The Moneychanger
Daily Commentary
Tuesday, 21 June a.d. 2016 Browse the commentary archive

Several futures brokerages in the US and Europe -- NOT the exchanges -- have DOUBLED margins on silver, gold, and currencies. The change was scheduled to take place with yesterday's close, but after customers complained some brokers put it off until tonight. It's to be rescinded after Friday's close. This allegedly will prevent speculation on the Brexit outcome. Right. Sure. Some of the cynical say the real purpose is to suppress silver & gold. Me, I ain't got a cynical bone in my whole loose-jointed, raw-boned body.

Yesterday I neglected to observe something. Y'all remember that big jump in stocks that everybody was jubilatin' about? Truth is, the Dow shot up 271 points, but gave back half of that to end the day up only 129.71. Spongy, folks, spongy.

Today the Dow barely stayed above its intertwined 20 & 50 day moving averages. Rose 24.86 (0.14%) to 17,829.73. S&P500 added 5.65 (0.27%) to 2,088.90. Hurts me to think about the pain coming when stocks hit the skids. Soon.

Y'all ever notice that when there's a fly in the room, he's never content to mind his business & let you mind yours? Always has to buzz around your head & land on your head & fly into your face until finally, with all the philosophical humanitarianism in the world you have to pull out the swatter and SMACK him. I hate to do that, because the fly is the national bird of my county.

US dollar index found some go-juice today and rose 42 basis points (0.45%) to 94.11. That closes it right on the upper channel downtrend line, blowing hot & cold out of both sides of its mouth. Dollar index will prove nothing until it rises & soars above the June high at 95.905.

Sorry, scurvy euro, which rose 0.28% yesterday in the Fantasyland Frenzy, sobered up today with a 0.53% drop to 41.1251, just above the 20 DMA & looking ready to die. Japanese yen plumped down a massy 0.93% to close today at 95.38. Needs one more gap down to complete that island reversal, but it's trying hard.

Glance at Gold's chart here,

Silver's chart hideth here,

Big break came in metals today. Gold like a meteor swooped $19.50 (1.5%) nearer the earth. Silver tumbled 19.2¢ (1.1%) to 1731.1¢.

I expect this to be a shallow correction, say to $1,260 gold, where lieth roughly the 50 day moving average and a 50% correction of the last rise. For silver, look for 1685¢ to 1660¢, a little beneath the 50 DMA. If they exceed those marks, then we are dealing with a different sort of correction, and deeper. At most that might extend to 1600¢ & $1,250.

Don't fuss at me, I'm just the reader and trying hard to be a realist. This is the very short term (next week) outlook. Brexit might skew everything in a way we don't yet know to expect. A vote FOR Brexit surely wouldn't hurt silver & gold, but go or stay, the effect won't last long.

On 21 June 1834 Cyrus McCormick patented the first practical mechanical reaper. His invention allowed farmers to more than double their crop size. Whether this was a good thing or not depends on your viewpoint.

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
21-Jun-16 Price Change % Change
Gold, $/oz 1,270.50 -19.50 -1.51%
Silver, $/oz 17.31 -0.19 -1.10%
Gold/Silver Ratio 73.393 -0.309 -0.42%
Silver/Gold Ratio 0.0136 0.0001 0.42%
Platinum 981.10 -5.70 -0.58%
Palladium 554.05 3.50 0.64%
S&P 500 2,088.90 5.65 0.27%
Dow 17,829.73 24.86 0.14%
Dow in GOLD $s 290.10 4.78 1.68%
Dow in GOLD oz 14.03 0.23 1.68%
Dow in SILVER oz 1,029.97 12.72 1.25%
US Dollar Index 94.11 0.42 0.45%
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SPOT GOLD: 1,267.90      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,299.60 1,310.37 1,310.37
1/2 AE 0.50 646.12 668.82 1,337.63
1/4 AE 0.25 326.23 340.75 1,362.99
1/10 AE 0.10 133.02 138.84 1,388.35
Aust. 100 corona 0.98 1,236.58 1,245.58 1,270.74
British sovereign 0.24 300.70 313.70 1,332.63
French 20 franc 0.19 238.49 242.49 1,298.83
Krugerrand 1.00 1,278.04 1,288.04 1,288.04
Maple Leaf 1.00 1,277.90 1,291.90 1,291.90
1/2 Maple Leaf 0.50 729.04 665.65 1,331.30
1/4 Maple Leaf 0.25 323.31 339.16 1,356.65
1/10 Maple Leaf 0.10 134.40 138.20 1,382.01
Mexican 50 peso 1.21 1,519.41 1,530.41 1,269.31
.9999 bar 1.00 1,272.34 1,279.90 1,279.90
SPOT SILVER: 17.27      
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 12,562.55 12,847.55 17.97
US 40% silver 1/2s 0.30 4,976.65 5,138.65 17.42
100 oz .999 bar 100.00 1,752.00 1,777.00 17.77
10 oz .999 bar 10.00 174.20 179.20 17.92
1 oz .999 round 1.00 17.37 17.83 17.83
Am Eagle, 200 oz Min 1.00 18.77 20.02 20.02
SPOT PLATINUM: 981.10      
Plat. Platypus 1.00 996.10 1,026.10 1,026.10
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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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