The Moneychanger
Daily Commentary
Wednesday, 6 July a.d. 2016 Browse the commentary archive

'Tis worth remembering that when gold hit $1,900 in August & September 2011, a European bank problem was the main driver. Well, looky here: we've got a European bank problem again!

Mark also that a rising dollar has not deterred rising silver & gold prices. If the present situation were to transmogrify into a full-blown financial panic, it is NOT unrolling as 2008 did. In March 2008 gold peaked at $1,003, made a secondary peak in July, collapsed into September, rallied, and then the bottom fell out to $681 intraday in October.

Point is, gold's price never benefitted from the panic as it has done this year & since Brexit. Note also that 2008 did not come after a five year bear phase had wrung all the excess out of gold's price. All this applies to silver as well.

A change of investor behavior has occurred. They are treating precious metals as currencies alternative to and safer than central bank currencies. Not everybody, but the shift has begun.

Another reason silver may have gone hog-wild the last few days: the Chinese are big gamblers looking for the next casino, as witnesseth what happened in Chinese iron and base metals markets earlier this year. Day traders bent them all out of shape -- not to be desired for silver.

I am so suspicious I'm ashamed of myself. I signed up for the STOXX 600 financials index, which includes the biggest European banks. I wanted to check the index. Today I got an "Information Update" from STOXX that "Due to technical issues" that index & several others just weren't working. Made me wonder whether the mass of traffic trying to watch those indices had glitched the system, or whether some NGM might have pulled the plug to limit panic. Why am I so suspicious? I reckon because I've been lied to so often by so many experts and official spokesthings.

Stocks lifted their heads up from their sickbeds -- in that sense they "rose." Dow gained 78 (0.44%) to 17,918.62 while the S&P500 added 11.18 (0.54%) to 2,099.73. Just like I used to tell my kids about popping each other with towels: "This will end badly."

US dollar index just can't establish a winning streak. Lost 14 basis points today (0.14%) to 96.12. Poked up into the 200 day moving average overhead, then tucked tail & ran. Meanwhile, the 30 year US bond is at an all time price high and the 10 year note ain't far from it. Lessee, somebody's buying so many bonds (denominated in US dollars) that they have pushed the price to all time highs, but the dollar is dropping? Don't make no sense, & when things don't make no sense, there's usually a Nice Government Man hiding behind the curtain.

Gold gobbled up another $8.50 (0.6%) today to $1,364.90. Highest close since March, 2014. Chart's here, go look,

This chart does NOT look like it's going to stop any time soon. It has broken through and closed above its overhead channel line three days running. Is it overbought? Worse than loud perfume at an old ladies' convention, but it can get overboughter still. Fixin' to hit that downtrend line from the 2011 high about $1,450. Don't y'all lift your eyebrows at me. Gold can very well make it that far. I'm not studying any correction till it does, either.

Silver climbed 29.4¢ (1.5%) to 2016¢. Highest close since August 2014. Behold the chart, hammering through the overhead channel line,

Let me throw all coyness to the winds: Silver & gold will go much higher from here.

On 6 July 1932 the rate for first class US mail increased from 2¢ to 3¢. Shucks, y'all wouldn't even bend down to pick up 3¢ today.

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
6-Jul-16 Price Change % Change
Gold, $/oz 1,364.90 8.50 0.63%
Silver, $/oz 20.16 0.29 1.48%
Gold/Silver Ratio 67.703 -0.574 -0.84%
Silver/Gold Ratio 0.0148 0.0001 0.85%
Platinum 1,086.90 14.50 1.35%
Palladium 608.05 4.90 0.81%
S&P 500 2,099.73 11.18 0.54%
Dow 17,918.62 78.00 0.44%
Dow in GOLD $s 271.38 -0.51 -0.19%
Dow in GOLD oz 13.13 -0.02 -0.19%
Dow in SILVER oz 888.82 -9.23 -1.03%
US Dollar Index 96.26 0.54 0.56%
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: 1,363.70      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,399.16 1,409.38 1,409.38
1/2 AE 0.50 694.98 719.35 1,438.70
1/4 AE 0.25 350.90 366.49 1,465.98
1/10 AE 0.10 141.72 149.33 1,493.25
Aust. 100 corona 0.98 1,327.34 1,336.34 1,363.34
British sovereign 0.24 323.42 336.42 1,429.15
French 20 franc 0.19 256.51 260.51 1,395.35
Krugerrand 1.00 1,374.61 1,384.61 1,384.61
Maple Leaf 1.00 1,373.70 1,387.70 1,387.70
1/2 Maple Leaf 0.50 784.13 715.94 1,431.89
1/4 Maple Leaf 0.25 347.74 364.79 1,459.16
1/10 Maple Leaf 0.10 144.55 148.64 1,486.43
Mexican 50 peso 1.21 1,635.86 1,646.86 1,365.89
.9999 bar 1.00 1,368.47 1,375.70 1,375.70
SPOT SILVER: 20.11      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 23.00 27.00 35.29
VG+ Peace dollar 0.77 18.00 20.00 26.14
90% silver coin bags 0.72 14,518.08 14,803.08 20.70
US 40% silver 1/2s 0.30 5,812.98 5,974.98 20.25
100 oz .999 bar 100.00 2,035.50 2,060.50 20.61
10 oz .999 bar 10.00 202.55 207.55 20.76
1 oz .999 round 1.00 20.21 20.67 20.67
Am Eagle, 200 oz Min 1.00 21.86 22.86 22.86
SPOT PLATINUM: 1,086.90      
Plat. Platypus 1.00 1,101.90 1,131.90 1,131.90
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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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