The Moneychanger
Weekly Commentary
Friday, 29 December a.d. 2017 Browse the commentary archive
Here's the weekly scorecard:
  22-Dec-17 29-Dec-17 Change % Change
Silver, cents/oz. 1,635.70 1,706.00 70.30 4.3
Gold, dollars/oz. 1,275.40 1,306.30 30.90 2.4
Gold/silver ratio 77.973 76.571 -1.402 -1.8
Silver/gold ratio 0.0128 0.0131 0.0002 1.8
Dow in Gold Dollars (DIG$) 401.22 391.17 -10.04 -2.5
Dow in gold ounces 19.41 18.92 -0.49 -2.5
Dow in Silver ounces 1,513.36 1,448.96 -64.40 -4.3
Dow Industrials 24,754.06 24,719.22 -34.84 -0.1
S&P500 2,683.34 2,673.61 -9.73 -0.4
US dollar index 92.92 91.98 -0.94 -1.0
Platinum 922.10 934.20 12.10 1.3
Palladium 1,044.84 1,073.75 28.91 2.8

I'm not too high on year end comparisons, since I am cynical enough to believe (from past evidence) that the Nice Government Men manipulate these figures to create a Potemkin economic performance. Yet some crave them, so I basely comply, slave to the public mood that I am. First, the year's scorecard:

Dow Jones Industrials, up 25%

S&P500, up 19.4%

Bitcoin, up 14,918% [sic]

US dollar index, down 10%

Gold, up 13.6% [sic -- it really is]

Silver, up 7%

Platinum, up 3.8%

Palladium, up 57.3%

All today's charts span 13 months, so you can see the year at a glance.

The scurvy US dollar index appears to be in real trouble, perched on a cliff edge, standing on a banana peel. Today it fell another 36 basis points (0.4%0 to 91.98 Behold, http://schrts.co/tP3ay5

Yes, this dollar weakness is strengthening silver & gold. Dollar index has now reached a point where it might turn around and work a little trouble for metals, but it has shown no inclination to strength. If it falls through the Head low about 91, well, imagine a cosmic toilet flushing.

Euro is plenty happy to take advantage of dollar's plight. Look for yourself, http://schrts.co/uSnNydl Nor is the yen gloomy, gapping up the last two days. Look right here, http://schrts.co/3zf7ir

Y'all will want to see the Bitcoin chart, most exciting bubble since the Dutch Tulip Mania in 1635, so go here, http://bit.ly/2CavVd2 With tiresome exactitude and repetition I again point out, "This is a lethal parabolic chart."

CME Bitcoin futures today settled at $14,470, up $725 (5.3%). Coindesk is showing $14,329.06, down $99.70 or 0.7%. Shucks, I don't know who to believe, or if I believe anybody. I see that Bitcoin promoters are calling the 27% collapse from the 17 December high at 19,661.63 a "buying opportunity." Well, it might be a SELLING opportunity for them, but woe to those who take the opportunity to buy.

One of the noisiest, bloodiest, and most painful stories next year will be rising interest rates. The Fed has suppressed interest rates for 35 years, and doubled down from 2008 onward, squeezing them down to zero. Even a nat'ral born durn Tennessee fool knows that the tighter you wind a spring, the harder it will hit you when it breaks loose. Look at the bellwether US 10 year Treasury note yield, http://schrts.co/aNuPrU That diagonal red line is the downtrend line from the 2007 high, so the 10 year yield has already broken upside through that. Then from May it was stymied by roughly 2.425% (24.250 on this chart), represented by the purple line. Now it stands above all moving averages and has burst through that overhead resistance and come back for the final kiss good-bye.

Of course, the longer a bond's duration, the more a yield rise lowers its price. Go look at the US 30 year T-bond, http://schrts.co/mchYS5 Whoops! Head and shoulders top with completed breakdown through the neckline -- to a new low. Yes, it has risen back up to the neckline, but only for that last good-bye smooch. Y'all bear in mind rates will rise around the globe. Global bond market is worth four times global equity markets -- US bond market is twice that for equities.

There will be blood up to the horses' bridles when the bond bubble bursts.

Now to the stock bubble. Stocks suffered a fainting spell today. Dow dropped 118.29 (0.48%) to 24,719.22 while the S&P500 stumbled 13.93 (0.52%) to 2,673.61. Nasdaq sank 0.67%, Nasdaq 100 fell 0.7%, Russell 2000 shaved off 0.87%. First week out of the last six stocks have closed lower.

Meanwhile it appears that the Dow in Gold, seen here http://schrts.co/mC39U8 has peaked and turned down. Since the 12 December high it has plunged through its 20 DMA and the short term uptrend line and isn't far from the (blue) 50 day moving average.

The Dow in Silver offers a similar picture, http://schrts.co/e1DC2B It made a sharp peak on 12 December and taken a ski slope since then. It has cut through the 20 DMA and is only about 5 oz. from the 50 DMA. Not far below lies the uptrend line. Indicators point firmly down.

Peek at the gold/silver ratio chart, http://schrts.co/kh9gOy It is in full freefall, now below the 50 DMA and closing in on the 200 DMA (76.37 today versus the 200 DMA at 74.95). It has fallen back into the downtrend represented by that falling red line. Indicators call for more earthward regress.

Comex gold closed the year at $1,306.30, up $12.20 or 0.9% today. Silver ended at 1706¢, up 22.7¢ or 1.3%. In the last 10 days, silver has risen 99.4¢ (6.2%) and gold $45.60 (3.6%).

