The Moneychanger
Weekly Commentary
Monday, 18 July a.d. 2016 Browse the commentary archive
Here's the weekly scorecard:
  8-Jul-16 18-Jul-16 Change % Change
Silver, cents/oz. 2,005.80 2,004.40 -1.40 -0.1
Gold, dollars/oz. 1,356.60 1,328.40 -28.20 -2.1
Gold/silver ratio 67.634 66.274 -1.360 -2.0
Silver/gold ratio 0.0148 0.0151 0.0003 2.1
Dow in Gold Dollars (DIG$) 276.52 288.40 11.88 4.3
Dow in gold ounces 13.38 13.95 0.57 4.3
Dow in Silver ounces 904.71 924.62 19.91 2.2
Dow Industrials 18,146.74 18,533.05 386.31 2.1
S&P500 2,106.97 2,166.89 59.92 2.8
US dollar index 96.33 96.58 0.25 0.3
Platinum 1,097.00 1,098.50 1.50 0.1
Palladium 617.60 646.55 28.95 4.7

Sorry I missed sending y'all a commentary last two days. Thursday I was speaking in Huntsville & Friday had an appointment with my foot doctor in Chattanooga. Weekend was a tidal wave of emergencies, so here I am, hat in hand, apologizing.

I wanted to send y'all this week-long wrap up. Although I was wrong about silver & gold rising on Thursday & Friday, this little correction will work to our greater advantage. More of that momentarily.

In currencies, the dollar is flat, the euro is broken-backed, and the yen has been collapsing.

US dollar index rose two basis points today to 96.58, about as high as it's been since 24 June, a month ago. Has formed a rising flat triangle, which usually breaks out upside by the height of the triangle. If so, that targets 98.30, OR HIGHER. Can't shake the suspicion the Nice Government Men are suppressing the dollar in favor of the euro. Or else, there are even more fools in the world than I suspect. Chart,

Euro has nothing to recommend it, & now hath formed an even sided triangle that promises to break out downside. See for yourself:

Yen chart looks like it's been sliced with a samurai sword, gapping down thrice. What was left behind looks like an island reversal, but awfully gappy. Today the yen closed 94.21, down 1.18% today and down from 100 six days ago, six percent. Owch. Hath reached the 50 DMA, so might rebound.

Stocks pushed their all time high a little higher today. Dow hit 18,533.05, up 16.50 or 0.09%. S&P rose 5.15 or 0.25% to 2,166.89. This won't last.

This upward reaction in the Dow in Gold has risen to the 50 Day Moving Average, which is another argument that the rise in stocks is ending along with gold's correction. Closed today at 13.94 oz.

The US 10 year treasury note 5 July reached a high at 133.212, highest since 134.97 in 2012. That bond price high was also the yield low (prices & yields move opposite) but the yield has since climbed back to the channel line it fell through in June. In other words, it is close to proving that the rise in bonds/fall in yields is about to turn.

Gold/Bank Index spread has reached the upper channel line it left behind when it broke out upside in June. Also about time to turn around & head up, implying gold is about to rise. Chart's at

Gold today closed up $1.90 at $1,328.40 which silver gainsaid gold, dropping 8.1¢ to 2004.4¢.

Now I am no more'n a nat'ral born durned fool from Tennessee & don't claim a durned thing more, but I'll be switched if I don't see a pennant or flag on the silver chart. Look for your own self,

I know the Commitments of Traders are negative, I know the MACD is high, I know the RSI is over bought, but durn! There 'tis, a pennant. And it's flying off a 540¢ flagpole. Rule of thumb says that "flags always fly at half staff." Thus if that 540¢ is half of the run, and I add 540¢ to the roughly 2000¢ it's likely to take off from, I come up at a durn fool target of 2540¢. And if that makes me so nervous I want to run through briars shirtless, I can move that pole over and say, Naw, it began at 1717¢, & still come up with a 2406¢ target. Heaven he'p me, I still can't help seeing that pennant! Can y'all see it?

Then I turn to the gold chart. Blamed if there ain't a bullish flag there, too. For that I get a puny $1,452.70 target ($124.70 + $1,328), which agrees with targets calculated by other means. Looky here,

Well, y'all can mark me down and chalk me up for a nat'ral born durn fool sure enough if gold closes below $1,320 or silver below 1980¢, 'cause that would knock my flags in the head. Otherwise, they're good. I see 'em.

Another witness silver & gold are going higher: silver continues to rise faster than gold, tugging that gold/silver ratio down Friday to 65.913. Today it closed the End of the Day at 66.22, down 20.3% from the March 1 high at 83.04.

I reckon some fool ought to have told y'all to buy more silver than gold. Durn. He did, didn't he?

Y'all enjoy your weekend (coming up next weekend).

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
18-Jul-16 Price Change % Change
Gold, $/oz 1,328.40 1.90 0.1
Silver, $/oz 20.04 -0.08 -0.4
Gold/Silver Ratio 66.274 0.097 0.1
Silver/Gold Ratio 0.0151 -0.0001 -0.4
Platinum 1,098.50 8.00 0.7
Palladium 646.55 -1.35 -0.2
S&P 500 2,166.89 5.15 0.2
Dow 18,533.05 16.50 0.1
Dow in GOLD $s 288.40 -0.13 -0.0
Dow in GOLD oz 13.95 -0.01 -0.0
Dow in SILVER oz 924.62 4.54 0.5
US Dollar Index 96.58 0.02 0.0
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SPOT GOLD: 1,328.20      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,356.09 1,372.69 1,372.69
1/2 AE 0.50 676.87 700.63 1,401.25
1/4 AE 0.25 341.75 356.95 1,427.82
1/10 AE 0.10 138.03 145.44 1,454.38
Aust. 100 corona 0.98 1,291.49 1,300.49 1,326.76
British sovereign 0.24 315.00 328.00 1,393.39
French 20 franc 0.19 249.83 253.83 1,359.59
Krugerrand 1.00 1,337.50 1,347.50 1,347.50
Maple Leaf 1.00 1,338.20 1,352.20 1,352.20
1/2 Maple Leaf 0.50 763.72 697.31 1,394.61
1/4 Maple Leaf 0.25 338.69 355.29 1,421.17
1/10 Maple Leaf 0.10 140.79 144.77 1,447.74
Mexican 50 peso 1.21 1,593.27 1,604.27 1,330.57
.9999 bar 1.00 1,332.85 1,340.20 1,340.20
SPOT SILVER: 20.08      
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 14,214.20 14,499.20 20.28
US 40% silver 1/2s 0.30 5,805.60 5,967.60 20.23
100 oz .999 bar 100.00 2,033.00 2,058.00 20.58
10 oz .999 bar 10.00 202.30 207.30 20.73
1 oz .999 round 1.00 20.18 20.64 20.64
Am Eagle, 200 oz Min 1.00 21.83 22.83 22.83
SPOT PLATINUM: 1,098.50      
Platinum Platypus 1.00 1,113.50 1,143.50 1,143.50
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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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