The Moneychanger
Daily Commentary
Wednesday, 7 October a.d. 2015 Browse the commentary archive

Let me describe for you the painful descent of an old bull after a market has topped, & y'all will have a peek into why it's so hard separate your judgment from your position.

The market suffers a top, then a big crash (stocks in May and August). Although the top screams TOP! off the page, you find eight or ten reasons to cast doubt on the fact that that really is a rounding top, and that plunging collapse really was a breakdown.

The market recovers a little, bounces back as it always does. Your heart leaps. You use that little pitty-pat dead cat bounce to wave in the face of that rounding top and plunge like a magic charm to scare them away. Market rises one more day -- your hopes are steadied, re-assured. You knew it would come back, you only had to wait.

Then you turn on the monitor the next day and it's down 4% on the open. You grab your wastebasket & puke, but still your hope prevents your selling out the position. You puke again, and wonder what you'll tell your wife.

Now this same grim, ulcerating torture follows the market all the way down, eats through all your profits, past where you bought in, now racks up real losses, but now your whole being is identified with the certainty that one day it will come back. You keep riding all the way down until the day that it bottoms, and that's the day you sell out and throw in the towel.

Don't ask me how I learned this, but it's what lies in the future for stock investors today.

Stocks rose again today, fighting with the 50 day moving averages, trying to escape that tanglefoot. Dow added 122.10 (0.73%), S&P500 gained 15.91 (0.8%) to 1,995.83. Don't bother me with counter arguments unless both of them pass by the May highs headed higher, because stocks have topped.

US dollar index barely followed stocks higher today, up 7 basis points from this time yesterday to 95.58. Nothing solid or impressive in today's chart. Remains below the 200 day moving average. Momentum is down, gravity is operational, gravity will do its work.

I expect silver or gold to take a breather here somewhere, but who am I to stand in the way of a rally? Silver gained 10.9 cents (0.7%) to 1608.8c (above 1600c!) while gold added $2.20 to $1,149.00

Clearly silver & gold are slowing here, and gold is laboring to burst through $1,150. Remember yesterday gold closed above its downtrend line from January? It did today, too, although 'twas lower at day's end. Either gold must pierce $1,150 or fall back for rest and another try.

Silver closed today above its 200 day moving average for the first time since May. Last high occurred back then at 1778c. Silver's slowing leaves the thought that it is about to pause, but the strength of this rally whispers it won't pause for long.

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
7-Oct-15 Price Change % Change
Gold, $/oz 1,149.00 2.20 0.19%
Silver, $/oz 16.09 0.11 0.68%
Gold/Silver Ratio 71.420 -0.350 -0.49%
Silver/Gold Ratio 0.0140 0.0001 0.49%
Platinum 944.50 11.50 1.23%
Palladium 698.15 -8.20 -1.16%
S&P 500 1,995.83 15.91 0.80%
Dow 16,912.29 122.10 0.73%
Dow in GOLD $s 304.27 1.62 0.53%
Dow in GOLD oz 14.72 0.08 0.53%
Dow in SILVER oz 1,051.24 0.47 0.04%
US Dollar Index 95.58 0.07 0.07%
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: 1,145.80      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,177.88 1,185.90 1,185.90
1/2 AE 0.50 583.85 604.41 1,208.82
1/4 AE 0.25 294.79 307.93 1,231.74
1/10 AE 0.10 120.20 125.47 1,254.65
Aust. 100 corona 0.98 1,117.50 1,126.50 1,149.25
British sovereign 0.24 271.74 284.74 1,209.62
French 20 franc 0.19 215.53 219.53 1,175.82
Krugerrand 1.00 1,166.42 1,176.42 1,176.42
Maple Leaf 1.00 1,155.80 1,169.80 1,169.80
1/2 Maple Leaf 0.50 658.84 601.55 1,203.09
1/4 Maple Leaf 0.25 292.18 306.50 1,226.01
1/10 Maple Leaf 0.10 121.45 124.89 1,248.92
Mexican 50 peso 1.21 1,371.71 1,382.71 1,146.81
.9999 bar 1.00 1,149.81 1,157.80 1,157.80
SPOT SILVER: 16.09      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 25.00 27.00 35.29
VG+ Peace dollar 0.77 20.00 22.00 28.76
90% silver coin bags 0.72 13,649.35 14,506.85 20.29
US 40% silver 1/2s 0.30 4,554.80 4,804.80 16.29
100 oz .999 bar 100.00 1,634.00 1,659.00 16.59
10 oz .999 bar 10.00 162.40 167.40 16.74
1 oz .999 round 1.00 16.19 16.65 16.65
Am Eagle, 200 oz Min 1.00 17.59 19.09 19.09
SPOT PLATINUM: 944.50      
Plat. Platypus 1.00 959.50 989.50 989.50
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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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