The Moneychanger
Daily Commentary
Wednesday, 10 January a.d. 2018 Browse the commentary archive

What a difference a day makes, when evil central banks are up to their shenanigans!

What's that? You object to my calling official/quasi-official/sometimes-privately-owned- masquerading-as-official central banks "evil"? Mercy, what word describes a parasitic institution imposed upon a country like a giant vampire bat to suck out its blood and feed off its labor and its future? What word describes an institution that attempts to manipulate economy, money supply, and interest for policy aims of the state or groups of elite plutocrats? If others are blind and mute, I am not, nor are the facts. So if wicked don't sit with ye, then substitute the word of your choice: Devilish, mischievous, nasty, naughty, vicious, villainous, abandoned, abominable, atrocious, degenerate, depraved, fiendish, flagitious, foul, heartless, impious, iniquitous, lowdownwhitetrash, nefarious, reprobate, corrupt, shameless, sinful, or vile. He'p yourself.

Yesterday it was the Bank o' Japan announcing it would be buying fewer long dated bonds -- Surprise! (I erred saying it was stopping purchases. It's only slowing.) That cranked interest rates right up into a breakout. Today the Bank o' China accelerated the breakout by rumors it would slow or halt its US Treasuries acquisitions Surprise! Look at the yield on the US 10 year T-note, Next look how much it helped the 30 year T-bond,

China is one of the largest holders of US treasuries with about $1.2 trillion worth. Japan's right up there with China. Both countries use US treasury purchases to launder dollars from the US trade deficit. China & Japan send the US stuff, the US pays for the stuff with dollars, more than Japan or China need, so they buy Treasuries with them, financing the trade deficit and the US government deficit at the same time. Few minds are willing to ponder even for a nanosecond what would happen if these two stopped buying US Treasuries, let alone began to sell them. Interest rates would ride a rocket to the moon.

What did that do to the US dollar index? Took it down 14 basis points -- 19 bps on this chart, to end at 92.07. Looks like 92.25 resistance has whupped the dollar index again.

Stocks took offense, too, and limped off with hurt feelings. Dow fell 16.67 (0.7%) to 25,369.13 and the S&P500 dropped 3.06 (0.11%) to 2,748.23.

Bubbles remain intact until they pop. Nobody's sure in advance which needle will pop them, & usually its one largely unexpected: like central bank reducing Treasury purchases. I am NOT saying this is the needle, only alerting you to the bubble's existence and its attraction to needles. Maybe it's static electricity.

Gold like today's events and inched up $5.70 (0.4%) to $1,317.40 on Comex. Less enthusiastic and sleepier silver lollygagged up 2.7¢ to 1696.3¢.

If you will weigh this chart you will mark that although Gold hit a new intraday high today, it still close below resistance at $1,325. They don't hand out seegars for "nearly" and "almost." Thus it was a good day, but worked no change in our expectations. Now a close above $1,330 tomorrow would do that.

I'll be switched if today's action didn't bounce silver off both its uptrend line and the 200 DMA, with a nice leap in value as well. "Still,"" he carpeth, "'tain't pierced 1725¢ & stayed up thar yit."

Today's activity could be no more than the B leg up of an A-B-C correction. I need proof the next advancing leg has begun, and that means higher closes above resistance.

Call me small-minded. I'm used to being scorned. Don't bother me a-tall. I'll jes' quietly cry myself to sleep tonight.

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
10-Jan-18 Price Change % Change
Gold, $/oz 1,317.40 5.70 0.43%
Silver, $/oz 16.96 0.03 0.16%
Gold/Silver Ratio 77.663 0.213 0.27%
Silver/Gold Ratio 0.0129 -0.0000 -0.27%
Platinum 971.40 -0.95 -0.10%
Palladium 1,080.05 -20.75 -1.88%
S&P 500 2,748.23 -3.06 -0.11%
Dow 25,369.13 -16.67 -0.07%
Dow in GOLD $s 398.08 -1.99 -0.50%
Dow in GOLD oz 19.26 -0.10 -0.50%
Dow in SILVER oz 1,495.56 -3.37 -0.22%
US Dollar Index 92.24 0.15 0.16%
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: 1,316.40      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,326.27 1,360.50 1,360.50
1/2 AE 0.50 670.85 694.40 1,388.80
1/4 AE 0.25 338.72 353.78 1,415.13
1/10 AE 0.10 138.12 144.15 1,441.46
Aust. 100 corona 0.98 1,277.43 1,290.34 1,316.40
British sovereign 0.24 312.20 325.20 1,381.50
French 20 franc 0.19 243.31 247.31 1,324.66
Krugerrand 1.00 1,321.67 1,331.67 1,331.67
Maple Leaf 1.00 1,324.40 1,340.40 1,340.40
1/2 Maple Leaf 0.50 756.93 691.11 1,382.22
1/4 Maple Leaf 0.25 335.68 352.14 1,408.55
1/10 Maple Leaf 0.10 139.54 143.49 1,434.88
Mexican 50 peso 1.21 1,575.15 1,586.15 1,315.54
.9999 bar 1.00 1,311.40 1,329.40 1,329.40
SPOT SILVER: 16.91      
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 11,586.58 11,872.58 16.61
US 40% silver 1/2s 0.30 4,795.23 4,942.23 16.75
100 oz .999 bar 100.00 1,670.50 1,705.50 17.06
10 oz .999 bar 10.00 170.55 175.55 17.56
1 oz .999 round 1.00 16.71 17.31 17.31
Am Eagle, 200 oz Min 1.00 18.16 18.91 18.91
SPOT PLATINUM: 971.40      
Plat. Platypus 1.00 986.40 1,016.40 1,016.40
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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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