The Moneychanger
Daily Commentary
Monday, 5 February a.d. 2018 Browse the commentary archive

Turns out it didn't take long for stocks to hit their 50 day moving averages -- one trading day, to be exact.

Stocks fell off a cliff today. Dow Industrials took the worst hit, losing 1,175.21 (-4.6%) for a close at 24,345.75. S&P500 lost 113.19 (4.1%) to 2,648.94.

Look at the Dow chart, It sliced clean through the three steepening uptrend lines and now is closing in on the green uptrend line from 2016.

The fall has not stopped yet. Aiming for the 200 day moving average (red line). Soon the Nice Government Men of the Plunge Protection Team will step in to try -- unsuccessfully -- to stop the carnage.

Bear in mind that since the January 26 high at 26,616.72 the Dow has plunged 2,270.96 or 8.5%. Right fast, too.

Look at the Dow in Gold, It appears that indeed the DiG did make a double top at 19.73 and has firmly and positively turned down. This is the single indicator I follow most closely.

In the 2008 financial panic investors could run into bonds, but today, thanks to rising interest rates, bonds look to scared investors the way a raging pit bull looks to an escaping cat. No solace or safety there. Whoops -- and the dollar is weak, too, so bonds suffer a double disability.

'Bout that US dollar index. Today it rose 54 basis points (0.6%) to 89.56. On the chart, you can see that peeks out of the corral where it's been stalled. Time has come also to point out that the persistently sickly Dollar Index points a guilty finger at the Nice Government Men of the Trump Administration who clearly believe the theory that lower exchange rates will stimulate the cheater's economy. This is the economic equivalent of Indian Joe's Universal Tonic. What you gain in exports you lose in import costs, not to mention what lowering the dollar's value does to innocent savers.

That said, the dollar index is overdue for a countertrend rally, maybe to 90.50. However, if the stock market keeps avalanching, that won't hurt gold much.

CME Bitcoin futures today closed down $1,325 or 15.4% [sic] at $7,260. Coindesk shows $7,199.27 down by 987.38 or 12.06%. Since the 16 December 2017 high at 19,343.04 Bitcoin has lost 62.8%. I take no joy in reporting this. It was a parabolic chart.

Comex gold today lost 70¢ (0.05%) to $1,333.00 while silver shaved off 3.7¢ (0.22%) to 1663.90. In the aftermarket gold is $5.90 higher at $1,338.90, silver at 1666¢.

Gold chart is right here, although gold topped 8 days ago, it remains above its 20 day moving average. Strong, so far.

Here's a chart from 2008 comparing Gold's performance and the Dow's,

Still analogizing from 2008, gold impressed me by falling only $10.30 on Friday when the Dow fell 666, and only 70¢ today when it fell 1,175. In 2008 gold fell faster than stocks, or in lock step with them. So far gold is holding firm -- in spite of the drops -- in the face of stock market panic. Was even weaker than stocks in 2008. Mind, too, that gold and silver bottomed in November 2008 & by December had turned higher. Stocks didn't bottom until March 2009.

Rounding out the picture, here's a 2008 chart of gold versus the dollar index. Dollar index began from a much lower base than today, soared into the panic, but was retreating by December when gold was beginning to rise.

But remember: 2018 is NOT 2008.

Look at silver right here, The 1650¢ lows probably marked the bottom, although silver has given no sign of a turnaround yet, other than that head-and-shouldery pattern on the chart.

Y'all shouldn't let silver's recent weakness roil your stomachs (Don't puke in that wastebasket yet!). A drop in any market as huge as stocks will infect & pull down other markets, and silver is no exception. Also, silver tends to move much more closely to stocks than gold. Wait, wait, don't get nervous. It is much more strongly tied to gold, and usually as large precious metals moves begin silver is weaker.

Speaking of that, look at the gold/silver ratio, One alert customer today traded gold American Eagles for US 90% silver coin and realized an 80.09 ratio when the market ratio was only 80.2. That's practically doing the trade for free.

If you wear a belt, it's time to cinch it up because there's a rough ride coming as the stock bubble deflates. If you wear suspenders, I don't know what you can do.

Argentum et aurum comparanda sunt —
Silver and gold must be bought.

— Franklin Sanders, The Moneychanger

Your source for gold and silver. Read our latest reviews and testimonials.
Market Snapshot See more charts and market data
5-Feb-18 Price Change % Change
Gold, $/oz 1,333.70 -0.70 -0.05%
Silver, $/oz 16.68 -0.04 -0.22%
Gold/Silver Ratio 79.977 0.135 0.17%
Silver/Gold Ratio 0.0125 -0.0000 -0.17%
Platinum 992.50 -3.90 -0.39%
Palladium 1,036.90 -12.00 -1.14%
S&P 500 2,648.94 -113.19 -4.10%
Dow 24,345.75 -1,175.21 -4.60%
Dow in GOLD $s 377.35 -18.01 -4.55%
Dow in GOLD oz 18.25 -0.87 -4.55%
Dow in SILVER oz 1,459.93 -67.09 -4.39%
US Dollar Index 89.56 0.54 0.61%
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: 1,338.90      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,340.91 1,353.91 1,353.91
1/2 AE 0.50 665.61 706.27 1,412.54
1/4 AE 0.25 332.80 359.83 1,439.32
1/10 AE 0.10 133.12 146.61 1,466.10
Aust. 100 corona 0.98 1,302.55 1,312.39 1,338.90
British sovereign 0.24 315.18 321.13 1,364.18
French 20 franc 0.19 248.22 251.22 1,345.60
Krugerrand 1.00 1,340.91 1,353.91 1,353.91
Maple Leaf 1.00 1,346.90 1,362.90 1,362.90
1/2 Maple Leaf 0.50 769.87 702.92 1,405.85
1/4 Maple Leaf 0.25 341.42 358.16 1,432.62
1/10 Maple Leaf 0.10 141.92 145.94 1,459.40
Mexican 50 peso 1.21 1,598.04 1,615.31 1,339.73
.9999 bar 1.00 1,333.90 1,351.90 1,351.90
SPOT SILVER: 16.66      
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 11,482.90 11,768.90 16.46
US 40% silver 1/2s 0.30 4,663.95 4,838.95 16.40
100 oz .999 bar 100.00 1,641.00 1,686.00 16.86
10 oz .999 bar 10.00 168.10 173.10 17.31
1 oz .999 round 1.00 16.41 16.76 16.76
Am Eagle, 200 oz Min 1.00 17.26 18.06 18.06
SPOT PLATINUM: 992.50      
Plat. Platypus 1.00 1,007.50 1,037.50 1,037.50
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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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