The Moneychanger
Weekly Commentary
Friday, 2 February a.d. 2018 Browse the commentary archive
Here's the weekly scorecard:
  26-Jan-18 2-Feb-18 Change % Change
Silver, cents/oz. 1,783.20 1,667.60 -115.60 -6.5
Gold, dollars/oz. 1,351.60 1,333.70 -17.90 -1.3
Gold/silver ratio 75.796 79.977 4.181 5.5
Silver/gold ratio 0.0132 0.0125 -0.0007 -5.2
Dow in Gold Dollars (DIG$) 407.06 395.10 -11.96 -2.9
Dow in gold ounces 19.69 19.11 -0.58 -2.9
Dow in Silver ounces 1,492.54 1,528.58 36.05 2.4
Dow Industrials 26,614.92 25,490.66 -1,124.26 -4.2
S&P500 2,872.80 2,762.13 -110.67 -3.9
US dollar index 88.89 89.02 0.13 0.1
Platinum 1,015.00 996.40 -18.60 -1.8
Palladium 1,087.80 1,048.90 -38.90 -3.6

Imagine being forced to lie down naked while somebody raked half the skin off your body with an orange zester. That pretty well describes this week.

Stocks were the big loser: Dow Industrials shrank 4.2%. US dollar index flaked and fell yesterday, but regained it all today. Still stinks. Gold & Silver held up all week, then fainted today, probably under pressure from other losing markets. Catalyst for it all was probably the 10 year T-note yield hitting 4 year highs. Seems interest rates are rising faster than anybody expected. Whoops.

Dow Industrials had its worst week in two years, losing 1,124.26 or 4.2%. Lo, today was the worst, tanking 665.75 or 2.56% to 25,490.66. Behold the chart, The Dow has an appointment with its 50 Day Moving average (now 25,016). It has broken the first of three steepening uptrend lines, then the 20 DMA, then the second uptrend line. Panic is on and surely will keep the skeer on till it reaches the 50 DMA. Remember this proverb that bull markets are prone to make you forget: Markets fall faster than they rise.

S&P500 this week lost 110.67 or 3.9%. Today it plunged 59.85 (2.12%) to 2,762.13.

Although the balloon was only waiting for a needle, the needle that happened by seems to have been rising interest rates, that FINALLY caught the public's attention. Look at the 10 year T-note, Fed has been suppressing interest rates for 35 years, and moreso since 2008. Market is wrenching control out of the fed's pasty, uncalloused hands. Fed likes a little inflation? Wonder how they'll like a lot? Fed wants rates a little higher? Wonder how they'll like them a LOT higher?

Just so you don't forget that bond prices move opposite to interest rates, and that the longer the bond's duration, the worse a rate rise hurts, I am pointing y'all toward this 30 year T-bond chart:

Don't kid yourself: rising rates are not good for stocks, since they increase borrowing and operating costs. I'm not going to get into what rising rates do to real estate and mortgages. Y'all are smart enough to figure that out.

US dollar Index rose 52 basis points (0.6%) after falling 45 yesterday. Chart here doesn't show today's trading, but use your imagination. It has made two bottoms and looks overdue for a countertrend correction, so next move ought to be up. Go figure, using the word "up" in the same sentence as "dollar index" without saying something like, "The dollar index' time is up."

Merciful markets! Gold lost $10.60 (0.8%) today to $1,333.80. Oh, but Comex silver plummeted 44.2¢ to $1667.6¢, a 2.6% loss.

If today's droop took y'all by surprise, y'all haven't been listening. After a long, enthusiastic rise, gold and silver have been signaling their intent to correct. This is an opportunity, not a catastrophe.

Gold is holding up better than silver. Look here, Today's long slide took gold below the 20 DMA but on Comex it still remained above $1,330. There's a band of support from $1,318 up to $1,330. Break that and gold falls to the next support at $1,295 - $1,300. (I vote for holdig on here.) Remember, the red downtrend line crossing the chart from upper left to lower right is the downtrend line from the 2011 high. Yes, gold has broken out through that line. This correction shouldn't last long, & the rally should come roaring back looking for vengeance like the Hatfields looking for McCoys.

