The Moneychanger
Daily Commentary
Monday, 20 June a.d. 2016 Browse the commentary archive

Daddurn! Somehow the whole globe slipped through a dimensional warp and landed back in the Best of All Possible Worlds! All the media played the same script today, "Polls show Brexit will fail, better buy stocks & euros & sell gold & bonds!" Why, ain't it a wonder how fast minds change?

'Cept that's all hogwash. First place, (with all due respect to the Brits) Brexit yea or nay won't make a hill of beans to global economic outcome. That failure has been baked in by central banks over the last 20 years pumping up credit/debt into a debt bubble that is already bursting & will take years to clean up. Next, 'tain't a durned thing in the present stock, market or economy that would give any rational person the expectation of better economic performance in the next five years. Everything will be dragged down by the debt albatross until at last the jubilee is declared, either by hyperinflating the debt away (God forefend!) or by outright default & jubilee.

Notwithstanding sanity, lemming investors, anxious to get a place nearer the cliff, poured into global stock markets today, bought euros, dumped bonds & dollars, & sold a teentch of gold.

Y'all better hope that the Nice Government Men are manipulating the US dollar down to keep up the euro in the teeth of the Brexit vote. If they're not, then that scrofulous, mangy cur is sick, sick, sick, & that promises some real pain for the US & world economies. Look at the chart,

Today the dollar index fell a meaty 66 basis points or 0.7%.

The US dollar index has been trending down since 2 December 2015. I've defined the downtrend channel from February by red lines. Notice that twice (End June & mid-June) the dollar index tried & did break through that upper boundary, only to fall shamefully back within the channel, leaving lower peaks behind. Today it gapped down & fell back into the channel. Momentum is down, down, & the dollar index is trapped below its 50 & 20 day moving averages.

Mmmm, add it up on your fingers: two failed breakouts, back into the old channel, momentum down, declining peaks. Not sanguine.

Of course, it also sets up a trap for dollar bears should Brexit brex. Everybody short dollars & long euros & stocks will be puking into their wastebaskets with one hand & selling with the other, praying they can buy dollars.

Now look at the euro's chart, Don't forget to hold your nose. Get a whiff of that thing & you're liable to puke. It's gangrenous.

Observe that two days ago it punched through its bottom channel boundary and nearly hit the 200 DMA, threatening to collapse. Whoops, handily, conveniently the US dollar reversed & the euro shot up. Yeah, right. Memorex? Euro rose 0.28% today to $1.1307.

And, call me a nat'ral born durn Tennessee fool, but that Yen has been on a tear that looks for all the world like an Island Reversal. Today alone it jumped 0.29% to 96.27. Big fall coming if it is an IR. (I quote "cents per 100 yen." It is also quoted as "Yen per dollar", the reciprocal. 96.27 ¢/100Y = Y103.87/US$1).

US 10 year treasury note yield gapped up today on news of the New Millennium As investors dumped bonds to be able to buy them stocks before they were all gone, bond prices dropped. Yield close today at 1.670%, up 3.21% from yesterday.

On Comex, where they take no prisoners, Gold fell 0.2% or $2.50 to $1,290.00. Silver gainsaid gold by rising 10.3¢(0.35%) to 1750.3¢.

Silver & gold have both painted secondary peaks that call for a little correction here. I say "little" because I mean "little." Say Gold might back off to $1,260, about the 50 DMA. Ever more volatile, silver might fall back to 1685¢ or 1650¢.

Other than a swiftly passing nudge, I don't expect the Brexit vote one way or t'other will change silver & gold's course. That is set, & aimed very much higher. After winding sideways the rest of the summer, sometime in August or September they will wax utterly serious about rising. Y'all better get ready now by buying whenever the golden & silver tail feathers droop.

On 20 June 1837 Queen Victoria ascended the throne of the United Kingdom following the death of her uncle, King William IV.

On 20 June 1863 West Virginia because the first state to join the US by seceding from another state. For somebody so much otherwise opposed to secession, Abe Lincoln was strangely submissive about this one.

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-Jun-16 Price Change % Change
Gold, $/oz 1,290.00 2.50 0.19%
Silver, $/oz 17.50 0.10 0.59%
Gold/Silver Ratio 73.702 -0.293 -0.40%
Silver/Gold Ratio 0.0136 0.0001 0.40%
Platinum 986.80 21.10 2.18%
Palladium 550.55 17.90 3.36%
S&P 500 2,083.25 12.03 0.58%
Dow 17,804.87 129.71 0.73%
Dow in GOLD $s 285.32 1.53 0.54%
Dow in GOLD oz 13.80 0.07 0.54%
Dow in SILVER oz 1,017.25 1.43 0.14%
US Dollar Index 93.68 -0.66 -0.70%
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: 1,290.40      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,322.66 1,333.63 1,333.63
1/2 AE 0.50 657.59 680.69 1,361.37
1/4 AE 0.25 332.02 346.80 1,387.18
1/10 AE 0.10 135.39 141.30 1,412.99
Aust. 100 corona 0.98 1,258.53 1,267.53 1,293.13
British sovereign 0.24 306.04 319.04 1,355.30
French 20 franc 0.19 242.72 246.72 1,321.50
Krugerrand 1.00 1,300.72 1,310.72 1,310.72
Maple Leaf 1.00 1,300.40 1,314.40 1,314.40
1/2 Maple Leaf 0.50 741.98 677.46 1,354.92
1/4 Maple Leaf 0.25 329.05 345.18 1,380.73
1/10 Maple Leaf 0.10 136.78 140.65 1,406.54
Mexican 50 peso 1.21 1,546.37 1,557.37 1,291.67
.9999 bar 1.00 1,294.92 1,302.40 1,302.40
SPOT SILVER: 17.50      
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 12,727.00 13,012.00 18.20
US 40% silver 1/2s 0.30 5,044.50 5,206.50 17.65
100 oz .999 bar 100.00 1,775.00 1,800.00 18.00
10 oz .999 bar 10.00 176.50 181.50 18.15
1 oz .999 round 1.00 17.60 18.06 18.06
Am Eagle, 200 oz Min 1.00 19.00 20.25 20.25
SPOT PLATINUM: 986.80      
Plat. Platypus 1.00 1,001.80 1,031.80 1,031.80
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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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