The Moneychanger
Daily Commentary
Wednesday, 1 June a.d. 2016 Browse the commentary archive

I don't know Doug McKelvey and I've never been to Ponca City, Oklahoma, but I most earnestly urge you to read his essay, "100-Year Vision." He captures all we have been trying to do over the past 17 years to live on a 100 year time horizon.

When our community built a church, we built it to last and to be beautiful, specifically, to last at least 100 years. About everything we do and undertake, we try to ask, "What will this look like in 100 years? What will be the 100 year outcome?" McKelvey's article captures all that and more.

US dollar index tucked tail & ran again today. Lost 50 basis points (0.52%) to 95.38. Not to say it won't go higher or has stopped rising, but I wonder why it has been so weak and lazy on this rise.

Yen rose 0.51% to $1.1186 but the yen gapped up 1.09% to 91.31. I search for rationality in the currency markets, but in vain. Finding value there is like a water man trying to climb a water ladder out of an ocean. No traction.

Speaking of water, Stocks were underwater most of the day until the now-accustomed 3:00 "Friendly" time when Big Friends come in to buy so the indices will close up on the day. Why, yes, yes, the Dow rose 2.47 points (0.01%) to 17,789.67, having at one point been languishing nearly 125 lower at 17,665. S&P500 rose 2.37 (0.11%) to 2,099.33, coming up off a low of 2,085.10.

Lest ye be fooled, all these aforenamed tops come at lower levels than foregoing recent tops. Falling tops define a downtrend, I note in passing.

Gold got its head shaved today $2.90, down 0.2% to $1,211.90. Low today again fell at $1,206, so there are buyers clustered there, waiting. Whether they can overcome the sellers remains to be seen.

Silver fell back 6.6¢ (0.4%) to 1590.6¢. A lower low today came at 1583¢.

Gold fell from a high at $1,222.90 around 9:30 to $1,206+ at 1:00. The bounce afterwards wasn't convincing. Silver peaked about the same time, but didn't reach at 1583¢ low until 1:30. Both are simply weak & dropping; indicators do not yet signal a turnaround.

Not really anything clever to say today. The Gold/Silver Ratio closed Comex at 76.191, and has climbed back to that lower range boundary it fell through in April. Chart is here, http://schrts.co/kh9gOy

That Gold/Silver Ratio has reached its 200 DMA. That may satisfy the correction due from its long fall from 84.38 at end-march to 70.40 at end April. Yes, it might rise to 77.42 for a 50% correction.

It catches my eye that the Ratio has formed an up-pointing or rising wedge. That usually resolves earthward. Keep an eye on it. That nearly complete pattern may be pointing to the end of the silver & gold correction.

On 1 June 1796 Tennessee became the 16th state in the Union -- you lucky dogs!

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
1-Jun-16 Price Change % Change
Gold, $/oz 1,211.90 -2.90 -0.24%
Silver, $/oz 15.91 -0.07 -0.41%
Gold/Silver Ratio 76.191 0.133 0.18%
Silver/Gold Ratio 0.0131 -0.0000 -0.17%
Platinum 970.20 -8.50 -0.87%
Palladium 547.30 -0.45 -0.08%
S&P 500 1,099.33 2.37 0.22%
Dow 17,789.67 2.47 0.01%
Dow in GOLD $s 303.44 0.77 0.25%
Dow in GOLD oz 14.68 0.04 0.25%
Dow in SILVER oz 1,118.43 4.78 0.43%
US Dollar Index 95.38 -0.50 -0.52%
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: 1,211.00      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,244.91 1,251.57 1,251.57
1/2 AE 0.50 617.10 638.80 1,277.61
1/4 AE 0.25 311.58 325.46 1,301.83
1/10 AE 0.10 127.05 132.60 1,326.05
Aust. 100 corona 0.98 1,181.09 1,190.09 1,214.13
British sovereign 0.24 287.21 300.21 1,275.31
French 20 franc 0.19 227.79 231.79 1,241.51
Krugerrand 1.00 1,221.90 1,231.90 1,231.90
Maple Leaf 1.00 1,221.00 1,235.00 1,235.00
1/2 Maple Leaf 0.50 696.33 635.78 1,271.55
1/4 Maple Leaf 0.25 308.81 323.94 1,295.77
1/10 Maple Leaf 0.10 128.37 132.00 1,319.99
Mexican 50 peso 1.21 1,452.68 1,463.68 1,213.97
.9999 bar 1.00 1,215.24 1,223.00 1,223.00
SPOT SILVER: 15.93      
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 12,033.45 12,323.45 17.24
US 40% silver 1/2s 0.30 4,581.35 4,743.35 16.08
100 oz .999 bar 100.00 1,618.00 1,643.00 16.43
10 oz .999 bar 10.00 160.80 165.80 16.58
1 oz .999 round 1.00 16.03 16.49 16.49
Am Eagle, 200 oz Min 1.00 17.43 18.68 18.68
SPOT PLATINUM: 970.20      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 985.20 1,015.20 1,015.20
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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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