Besides: stocks are skidding, bonds are sucking down the drain -- whither other than gold will scared money flee? Oatmeal futures?

Silver has been weaker than gold all along, always is when precious metals rallies begin. Look,

Today silver closed not only below its 200 day moving average but below the 50 DMA, too, and in the aftermarket returned to that 1660¢ October low. Are y'all surprised silver is volatile?

Is silver stopped here or around here -- 1650¢ ish -- it would paint a clever little upside down head & shoulders reversal pattern. Perfect.

View these declines as a buying opportunity. This is the year for silver & gold.

Here's a little Susan story.

Every morning in the little hall out of my bedroom I pass a frame with a blouse in it. Susan made the blouse, & I persuaded her to frame it. It was fraying and tattering and when wanted to throw it away, but it was so typical of her handiwork I wouldn't let her.

When we lived in Memphis and had only three children, we bought an old house in midtown built in 1904. next door live two older ladies whom we called "Maw" and her mother "Mimi." They adopted our children, but especially Worth. When he got mad at Susan, he'd trundle his three year old bottom over to Maw and Mimi to be consoled, and they would pet him and cook him popcorn.

Mimi found an old petticoat that I'm guessing dated to about 1915. It was the finest cotton imaginable, 2-1/2 inch panels alternating with lace. It was in perfect shape, and Mimi gave it to Susan. Hot Needle Hattie sat down and turned that ancient petticoat in a precious blouse for herself -- I'm telling y'all, you have rarely seen cotton that fine. And Susan wore it till it started giving out. It was beautiful.

But that's how she was: she had to beautify the whole world around her.

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
2-Feb-18 Price Change % Change
Gold, $/oz 1,333.70 -10.60 -0.8
Silver, $/oz 16.68 -0.44 -2.6
Gold/Silver Ratio 79.977 -0.614 -0.8
Silver/Gold Ratio 0.0125 -0.0003 -2.6
Platinum 996.40 -8.40 -0.8
Palladium 1,048.90 5.00 0.5
S&P 500 2,762.13 20.25 0.7
Dow 25,490.66 -665.75 -2.5
Dow in GOLD $s 395.09 -7.08 -1.8
Dow in GOLD oz 19.11 -0.34 -1.8
Dow in SILVER oz 1,528.58 0.58 0.0
US Dollar Index 89.02 0.52 0.6
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: 1,331.60      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,333.60 1,346.60 1,346.60
1/2 AE 0.50 661.97 702.42 1,404.84
1/4 AE 0.25 330.99 357.87 1,431.47
1/10 AE 0.10 132.39 145.81 1,458.10
Aust. 100 corona 0.98 1,295.45 1,305.23 1,331.60
British sovereign 0.24 313.46 319.41 1,356.88
French 20 franc 0.19 246.86 249.86 1,338.30
Krugerrand 1.00 1,333.60 1,346.60 1,346.60
Maple Leaf 1.00 1,339.60 1,355.60 1,355.60
1/2 Maple Leaf 0.50 765.67 699.09 1,398.18
1/4 Maple Leaf 0.25 339.56 356.20 1,424.81
1/10 Maple Leaf 0.10 141.15 145.14 1,451.44
Mexican 50 peso 1.21 1,589.32 1,606.51 1,332.43
.9999 bar 1.00 1,326.60 1,344.60 1,344.60
SPOT SILVER: 16.51      
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 11,372.08 11,658.08 16.31
US 40% silver 1/2s 0.30 4,618.23 4,793.23 16.25
100 oz .999 bar 100.00 1,625.50 1,670.50 16.71
10 oz .999 bar 10.00 166.55 171.55 17.16
1 oz .999 round 1.00 16.26 16.61 16.61
Am Eagle, 200 oz Min 1.00 17.11 17.91 17.91
SPOT PLATINUM: 996.40      
Platinum Platypus 1.00 1,011.40 1,041.40 1,041.40
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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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