The Moneychanger
Weekly Commentary
Friday, 10 July a.d. 2015 Browse the commentary archive
Here's the weekly scorecard:
  2-Jul-15 10-Jul-15 Change % Change
Silver, cents/oz. 1,553.70 1,546.80 -6.90 -0.4
Gold, dollars/oz. 1,163.00 1,157.70 -5.30 -0.5
Gold/silver ratio 74.854 74.845 -0.009 -0.0
Silver/gold ratio 0.0134 0.0134 0.0000 0.0
Dow in Gold Dollars (DIG$) 315.15 317.13 1.98 0.6
Dow in gold ounces 15.25 15.34 0.10 0.6
Dow in Silver ounces 1,141.15 1,148.20 7.05 0.6
Dow Industrials 17,730.11 17,760.41 30.30 0.2
S&P500 2,076.78 2,076.62 -0.16 -0.0
US dollar index 95.29 96.17 0.88 0.9
Platinum 1,083.60 1,032.30 -51.30 -4.7
Palladium 693.15 649.35 -43.80 -6.3

I suspect I see the invisible hand of Bogusness in this week's closes. At Comex close both silver & gold were down slightly for the week, but in the aftermarket they were up strongly, slightly higher than last week's closes. Nevertheless, the tape is painted with down weeks for both. Likewise the Dow ended with an "up week" by 30.30 points after spending most of the week taking on water and running the bilge pumps. S&P500 finished flat. US dollar index was strong as a garlic milkshake all week, so had to be tempered on Friday.

Those Nice Government Men must think we all fell off a turnip truck. Let me brush these hayseeds off my shoulder.

The media, who report "all the news that fits," tell us today that stocks rose on hopes of a European deal on Greece's debt this weekend. If so, that's the triumph of hope over experience, as Dr. Johnson said of a man's remarrying soon after the death of a wife to whom he had been unhappily married. The Greeks have the Euros over a barrel now. The Euros over the pas few years have shifted the debt from the banks to the taxpayers, & now the taxpayers, through their governments, will take the hit if Greece defaults. Not good for politicians when taxpayers find out how they've been shafted.

Anyhow, the Dow rose 211.79 (1.21%) to 17,760.41 while the S&P500 climbed 25.31 (1.48%) to 2,076.52. Today's closes bring both averages back above their 200 DMAs.

I talked to my friend Al Thomas today (www.mutualfundmagic.com), author of "If It Doesn't Go Up, Don't Buy It." Al is one of those men you listen carefully to because his knowledge comes from experience. He is expecting one last rise in stocks, & reminded me that the sell signal comes when the market moves through a DOWNTRENDING 200 DMA. The stock index's 200 DMAs are almost flat, but still rising and not yet falling. Yes, yes, Al's book most certainly is worth buying, reading, and studying.

Someone asked me a question today that revealed I haven't done my explaining job very well. The formation I call "Gator Jaws" in the Dow in Gold & Dow in Silver is what most folks, who lack color and imagination, call a "broadening top" or "megaphone" pattern. In this pattern a market stalls, moving sideways with higher (or flat) highs and lower lows. It is not able to push through the old highs and advance, and suffers deeper lows. Eventually it breaks out downward, never to recover. That's what I've been watching in the Dow in Gold & Dow in Silver, although these two are very irregular examples of a broadening top. Here are the charts, http://schrts.co/5dVaZs and http://schrts.co/JzctdV

Both charts have been unable to penetrate that top Gator Jaw & advance. Now their 200 DMAs are pushing up on them, leaving little room to fall without strong consequences.

Dow in Gold ended today up 0.84% at G$315.66 gold dollars (15.27 troy ounces). Dow in Silver lost 0.16% today to end at $1,474.82 silver dollars (1,140.68 oz). That comes after the DiS pierced the upper Jaw Tuesday with a rise to$1,531.27 silver dollars (1,184.34 oz), a new high punching through that line. It just as quickly fell back within the gator jaws.

Why am I so concerned with this? Because the Dow in Gold & Dow in Silver are the most reliable indicator for that shift in investor mood from confidence to lack of confidence in the financial system. And that, dear friends, is what drives silver & gold up. So when the DiG & DiS confirm they have turned down and resumed the bear market for stocks against metals that began in 1999 and 2001, we can be sure that gold & silver nominal prices have turned up. And, of course, pinpoint the time to swap stocks for silver & gold.

You there, in the back! I see you dozing! Sit up, pay attention. I'm not a politician, so I have no easy answers.

After breaking out upside this week out of an even-sided triangle, the US dollar index fell back into the triangle today, down 62 basis points (0.64%) to 96.17. That breaks the uptrend for the interim, but does that mean this week's breakout was a fakeout caused by safe haven buying over Greece? Maybe, or maybe NGM manipulating rates. Either way, it's too soon to count the dollar's rally dead. I would need to close below 93.30 (last low) to call that. Chart's at http://schrts.co/XtyH9W

Euro rose 1.16% to $1.1160. That leaves it still broken down out of an even sided triangle and looking nasty. The Yen's masters slapped it winded today, down 1.21% to 81.42 & once again below that range that held it from December to May.

Bond yields gapped up today, whereas earlier in the week they gapped down. This is some kind of volatility, with the yield closing above the 20 DMA. Since bond prices fall when yields rise, this implies those flighty investors who fled euros & other investments because of Greece had backbone transplants last night. I'm sorry, I just don't buy it. 'Tain't nat'ral. Charts at http://schrts.co/vUJO4G

Both Copper & Crude appear to have turned up after vicious drops earlier in the week. Whether that is lasting or temporary is not yet clear.

