The Moneychanger
Daily Commentary
Tuesday, 2 February a.d. 2016 Browse the commentary archive

Many thanks for your prayers for Susan's eye surgery last Tuesday. It was successful but more painful in recovery than we anticipated. Today it's improving, but still painful. Please remember her in your prayers.

No market is infinitely flexible. Can't put off a decision forever. Therefore silver & gold must move decisively.

Yes, they'be been trending up since the December low, but now they have come to "Fish or cut bait" time. Sitting slap against the downtrend line from the October 2012 high, slap up against the 200 day moving average ($1,132), gold can't just wilt again. It must clear those points, then climb smartly higher to convince buyers it has some prospect. After 4-1/2 years waiting, investors need persuasion.

In January 2015 gold rallied nearly to that downtrend line, even crossed above its 200 DMA, but failed. In May it reached again toward the line, peeked through the 200 DMA, but fell back. In October it pierced both barriers, only to fizzle out and waterfall to new lows. Chart's here, http://schrts.co/xlyvhj

Understand, when I say gold must fish or cut bait, I'm not just flapping my gums. As if life, if you're not moving forward you're falling back -- soon.

Silver's story is similar. It has formed a bowl since November, & a bowl usually resolves by breaking upward. Lip of the bowl lies about 1440 - 1465. Call it 1465¢ to get plumb clear. Silver tried in December, and failed. Tried again in December, and failed, and has failed twice in January. Keep failing, and the bowl turns into the type that flushes. http://schrts.co/VAFYOi

Silver & gold stalled today. Silver shaved off 5.3¢ to 1427.6 on Comex. Gold scraped off 60¢ to end at $1,127.30.

I think silver & gold are trying to rally, but no breakout, no rally.

Stocks lost big today. Dow tumbled 295.64 (1.8%) to 16,153.54. S&P500 lapsed 36.35 to 1,903.03, down 1.87%. Both closed BELOW their 20 day moving averages, so short term momentum is down although some indicators still point up. Greater volatility points out lower strength. Right now they need lows below 15,450 & 1,812 to turn them down. Probably will work higher so the bear can lure more incautious bovines into his lair, where he can maul them at will.

US dollar index is working hard to appear weak. Today again it tried to break down out of that wedge (or channel) formation earthward. closed below 20 & on the 50 day moving averages, down 16 basis points at 98.86. Where is the strength by which it vaulted on Friday? Vanished. Gone. If the dollar index breaks that 50 DMA (98.85) and that pattern's bottom boundary, there will be nothing to hold it up but Nice Government Men, and I hope they ain't the skinny, wormy ones.

Well, the Weather Terrorists have latched on to me so tight tonight I can't even think about the Zika Virus Terrorists. Something about a tornado warning wondrously concentrates the mind on locating someplace below ground level.

On 2 February 1945 US president Franklin Roosevelt and British PM Winston Churchill left for a summit in Yalta with Soviet dictator Josef Stalin. At the conference Roosevelt and Churchill gave away eastern Europe, building the frame for the Iron Curtain that would fall over Czechoslovakia, Poland, Romania, Bulgaria, Hungary, Yugoslavia, & Albania.

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-16 Price Change % Change
Gold, $/oz 1,127.30 -0.60 -0.05%
Silver, $/oz 14.28 -0.05 -0.37%
Gold/Silver Ratio 78.965 0.250 0.32%
Silver/Gold Ratio 0.0127 -0.0000 -0.32%
Platinum 854.40 -14.40 -1.66%
Palladium 490.60 -11.00 -2.19%
S&P 500 1,903.03 -36.35 -1.87%
Dow 16,153.54 -295.64 -1.80%
Dow in GOLD $s 296.21 -5.26 -1.75%
Dow in GOLD oz 14.33 -0.25 -1.75%
Dow in SILVER oz 1,131.52 -16.45 -1.43%
US Dollar Index 98.86 -0.16 -0.16%
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: 1,129.70      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,155.68 1,176.02 1,176.02
1/2 AE 0.50 575.64 595.92 1,191.83
1/4 AE 0.25 290.64 303.61 1,214.43
1/10 AE 0.10 118.51 123.70 1,237.02
Aust. 100 corona 0.98 1,099.58 1,108.58 1,130.97
British sovereign 0.24 267.93 280.93 1,193.40
French 20 franc 0.19 212.50 216.50 1,159.60
Krugerrand 1.00 1,144.39 1,154.39 1,154.39
Maple Leaf 1.00 1,139.70 1,153.70 1,153.70
1/2 Maple Leaf 0.50 649.58 593.09 1,186.19
1/4 Maple Leaf 0.25 288.07 302.19 1,208.78
1/10 Maple Leaf 0.10 119.75 123.14 1,231.37
Mexican 50 peso 1.21 1,353.79 1,364.79 1,131.95
.9999 bar 1.00 1,133.65 1,141.70 1,141.70
SPOT SILVER: 14.29      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 22.50 26.00 33.99
VG+ Peace dollar 0.77 17.50 20.00 26.14
90% silver coin bags 0.72 11,754.60 12,112.10 16.94
US 40% silver 1/2s 0.30 4,097.55 4,259.55 14.44
100 oz .999 bar 100.00 1,454.00 1,479.00 14.79
10 oz .999 bar 10.00 144.40 149.40 14.94
1 oz .999 round 1.00 14.39 14.85 14.85
Am Eagle, 200 oz Min 1.00 15.79 17.04 17.04
SPOT PLATINUM: 854.40      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 869.40 899.40 899.40
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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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