0131 -0.0001 -0.69%
Platinum 947.90 10.30 1.10%
Palladium 1,001.05 -2.30 -0.23%
S&P 500 2,601.42 -1.00 -0.04%
Dow 23,580.74 22.79 0.10%
Dow in GOLD $s 376.59 -0.45 -0.12%
Dow in GOLD oz 18.22 -0.02 -0.12%
Dow in SILVER oz 1,385.47 7.90 0.57%
US Dollar Index 93.14 -0.73 -0.78%
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: 1,294.10      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,313.51 1,337.45 1,337.45
1/2 AE 0.50 659.48 682.64 1,365.28
1/4 AE 0.25 332.97 347.79 1,391.16
1/10 AE 0.10 135.78 141.70 1,417.04
Aust. 100 corona 0.98 1,255.79 1,268.48 1,294.10
British sovereign 0.24 306.92 319.92 1,359.03
French 20 franc 0.19 239.19 243.19 1,302.58
Krugerrand 1.00 1,301.86 1,311.86 1,311.86
Maple Leaf 1.00 1,302.10 1,318.10 1,318.10
1/2 Maple Leaf 0.50 744.11 679.40 1,358.81
1/4 Maple Leaf 0.25 330.00 346.17 1,384.69
1/10 Maple Leaf 0.10 137.17 141.06 1,410.57
Mexican 50 peso 1.21 1,544.57 1,555.57 1,290.18
.9999 bar 1.00 1,298.63 1,306.10 1,306.10
SPOT SILVER: 17.02      
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 11,811.80 12,097.80 16.92
US 40% silver 1/2s 0.30 4,829.15 4,979.15 16.88
100 oz .999 bar 100.00 1,682.00 1,717.00 17.17
10 oz .999 bar 10.00 171.70 176.70 17.67
1 oz .999 round 1.00 16.82 17.42 17.42
Am Eagle, 200 oz Min 1.00 18.52 20.02 20.02
SPOT PLATINUM: 947.90      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 962.90 992.90 992.90
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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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