Today silver rose 12.3 cents (0.8%) to 1546.8 at Comex close. In the aftermarket, I had to pay 1565c to buy silver, so that Comex close smells a little gamey. Gold ended Comex down $1.30 (0.11c) at$1,157.70, but ended the day at $1,164.

Sounds like somebody doesn't want to go home for the weekend without some silver & gold.

One item I left out of my discussion of the Dow in Gold & Dow in Silver above. They address my apprehension that silver & gold might plunge to the $1,000 or 800c some analysts keep thumping for. If stocks moved higher, then the DiG & DiS could only maintain that top Gator Jaw if metals, too, moved up in step with stocks. Being stalled at their highs for eight months whispers loudly that stocks aren't going much higher, at least, not higher against silver & gold. Mathematically it's also possible that stocks might drop while metals drop, too, but then I'll play the metals seasonal low card. That seems to halt that possibility.

Gold this week traded down to trendlines I've been watching, especially the uptrend from the November low, and successfully bounced off. However, that's like saying, I'm glad I didn't have much money in it when they stole my wallet. Gold needs positive proof of a turnaround, some sign, but it has not yet given that. Buying here you're guessing we've seen the low, but you're only guessing. Chart's at http://schrts.co/mQFRFr

Silver actually posted a key reversal followed by two days' higher closes. This implies a rally of some magnitude, yet silver has not yet crossed the rally tripwire (the 20 DMA). Momentum & trend indicators are turning up. Next week could be a higher week -- much higher. If so, it will start higher on Monday. http://schrts.co/vbydI7

In an article entitled "Why Do They Hate The South & Its Symbols" the ever articulate and insightful Paul Gottfried from Connecticut explains what the assault on the South really means, and what motivates it. http://bit.ly/1HS7rC6 I highly recommend you read it to clear your system of hogwash & lies.

Yesterday evening I began to send out that paragraph about South Carolina removing the Confederate flag from the capitol, then recalled that it was July the Ninth & saved that to use today and wrote this. Then I confused the files & sent the wrong one. This should have flown on July ninth, but I'll do it nunc pro tunc, now for then:

THIS MORNING in the ordinary course of my reading I read Psalm 66:

Thou, O God, has proved us;

Thou also hast tried us, like as silver is tried.

Thou broughtest us into the snare;

And laidest trouble upon our loins.

Thou sufferedst men to ride over our heads;

We went through fire and water,

And thou broughtest us out into a wealthy place.

Immediately those words reminded me what God did for us during our federal trial and on when we (my wife & I & 14 others) were acquitted on 9 July 1991, 24 years ago today.

God proved us and plunged us into the fiery furnace over and over to purge our unbelief, doubt, mistrust, and ridiculously low estimation of his power & great love for us. Over and over we were tempted to waver like Israel, not sure whether the federal government was god, as it claims, or whether God is God.

From our arrest on 9 January 1990 until our acquittal on 9 July 1991, look what happened! God allowed us to fall into their trap and humiliate us, he let the whole world assume that "there is no help for them in their God," he let them attack us with what seemed to be all the money and men and scorn in the world.

But the federal government is not god: God is God, God remains God, and on 9 July 1991 and since he has brought us out into a wealthy place, a place of joy and health and well being for body and soul.

How can we praise you rightly, O God? Put into our mouths a new song, new words that can rise high enough to praise your faithfulness & glory & unspeakable love and power!

Y'all can read about those events here, http://bit.ly/1JSHu5D

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
10-Jul-15 Price Change % Change
Gold, $/oz 1,157.70 -1.30 -0.1
Silver, $/oz 15.47 0.13 0.8
Gold/Silver Ratio 74.845 -0.090 -0.1
Silver/Gold Ratio 0.0134 0.0001 0.8
Platinum 1,032.30 9.40 0.9
Palladium 649.35 12.35 1.9
S&P 500 2,076.62 25.31 1.2
Dow 17,760.41 211.79 1.2
Dow in GOLD $s 317.13 4.17 1.3
Dow in GOLD oz 15.34 0.20 1.3
Dow in SILVER oz 1,148.20 4.23 0.4
US Dollar Index 96.17 -0.62 -0.6
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SPOT GOLD: 1,163.00      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,199.05 1,203.71 1,203.71
1/2 AE 0.50 592.62 613.48 1,226.97
1/4 AE 0.25 299.22 312.56 1,250.23
1/10 AE 0.10 122.01 127.35 1,273.49
Aust. 100 corona 0.98 1,134.27 1,143.27 1,166.37
British sovereign 0.24 275.82 288.82 1,226.95
French 20 franc 0.19 218.76 222.76 1,193.15
Krugerrand 1.00 1,181.61 1,191.61 1,191.61
Maple Leaf 1.00 1,171.00 1,187.00 1,187.00
1/2 Maple Leaf 0.50 668.73 610.58 1,221.15
1/4 Maple Leaf 0.25 296.57 311.10 1,244.41
1/10 Maple Leaf 0.10 123.28 126.77 1,267.67
Mexican 50 peso 1.21 1,395.10 1,406.10 1,166.21
.9999 bar 1.00 1,167.07 1,175.00 1,175.00
SPOT SILVER: 15.61      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 23.00 26.00 33.99
VG+ Peace dollar 0.77 18.50 21.00 27.45
90% silver coin bags 0.72 13,020.15 13,377.65 18.71
US 40% silver 1/2s 0.30 4,413.20 4,563.20 15.47
100 oz .999 bar 100.00 1,551.00 1,601.00 16.01
10 oz .999 bar 10.00 155.10 160.60 16.06
1 oz .999 round 1.00 15.71 16.21 16.21
Am Eagle, 200 oz Min 1.00 17.11 17.96 17.96
SPOT PLATINUM: 1,032.30      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Platinum Platypus 1.00 1,047.30 1,077.30 1,077.30
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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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