The Moneychanger
Daily Commentary
Thursday, 7 July a.d. 2016 Browse the commentary archive

Here's an interesting article y'all need to read, http://bit.ly/29qv9Zx It's from Zero Hedge, entitled "For Stan Druckenmiller This is 'The Endgame' - His Full 'Apocalyptic' Presentation." Want to know what's happening, from somebody who actually has his head screwed on straight? Read it.

That Gold platinum spread I wrote about not long ago (pointing y'all to Bob Moriarty's article) has dropped from $374.40 on 24 June to $267 today, down $107.40 or 28.7%. It has also broken down through the uptrend line from 2014. Chart's at http://schrts.co/qyWikt

Lacking any other way to torture myself, I stayed up last night reading articles about the European banking crisis. I cannot recommend this as a route to a good night's sleep. One of the forces making gold & silver more and more attractive is the Unattractiveness of leaving money in a bank. If the last 8 years have taught us anything, it's that the banks will steal depositors' money, with government approval. And that no matter how crooked they are, Washington will give the banks whatever they want, and the taxpayer & public be damned.

That ain't an arena I want to loan a lot of money to, so as far as I am able, I am not loaning any more to banks -- and yes, when you "deposit" money you are loaning it to the bank.

More on a possible financial crisis unfolding: seven (7) UK "property funds" have frozen redemptions (think "locked the doors during a bank run"). They are open ended real estate funds, & investors have run the funds with withdrawals, so many that the funds have halted trading. The fund's real estate assets, of course, cannot readily be sold to meet demands for cash. Yes, this IS a "liquidity crisis," another name for "financial panic." Can you spell B-E-A-R S-T-E-A-R-N-S?

Y'all know how to stay out of a bar fight, right? Leave the bar before the fight breaks out. How do you stay out of a banking financial panic? Y'all fill in the blanks.

Stocks swooned today. Dow wilted at 17,984.95, and ended 222.74 (0.13%) lower for the day at 17,816.65. S&P500 tilted over 1.83 (0.09%) to 2,097.90.

The coming stock market debacle, whether it commenceth from here or higher, will be the stupor mundi, the wonder of the world in economic history. Why? Because the Fed's refusal to let go & let the market correct has repeatedly suppressed corrections, so that now the spring has been would so tight & values so overblown, that this will be a Bust for the Ages.

What keeps bothering me about the US dollar index, which today gained 0.2% or 19 basis points to 96.32, is the nagging idea that the Nice Government Men might NOT be manipulating it downward. That is, that the dollar's stubborn, feckless weakness is truly its own, so the market is foretelling horrifying wretchedness in the dollar's future. Naw, it must be the NGM. Europe coming apart has to be sending gobs of money fleeing into dollars. Thus sayeth US government treasury securities at or near all time highs.

To show any strength at all, the dollar index must cross above its 200 DMA (96.53) soon.

Euro dropped 0.36% to $1.1062. Yen rose 0.6% to 99.27. That's nearly plumb par to the dollar (100¢=Y100).

Was anyone surprised when Comex gold backed off $4.80 (0.4%) to $1,360.10, or silver crawfished 36.2¢ (1.8%) to 1979.8¢? This comes after 5 days of manic rises -- so stop & blow a minute.

The rally has not ended. Gold may backtrack as far at $1,340 before it turns up again. Silver to 1920¢ or even 1900¢. The rally will resume, & quickly.

Y'all may remember Clint Eastwood in The Outlaw Josie Wales. "When things look bad and it looks like you're not gonna make it, you gotta get MEAN. I mean, plumb, mad dog mean."

Looks like silver & gold took Clint's advice, and they are stagin' one "plumb, mad dog mean" rally.

On 7 July 1917 Aleksandr Kerensky formed a provisional government in Russia. He later was ousted in a coup by the communists under Lenin. Kerensky was nice. Lenin was mean. Most folks dealing with communists made that mistake, when nothing but plumb, mad dog mean could beat 'em.

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
7-Jul-16 Price Change % Change
Gold, $/oz 1,360.10 -4.80 -0.35%
Silver, $/oz 19.80 -0.36 -1.80%
Gold/Silver Ratio 68.699 0.995 1.47%
Silver/Gold Ratio 0.0146 -0.0002 -1.45%
Platinum 1,091.10 4.20 0.39%
Palladium 612.85 4.80 0.79%
S&P 500 2,097.90 -1.83 -0.09%
Dow 17,816.65 -22.74 -0.13%
Dow in GOLD $s 270.79 0.61 0.22%
Dow in GOLD oz 13.10 0.03 0.22%
Dow in SILVER oz 899.92 15.03 1.70%
US Dollar Index 96.32 0.19 0.20%
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: 1,359.60      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,393.59 1,405.15 1,405.15
1/2 AE 0.50 692.89 717.19 1,434.38
1/4 AE 0.25 349.84 365.39 1,461.57
1/10 AE 0.10 141.29 148.88 1,488.76
Aust. 100 corona 0.98 1,323.35 1,332.35 1,359.26
British sovereign 0.24 322.45 335.45 1,425.02
French 20 franc 0.19 255.74 259.74 1,391.22
Krugerrand 1.00 1,369.12 1,379.12 1,379.12
Maple Leaf 1.00 1,369.60 1,383.60 1,383.60
1/2 Maple Leaf 0.50 781.77 713.79 1,427.58
1/4 Maple Leaf 0.25 346.70 363.69 1,454.77
1/10 Maple Leaf 0.10 144.12 148.20 1,481.96
Mexican 50 peso 1.21 1,630.94 1,641.94 1,361.81
.9999 bar 1.00 1,364.36 1,371.60 1,371.60
SPOT SILVER: 19.71      
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 14,235.65 14,520.65 20.31
US 40% silver 1/2s 0.30 5,696.45 5,858.45 19.86
100 oz .999 bar 100.00 1,996.00 2,021.00 20.21
10 oz .999 bar 10.00 198.60 203.60 20.36
1 oz .999 round 1.00 19.81 20.27 20.27
Am Eagle, 200 oz Min 1.00 21.46 22.46 22.46
SPOT PLATINUM: 1,091.10      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,106.10 1,136.10 1,136.10
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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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