The Moneychanger
Daily Commentary
Tuesday, 19 July a.d. 2016 Browse the commentary archive

'Twas a day of resolution, and a day of irresolution.

The resolute US dollar index resolved upwards out of that flat-topped rising triangle. And it did so persuasively, levitating 52 basis points (0.54%) to 97.11, well above the triangle's upper boundary.

This rising dollar helps explain gold's timidity today, but I still observe that gold rose in the teeth of a rising dollar. New game, folks.

The euro resolved downside out of the even-sided triangle it has been trapped in. Yes, it needs another close below that line, but no doubt you'll see it, soon.

Yen jiggled up 0.06% to 94.22. Jiggled. Stumbling trying to fall through the 50 day moving average. Firmly astride the down escalator.

As if they didn't even believe their rally themselves, stock indices irresolutely gainsaid each other. The Dow rose 25.96 (0.14%) to 18,559.01 while the S&P500 fell 3.11 (01.4%) to 2,163.78.

When markets that ought to speak together in harmony contradict each other, confusion abounds.

So also silver & gold acted irresolutely. Gold gained $3.10 (0.2%) to $1,331.50 on Comex, but silver turned the other way, losing 6.9¢ (0.3%) to 1997.5¢.

Both metals are trading sideways & directionless on their 5 day charts. Was I therefore wrong yesterday when I pointed out the pennant/flags on their charts?

Newp. Flags abide there still, and were not violated or negated today.

Start with silver,

Today the low on the pennant's bottom boundary was 1977¢, & tomorrow will be about 1982¢. Upside cap tomorrow is 2013¢, and Thursday will find silver all the way out in the far nose of the pennant, forcing silver's hand. A close above 2013¢ breaks out of the pennant, but that needs to take place with drama and rise above 2025¢.

Tomorrow the bottom line of gold's [presumptive] bullish flag is $1,305, the upper line $1,331. In other words, it might fall as low as $1,305 & rise as high as $1,331 tomorrow without violating or breaking out of that flag. Really gold needs to close above $1,340 to convince investors it has truly broken out toward the heavens.

Despite today's irresolution, there will be no irresolution when they break out. Up or down, it will be an enthusiastic move. Of course, those flags point to upside breakouts.

Gold/silver ratio is a nasty fly in that ointment, however. After a long, gappy downward skid, it may be turning up. That doesn't bode well for higher silver & gold prices.

So many charts, so many indicators, so many signs -- who can choose?

On 17 July 1867 congress passed the third Reconstruction Act. Contrary to everything they had claimed about the seceding states' existence during the War, now the Red Republicans turned around and treated them as conquered provinces and occupied them with the army. That humiliating military occupation propping up carpetbag Republican governments would continue until 1877 in some states. It was only ended then as part of a bargain to elect Republican Rutherford B. Hayes president. These same Republican governments left Southern states saddled with enormous debt, rifled their treasuries, and in the end helped the ex-slaves and destitute Southerners none at all, but fattened all the jackals. The South's economy didn't fully recover for 100 years.

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
19-Jul-16 Price Change % Change
Gold, $/oz 1,331.50 3.10 0.23%
Silver, $/oz 19.98 -0.07 -0.34%
Gold/Silver Ratio 66.658 0.384 0.58%
Silver/Gold Ratio 0.0150 -0.0001 -0.58%
Platinum 1,094.70 -3.80 -0.35%
Palladium 656.90 10.35 1.60%
S&P 500 2,163.78 -3.11 -0.14%
Dow 18,559.01 25.96 0.14%
Dow in GOLD $s 288.13 -0.27 -0.09%
Dow in GOLD oz 13.94 -0.01 -0.09%
Dow in SILVER oz 929.11 4.49 0.49%
US Dollar Index 97.11 0.52 0.54%
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: 1,331.50      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,360.79 1,376.11 1,376.11
1/2 AE 0.50 678.56 702.37 1,404.73
1/4 AE 0.25 342.60 357.84 1,431.36
1/10 AE 0.10 138.37 145.80 1,457.99
Aust. 100 corona 0.98 1,294.70 1,303.70 1,330.03
British sovereign 0.24 315.79 328.79 1,396.71
French 20 franc 0.19 250.46 254.46 1,362.91
Krugerrand 1.00 1,338.16 1,348.16 1,348.16
Maple Leaf 1.00 1,341.50 1,355.50 1,355.50
1/2 Maple Leaf 0.50 765.61 699.04 1,398.08
1/4 Maple Leaf 0.25 339.53 356.18 1,424.71
1/10 Maple Leaf 0.10 141.14 145.13 1,451.34
Mexican 50 peso 1.21 1,597.23 1,608.23 1,333.86
.9999 bar 1.00 1,336.16 1,343.50 1,343.50
SPOT SILVER: 19.95      
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 14,117.68 14,402.68 20.14
US 40% silver 1/2s 0.30 5,765.78 5,927.78 20.09
100 oz .999 bar 100.00 2,019.50 2,044.50 20.45
10 oz .999 bar 10.00 200.95 205.95 20.60
1 oz .999 round 1.00 20.05 20.51 20.51
Am Eagle, 200 oz Min 1.00 21.70 22.70 22.70
SPOT PLATINUM: 1,094.70      
Plat. Platypus 1.00 1,109.70 1,139.70 1,139.70
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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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