The Moneychanger
Daily Commentary
Tuesday, 5 December a.d. 2017 Browse the commentary archive

Virtual Beanie Babies, anyone?

Cryptocurrency folks have spent over $1.3 million on CryptoKitties game based on the Ethereum blockchain. Seems that you can buy a virtual cat (makes cleaning the litterbox very easy) for anywhere from $13 to $113,000 [sic]. As this article here says, "So now we have people using Ether, an asset with arguably little tangible utility -- to purchase an asset with unarguably zero tangible utility. Welcome ot the internet in 2017."

Stocks were slapped reeling today. Dow industrials lost 109.41 (0.45) & closed at 24,180.64. S&P500 lost 9.87 (0.37%) to 2,629.57, Nasdaq Composite fell 0.2% and Nasdaq 100 alone rose 0.02%.

Bad as that might look, I don't think that's the break. Why? The headline indicator. Of six headlines on Marketwatch this afternoon, six (6) warned stocks are due for a fall. At the very top you won't be able to find a radioactive bear with a Geiger counter, and every headline will be bullish.

US dollar index closed up 23 basis points at 93.27, smack on the downtrend line. Probably will rally further, but who cares?

Silver & gold took a beating today with a knobbly stick. Comex silver lost 31.1¢ (2%) and closed at a morale-killing 1597.3¢. Gold lost 1% or $12.70 and ended barely below (but below all the same) the $1,262 support: $1,261.60.

Behold the gold chart with Bollinger Bands (lavender line). Bollinger bands show two standard deviations (covers 95% of all random chances) from the 20 day moving average. As you move below the lower line, as gold did today, it becomes less and less likely you will drop further. That, however, is ALL relative. Oversold can always get oversolder until all your margin money is eaten up. Bottom line here is that gold is breaking toward what I expect is the final downdraft of this long correction. Be patient, let it drop, then settle before you jump.

Bollinger bands on silver's chart, show silver piercing the bottom line the last five days. That's stretching things and suggests it hath not much further to fall. As I expected yesterday, it hit that bottom support line (downtrend line from July 2016 high) & punched through a little. Bottom ought to come in a very few days.

Supporting that notion is the Gold/Silver ratio chart, Note the Bollinger bands & how the ratio has broken above them, call it a four day stretch. Comex ratio closed today at 78.983, high enough that I would swap gold for silver right here. Repeat: begin swapping gold for silver here or at any higher ratio.

If y'all didn't see my message yesterday about selling your sterling for bullion or cash, go back & read it.

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
5-Dec-17 Price Change % Change
Gold, $/oz 1,261.60 -12.70 -1.00%
Silver, $/oz 15.97 -0.31 -1.91%
Gold/Silver Ratio 78.983 0.729 0.93%
Silver/Gold Ratio 0.0127 -0.0001 -0.92%
Platinum 916.30 -8.50 -0.92%
Palladium 991.75 -7.00 -0.70%
S&P 500 2,629.57 -9.87 -0.37%
Dow 2,180.64 -109.41 -4.78%
Dow in GOLD $s 35.73 -1.42 -3.82%
Dow in GOLD oz 1.73 -0.07 -3.82%
Dow in SILVER oz 136.52 -4.11 -2.92%
US Dollar Index 93.27 0.23 0.25%
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: 1,264.90      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,285.14 1,307.27 1,307.27
1/2 AE 0.50 644.59 667.23 1,334.47
1/4 AE 0.25 325.45 339.94 1,359.77
1/10 AE 0.10 132.71 138.51 1,385.07
Aust. 100 corona 0.98 1,227.46 1,239.85 1,264.90
British sovereign 0.24 299.99 312.99 1,329.61
French 20 franc 0.19 233.80 237.80 1,273.68
Krugerrand 1.00 1,268.69 1,278.69 1,278.69
Maple Leaf 1.00 1,272.90 1,288.90 1,288.90
1/2 Maple Leaf 0.50 727.32 664.07 1,328.15
1/4 Maple Leaf 0.25 322.55 338.36 1,353.44
1/10 Maple Leaf 0.10 134.08 137.87 1,378.74
Mexican 50 peso 1.21 1,509.71 1,520.71 1,261.27
.9999 bar 1.00 1,269.33 1,276.90 1,276.90
SPOT SILVER: 16.02      
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 11,057.48 11,343.48 15.87
US 40% silver 1/2s 0.30 4,532.68 4,679.68 15.86
100 oz .999 bar 100.00 1,581.50 1,616.50 16.17
10 oz .999 bar 10.00 161.65 166.65 16.67
1 oz .999 round 1.00 15.82 16.42 16.42
Am Eagle, 200 oz Min 1.00 17.52 19.02 19.02
SPOT PLATINUM: 916.30      
Plat. Platypus 1.00 931.30 961.30 961.30
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© 2015 Little Mountain Corporation, d.b.a. The Moneychanger. All rights reserved. May not be republished in any form, including electronically, without our express permission.

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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