The Moneychanger
Daily Commentary
Monday, 20 July a.d. 2015 Browse the commentary archive

Y'all remember those puzzles they used to have when we were children (back when dirt was young) where you had to locate all ten things that were out of place? For instance, the pig in the picture picking his teeth with a radio, or a hummingbird with a saddle on his back. Today we're going to look for what doesn't fit.

Gold plummeted $25.10 (2.2%) to $1,106.70, with a low at $1,080. Silver lost only 7.5 cents (0.5%) to 1474.5c. Gold/Silver ratio dropped 1.7% to 75.056.

Ned Schmidt wrote this morning, "The last time the Street was this bearish on gold was in 2007." I didn't check his numbers, but that sounds about right. Reuters headline today screamed "Morgan Stanley touches 7 year high, Gold touches 5 year low." Perfect headline to show max confidence in financial system and minimum confidence in its opposite, gold, and a metals' low. Other than ridgerunners like me from Tennessee, why, you couldn't find a radioactive gold bug if you had a Geiger counter. Lo, the Fear of Deflation lieth heavy on them all.

Is there any sign at all silver & gold might turn around? Well, no dramatic reversal yet, but other signs that make me scratch my head.

** Gold made a new low for the post 2011 bear market, but the volume. was lower than the 7 November 2014 low at $1,130.40 (250,336 v 285,380).

** Gold punched through its 3 standard deviation lower Bollinger Band.

** Gold's RSI is more oversold today than it was in November 2014.

** MACD, Rate of Change, and Full stochastics are in about the same condition there were last November.

Silver's interesting, too:

** Silver made a new low for this move today at 1449c, but on lower volume than the 7 July low at 1462c (58,621 vs. 87,204). That might -- might -- signal a double bottom.

** at the 7 July low silver punched into its 3-sigma lower Bollinger Band. Today it didn't, although the price was lower.

** Several silver cycles converge here with a target low at 1465c, according to the cycles expert I read. (It give me a headache to do cycles.)

Gold/Silver Ratio is more interesting still.

** The Ratio fell like a plumb bob off a four story wall. That ain't right. That just ain't right. It's one of the biggest plunges of the last 10 months, but when metals are weak silver is almost always weaker than gold. What is this? Gold makes a new bottom, drops 2.2% to a five year low, but silver only drops 1/2%? Ratio drops 1.7%? Ratio closes just barely UNDER the uptrend line from the April 2011 low? Below its 20 DMA? Mercy, the Ratio ought to be RISING but it falls. Y'all look for yourself,

Now add to all that improving Commitments of Traders numbers for silver & gold, & these things don't all fit into the picture of markets about to plunge further.

But them is jus' the observations of a nat'ral born durned fool from Tennessee, & I ain't no millionaire. Shucks, I ain't even hardly a thousandaire.

Other markets jus' seem pale and watery after silver & gold. Stocks tried their best to get up out of bed today, made the effort, then decided just to lie down again. Dow reached as high at 10,137 but ended up only 13.96 (0.08%) at 18,100.41. S&P500 added 1.64 (0.08% to 2,128.28.

US dollar index is running out of fuel fast, tracing out a rising wedge. Rose 17 basis points (0.18%) to 98.16. Whatever it does the rest of its life, looks like it's fixin' to take a leetle rest right here. Euro lost another 0.21% to $1.0808, on it's way to par with the dollar -- or less. Yen lost 0.18% to 80.46.

The other inflation markets, oil & copper, fell modestly today, down 1.06% and 0.88%, but not to hold a candle to gold or silver.

Okay, Moneychanger, what are you saying? I'm saying a lot of things in the silver & gold chart do not look like sharply lower prices are coming immediately. One thing I would like to see is a very sharp reversal day, preferably one that makes a new low by a teentch, then shoots up way higher than the day before's close. Judging by the number of calls we got today, I reckon there are a lot of buyers out there satisfied to buy at these prices.

On 20 July 1944 Adolf Hitler survived an assassination attempt by a bomb placed by Col. Claus von Stauffenberg. The coup failed like the assassination, and the plotters were rounded up and executed. Von Stauffenberg was executed before a firing squad on 21 July 1944. R.I.P.

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
20-Jul-15 Price Change % Change
Gold, $/oz 1,106.70 25.10 2.32%
Silver, $/oz 14.75 0.08 0.51%
Gold/Silver Ratio 75.056 1.327 1.80%
Silver/Gold Ratio 0.0133 -0.0002 -1.77%
Platinum 990.20 -10.80 -1.08%
Palladium 611.05 -6.95 -1.12%
S&P 500 2,128.28 1.64 0.08%
Dow 18,100.41 13.96 0.08%
Dow in GOLD $s 338.09 -7.58 -2.19%
Dow in GOLD oz 16.36 -0.37 -2.19%
Dow in SILVER oz 1,227.56 -5.32 -0.43%
US Dollar Index 98.16 0.17 0.17%
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SPOT GOLD: 1,099.20      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,133.28 1,137.67 1,137.67
1/2 AE 0.50 560.08 579.83 1,159.66
1/4 AE 0.25 282.79 295.41 1,181.64
1/10 AE 0.10 115.31 120.36 1,203.62
Aust. 100 corona 0.98 1,069.89 1,078.89 1,100.69
British sovereign 0.24 260.69 273.69 1,162.67
French 20 franc 0.19 206.76 210.76 1,128.87
Krugerrand 1.00 1,118.99 1,128.99 1,128.99
Maple Leaf 1.00 1,107.20 1,123.20 1,123.20
1/2 Maple Leaf 0.50 632.04 577.08 1,154.16
1/4 Maple Leaf 0.25 280.30 294.04 1,176.14
1/10 Maple Leaf 0.10 116.52 119.81 1,198.13
Mexican 50 peso 1.21 1,318.57 1,329.57 1,102.74
.9999 bar 1.00 1,103.05 1,111.20 1,111.20
SPOT SILVER: 14.73      
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 12,533.95 13,034.45 18.23
US 40% silver 1/2s 0.30 4,153.60 4,303.60 14.59
100 oz .999 bar 100.00 1,463.00 1,513.00 15.13
10 oz .999 bar 10.00 146.30 151.80 15.18
1 oz .999 round 1.00 14.83 15.33 15.33
Am Eagle, 200 oz Min 1.00 16.23 17.08 17.08
SPOT PLATINUM: 990.20      
Plat. Platypus 1.00 1,005.20 1,035.20 1,035.20
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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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