The Moneychanger
Daily Commentary
Monday, 8 August a.d. 2016 Browse the commentary archive

It's Tuesday morning & I am writing this for Monday. I had to leave yesterday evening to drive with Susan to middle Alabama to pick up 350 day old chicks. I suspect that by the time we drive home 3 hours with 350 peepers we will have plumbed the depths of the term "bird brain."

The gold & silver correction hung fire yesterday and today (at 10:00 a.m) is hanging fire still. Gold is tangled in its 20 day moving average (1st tripwire of a direction change) and in the since-June-began uptrend. Nevertheless, momentum has turned down, gold has painted double tops at $1,375, so we have to reckon with a larger correction. Targets are $1,310, last low & 50 DMA, or for a larger correction, $1,210. $1,275 also offers itself as a candidate.

So are gold has not whispered how far it will fall, but Commitments of Traders have been negative for quite a while, and that is weighing on gold and silver like a ball and chain on a chain gang fugitive.

Silver HAS crossed through its 20 DMA and the uptrend line, and with arms upstretched below stands the 50 DMA about 1870¢. At 1780¢ - 1800¢ stands support from the previous trading channel. Silver's COTs have been worse than gold's, so weigh proportionally more. Worst case would be a correction to the December uptrend line, now about 1700¢.

None of this calls into doubt my interpretation that we saw the bottom of the 2011-2015 correction in December.

We wait and watch.

It occurred to me yesterday that as little as I like Trump, there MUST be something good about him if 100% of the media & professional politicians oppose him. Sometimes the enemy of my enemy is my friend, although that's hard to swaller.

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
8-Aug-16 Price Change % Change
Gold, $/oz 1,333.40 -3.00 -0.22%
Silver, $/oz 19.77 -0.01 -0.06%
Gold/Silver Ratio 67.452 -0.111 -0.16%
Silver/Gold Ratio 0.0148 0.0000 0.16%
Platinum 1,152.00 4.00 0.35%
Palladium 692.05 -3.00 -0.43%
S&P 500 2,180.89 1.98 0.09%
Dow 18,529.29 0.17 0.00%
Dow in GOLD $s 287.26 0.65 0.23%
Dow in GOLD oz 13.90 0.03 0.23%
Dow in SILVER oz 937.34 0.58 0.06%
US Dollar Index 96.34 0.17 0.18%
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: 1,333.10      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,365.09 1,377.76 1,377.76
1/2 AE 0.50 679.37 703.21 1,406.42
1/4 AE 0.25 343.02 358.27 1,433.08
1/10 AE 0.10 139.87 145.97 1,459.74
Aust. 100 corona 0.98 1,298.86 1,307.86 1,334.28
British sovereign 0.24 316.17 329.17 1,398.32
French 20 franc 0.19 250.76 254.76 1,364.52
Krugerrand 1.00 1,339.77 1,349.77 1,349.77
Maple Leaf 1.00 1,343.10 1,357.10 1,357.10
1/2 Maple Leaf 0.50 766.53 699.88 1,399.76
1/4 Maple Leaf 0.25 339.94 356.60 1,426.42
1/10 Maple Leaf 0.10 141.31 145.31 1,453.08
Mexican 50 peso 1.21 1,595.94 1,606.94 1,332.78
.9999 bar 1.00 1,337.77 1,345.10 1,345.10
SPOT SILVER: 19.72      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 25.00 27.00 35.29
VG+ Peace dollar 0.77 20.00 22.00 28.76
90% silver coin bags 0.72 13,881.73 14,166.73 19.81
US 40% silver 1/2s 0.30 5,624.18 5,774.18 19.57
100 oz .999 bar 100.00 1,951.50 2,021.50 20.22
10 oz .999 bar 10.00 198.65 203.65 20.37
1 oz .999 round 1.00 19.52 20.28 20.28
Am Eagle, 200 oz Min 1.00 21.22 22.72 22.72
SPOT PLATINUM: 1,152.00      
Plat. Platypus 1.00 1,167.00 1,197.00 1,197.00
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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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