The Moneychanger
Daily Commentary
Monday, 16 May a.d. 2016 Browse the commentary archive

Silver & gold left me scratching my head today. Here's a 5 month gold chart,

Today gold jumped up as high as $1,290.40, but closed Comex only $1.50 higher at $1,273.40. So it closed about where it opened, and gained very little, after pushing up into new high territory for this short term leg. It tested resistance above $1,288, but was beaten back. That is weak, but gold has stayed above its 20 day moving average, even as it was falling, since 28 April. Meanwhile every analyst is looking at wildly overblown Commitments of Traders wondering why gold -- and silver -- haven't fallen. It's never a good idea to stare a market in the eye saying "You're wrong!" On the other hand, careers are cut short by not respecting warning signs. Musing over the weekend I began to wonder whether gold might be saying, "I'm not going to correct. I'm going to blow the top out of this range and move $50 higher before I correct." In other words, the last 3-1/2 months are beginning to look more like a consolidation than a top.

As long as gold does not fall through that lower range boundary, today about $1,238, no correction & no lower prices are coming. Somebody reminded me today about the 2009-2011 gold market. It just kept trading up & up with hardly a correction. Chart's here, Even those corrections that look large were no more than 15% down from the high, most 10%.

Makes me nervous as a Yankee teetotaler in a Georgia roadhouse, but I have to face the possibility gold & silver will move higher before they correct. Yep, I can feel the limb bouncing underneath me as I pull out my saw.

Silver rose with gold as high as 1743, then faded. Closed Comex 2.7¢ higher at 1714.2¢. On the daily chart silver & gold were chugging right along until 1:30, when somebody on the 2nd floor dropped a piano on their heads.

I'd rather silver & gold corrected so I get a chance to buy them cheaper, but they are refusing to let me tell them what to do.

Stocks surged today as copycat investors sought to sore to the Buffettian empyrean by buying Apple after Warren Buffett's Berkshire-Hathaway reported buying 9 million shares of Apple. Nobody remembered apparently that two weeks ago Carl Icahn announced he sold out his Apple holdings, 52.8 mn shares since February. Good luck, copycats. Apple has a chart that looks like it came out of Nightmare on Elm Street, complete with bloody chain saw: dome top, two gigantic breakdowns. Probably has exhausted the downside for a little while, but appears headed from its present 93.88 to about 65 before the fall has ended, maybe lower.

Dow added 175.38 (1%) for a 17,710.71 close. S&P500 rose 20.056 (0.98%) to 2,066.66. Y'all can get all worked up about stocks' great future if you want, but I will merely point to the chart where the right shoulder of a head & shoulders top is completing. Once that is finished, a large drop will follow, to the tune of weeping, wailing, and gnashing teeth. Wait! Did I leave out "hair-pulling"?

US dollar index stalled again today, beneath the 50 DMA still. Lost 6 basis points (0.06%) to 94.54. Mighty slothful for a mighty currency.

I am most grateful for y'all's continuing prayers for healing after my foot surgery. That rascal toe has hardly hurt, but the whole foot is sort of tuning up today, like an orchestra fixing to play some of that crazy stuff by Bartok or Rachmaninoff. I would be grateful if y'all continued to pray.

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
16-May-16 Price Change % Change
Gold, $/oz 1,273.40 1.50 0.12%
Silver, $/oz 17.14 0.03 0.16%
Gold/Silver Ratio 74.285 -0.030 -0.04%
Silver/Gold Ratio 0.0135 0.0000 0.04%
Platinum 1,053.10 1.20 0.11%
Palladium 590.80 -1.40 -0.24%
S&P 500 2,066.66 20.05 0.98%
Dow 17,710.71 175.39 1.00%
Dow in GOLD $s 287.51 2.51 0.88%
Dow in GOLD oz 13.91 0.12 0.88%
Dow in SILVER oz 1,033.18 8.62 0.84%
US Dollar Index 94.54 -0.06 -0.06%
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: 1,274.80      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,309.22 1,317.51 1,317.51
1/2 AE 0.50 649.64 672.46 1,344.91
1/4 AE 0.25 328.00 342.60 1,370.41
1/10 AE 0.10 133.75 139.59 1,395.91
Aust. 100 corona 0.98 1,243.31 1,252.31 1,277.61
British sovereign 0.24 302.34 315.34 1,339.59
French 20 franc 0.19 239.79 243.79 1,305.79
Krugerrand 1.00 1,286.27 1,296.27 1,296.27
Maple Leaf 1.00 1,284.80 1,298.80 1,298.80
1/2 Maple Leaf 0.50 733.01 669.27 1,338.54
1/4 Maple Leaf 0.25 325.07 341.01 1,364.04
1/10 Maple Leaf 0.10 135.13 138.95 1,389.53
Mexican 50 peso 1.21 1,526.14 1,537.14 1,274.89
.9999 bar 1.00 1,279.26 1,286.80 1,286.80
SPOT SILVER: 17.16      
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 12,805.65 13,345.65 18.67
US 40% silver 1/2s 0.30 4,944.20 5,106.20 17.31
100 oz .999 bar 100.00 1,741.00 1,766.00 17.66
10 oz .999 bar 10.00 173.10 178.10 17.81
1 oz .999 round 1.00 17.26 17.72 17.72
Am Eagle, 200 oz Min 1.00 18.66 19.91 19.91
SPOT PLATINUM: 1,053.10      
Plat. Platypus 1.00 1,068.10 1,098.10 1,098.10
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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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