The Moneychanger
Daily Commentary
Monday, 11 July a.d. 2016 Browse the commentary archive

Bull markets climb a wall of worry, saith the market proverb.

What does that mean? That all sorts of reasons abound why a market in bull heat should no go higher, but it does anyway. So people worry and worry about this force or that killing the rise, but it keeps on climbing that wall of worry.

Case you don't get it, I am talking about gold & silver right now. Overbought can get overboughter.

S&P500 closed today up 7.26 (0.34%) at 2,137.16, higher than its 21 May 2015 all-time high at 2,130.82. Dow did not close above its 21 May 2015 all-time high at 18,312.39, but at 18,226.93, up 80.19 (0.44%) from Friday.

Guess that leaves me with egg all over my face, huh? Nope. 'Twill be a gorgeous, textbook double top, but I don't really care one way or the other because instead of watching the price of stocks in paper dollars, I watch their price in gold and silver, the only money that matters 'cause it can't be printed. In gold terms the Dow closed today at 13.44 oz, not much above its February low at 12.558 oz. In silver terms the Dow costs 895.23 oz, lowest price since September 2014.

However long & tortuously stocks stretch out their top in dollar terms, they long ago (December 2015) turned down against precious metals. Thus it is not want of imagination that keeps me repeating "Sell stocks & put the proceeds in silver & gold," but a want of gullibility. I have been immunized against Wall Street & central bank propaganda.

US dollar index closed above 96.50 today, up 26 basis points (0.27%) at 96.59. At last! A close above the 200 DMA (96.53). Maybe now the US dollar index can move higher. Yen gapped down today & lost 2.17% to 97.26. What happened? The ruling Liberal Democratic party was re-elected in a landslide, which promises more loony Abenomics and more yen-depreciation.

Gold backed off an insignificant $1.60 to $1,355.00. Silver added 20.6¢ (1%) to 2026.4¢, highest close since 1 August 2014, nearly two years.

Silver has already conquered its downtrend line from the 2011 high, and now gold is tapping on the same line overhead. A close above $1,377 pushes gold through, and buyers will jump on gold like ugly on an ape. Gold's hesitation at this momentous threshold ought not surprise y'all. It will be a big step, and plenty of sellers know that & are lurking there to sell. Gold WILL break through, sooner rather than later.

Y'all should not confound my late enthusiasm for silver & gold with those broken records who continually repeat "$10,000 gold!" and "$500 silver!" I have reasons for my optimism, most of them right there in the chart. This leg up is baby-new, and has a long, long way to grow.

Premium on US 90% silver coin today fell to 40¢ an ounce over spot, below the 50¢ an ounce over spot wholesale cost of one ounce silver rounds. That is a whispering sign that silver is getting very high. Down below $17.00 spot, the premium rose to $5.00/ oz. [sic].

Premium on Austrian 100 coronas also fell so they now cost at wholesale about $3.00 under spot. Can't figure out for the life of me why customers walk past Austrian 100 coronas and pay more than $40/oz more for gold American Eagles. Gold is gold.

For years I've been warning gold investors to stay out of high-premium gold coins, especially numismatics, because the premium would disappear. Turns out I was right: it has vanished. However, now the premium on US $20 gold pieces minted before 1935 has fallen so low that there's a chance they will gain premium in the future. I was right before, & I might be right again. Ask us about US$20s when you're buying gold.

Speaking of that, the US $5 gold commemoratives minted from 1986-2008 are still a wondrously thrifty buy. They cost about 3.5% over melt at retail, way less than 7% premium one ounce American Eagles, AND they're a fractional coin (0.2418 oz). The $10 commems are trading at the same premium, and they're 0.48375 oz. This is a temporary market quirk y'all ought to take advantage of.

Argentum et aurum comparanda sunt —
Silver and gold must be bought.

— Franklin Sanders, The Moneychanger

Your source for gold and silver. Read our latest reviews and testimonials.
Market Snapshot See more charts and market data
11-Jul-16 Price Change % Change
Gold, $/oz 1,355.00 -1.60 -0.12%
Silver, $/oz 20.26 0.21 1.03%
Gold/Silver Ratio 66.867 -0.767 -1.13%
Silver/Gold Ratio 0.0150 0.0002 1.15%
Platinum 1,104.70 7.70 0.70%
Palladium 625.80 8.20 1.33%
S&P 500 2,137.16 7.26 0.34%
Dow 18,226.93 80.19 0.44%
Dow in GOLD $s 278.07 1.55 0.56%
Dow in GOLD oz 13.45 0.07 0.56%
Dow in SILVER oz 899.47 -5.24 -0.58%
US Dollar Index 96.59 0.26 0.27%
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: 1,354.50      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,387.01 1,399.88 1,399.88
1/2 AE 0.50 690.29 714.50 1,429.00
1/4 AE 0.25 348.53 364.02 1,456.09
1/10 AE 0.10 140.76 148.32 1,483.18
Aust. 100 corona 0.98 1,315.73 1,324.73 1,351.49
British sovereign 0.24 321.24 334.24 1,419.88
French 20 franc 0.19 254.78 258.78 1,386.08
Krugerrand 1.00 1,363.98 1,373.98 1,373.98
Maple Leaf 1.00 1,364.50 1,378.50 1,378.50
1/2 Maple Leaf 0.50 778.84 711.11 1,422.23
1/4 Maple Leaf 0.25 345.40 362.33 1,449.32
1/10 Maple Leaf 0.10 143.58 147.64 1,476.41
Mexican 50 peso 1.21 1,624.82 1,635.82 1,356.74
.9999 bar 1.00 1,359.24 1,366.50 1,366.50
SPOT SILVER: 20.32      
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 14,528.80 14,813.80 20.72
US 40% silver 1/2s 0.30 5,876.40 6,038.40 20.47
100 oz .999 bar 100.00 2,057.00 2,082.00 20.82
10 oz .999 bar 10.00 204.70 209.70 20.97
1 oz .999 round 1.00 20.42 20.88 20.88
Am Eagle, 200 oz Min 1.00 22.07 23.07 23.07
SPOT PLATINUM: 1,104.70      
Plat. Platypus 1.00 1,119.70 1,149.70 1,149.70
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© 2015 Little Mountain Corporation, d.b.a. The Moneychanger. All rights reserved. May not be republished in any form, including electronically, without our express permission.

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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