Y'all have to see the gold chart, http://schrts.co/oppTEZ Gold has solidly risen off a V-bottom and now pierced resistance at $1,262 and $1,300. Just about $10 above it will collide with the downtrend line from 2011, but equally important is that purple resistance line above at about $1,360. That has ruled gold with an iron hand since 2013. Gold will get plenty of attention when it breaks through that blockade, and plenty of buyers.

I watch the gold/bank index spread to gauge whether money is flowing into the financial sector (banks) or fleeing into gold. Here 'tis, http://schrts.co/i4h1Sf The spread tumbled this year as stocks rose and then interest rates promised to rise, making banks more profitable. But in December the spread made a V-bottom and today even gapped up. Indicators are pointing up, too. As yet this is only a whisper, but once it closes above that green trend line at about 12.7 we can be pretty sure it has turned up.

Silver's chart lurks here, http://schrts.co/H2QFUe Since the 12 December low it has vigorously climbed until now it stands above the 1650¢ resistance and all of its moving averages, even the 200. Now silver has positioned itself to break through that blasted 1725¢ resistance. WHOPPIN' rally coming in January.

A little moth flying around my brain keeps throwing its shadow on my mind's wall. Silver & gold have put on a good show, and from here they might just keep marching for a while, or they might also take a break before attacking 1725¢ and $1,315. Just a moth, but pesky.

Y'all have asked me if we would still honor that special offer on generic silver rounds at 46¢ over spot silver. Yep, we'll honor it till they're all gone.

I am always humbled when y'all respond so generously to my requests, but y'all have overwhelmed me by your gifts for our jail ministry Bibles. Y'all have brought the goal in sight -- Thank you. We are sending every giver a thank you letter.

I have a wee Susan story. At Christmas 1986 Susan was pregnant with our seventh child and fifth son, Zachariah. She was due about January 20th. As was our custom, about December 20th we trooped out into the fields to cut a cedar for a Christmas tree. Now Susan always handled pregnancy very well and carried babies high. Never could much tell she was pregnant till after the sixth month, but by this time she was, as they say, "great with child." She called herself a "beached whale," but she really didn't look a thing like a whale, she was beautiful but just had a little trouble rolling over off her back once she lay down.

We had a large brown pony called "Blackie", and I wanted to spare Susan the long walk through the fields. I put her up on Blackie and led her. We got about halfway across a giant field and Blackie stepped into a hole. Susan literally did a 180 degree flip over Blackie's neck and onto her back. I could only think, "My God, I've killed my wife!"

Well, I hadn't. Susan was okay, she got back on the horse, I think, we got our cedar tree and went back and decorated it. However, Zachariah arrived on 23 December.

Mercy! Susan was a Christmas maniac. She started saving for Christmas on December 26, and shopped all year long. She planned, she baked, she decorated, and she wrapped presents -- professionally. But here she is having a baby on 23 December and out of the hospital on the 24th. All the shopping was done & presents for six children hidden, but none were wrapped. I was no help at all. At top speed I can wrap 1.8 packages an hour. Susan, on the other hand, was a wrapping Mo-sheen, a lightning cloud of scissors and ribbons and arms and elbows and hands and packages popping out about every two minutes. But there was not time to wrap. What could she do?

After the children went to sleep, she pulled out six big black plastic trash bags and made Santa Bags out of them, stuffing in all the child's presents and tagging it with his name. These she left scattered around the living room. Christmas morning the kids thought it was the Best Christmas Ever. So did I, because God had added his best gift for us, a baby boy brought home in a Christmas stocking, and I had my beloved Susan.

Y'all enjoy your weekend.

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
29-Dec-17 Price Change % Change
Gold, $/oz 1,306.30 12.20 0.9
Silver, $/oz 17.06 0.23 1.3
Gold/Silver Ratio 76.571 0.705 0.9
Silver/Gold Ratio 0.0131 0.0002 1.3
Platinum 934.20 7.30 0.8
Palladium 1,073.75 -2.45 -0.2
S&P 500 2,673.61 13.93 0.5
Dow 24,719.22 -118.29 -0.5
Dow in GOLD $s 391.17 -5.54 -1.4
Dow in GOLD oz 18.92 -0.27 -1.4
Dow in SILVER oz 1,448.96 -26.57 -1.8
US Dollar Index 91.98 -0.36 -0.4
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: 1,302.80      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,322.34 1,346.44 1,346.44
1/2 AE 0.50 663.92 687.23 1,374.45
1/4 AE 0.25 335.21 350.13 1,400.51
1/10 AE 0.10 136.69 142.66 1,426.57
Aust. 100 corona 0.98 1,264.23 1,277.00 1,302.80
British sovereign 0.24 308.98 321.98 1,367.80
French 20 franc 0.19 240.80 244.80 1,311.20
Krugerrand 1.00 1,310.62 1,320.62 1,320.62
Maple Leaf 1.00 1,310.80 1,326.80 1,326.80
1/2 Maple Leaf 0.50 749.11 683.97 1,367.94
1/4 Maple Leaf 0.25 332.21 348.50 1,394.00
1/10 Maple Leaf 0.10 138.10 142.01 1,420.05
Mexican 50 peso 1.21 1,558.88 1,569.88 1,302.05
.9999 bar 1.00 1,297.80 1,315.80 1,315.80
SPOT SILVER: 16.93      
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 11,747.45 12,033.45 16.83
US 40% silver 1/2s 0.30 4,802.60 4,949.60 16.78
100 oz .999 bar 100.00 1,673.00 1,708.00 17.08
10 oz .999 bar 10.00 170.80 175.80 17.58
1 oz .999 round 1.00 16.73 17.33 17.33
Am Eagle, 200 oz Min 1.00 18.18 18.93 18.93
SPOT PLATINUM: 934.20      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Platinum Platypus 1.00 949.20 979.20 979.20
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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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