The Moneychanger
Daily Commentary
Wednesday, 10 August a.d. 2016 Browse the commentary archive

'Twas one weird day. US dollar index tumbled 0.6% while platinum rose 24.40 (2.1%) and palladium rose $32.05, four point six percent! Stocks eroded and gold and silver rose, but not enough.

US dollar index yesterday made a slight key reversal, but apparently the chart watchers were watching, because the sold that dollar index today like the Russians were on Main Street. Dollar tumbled 56 basis points (0.58%) to 95.57. Chart's right here,

Dollar index now stands -- or maybe I should say "sits" -- below all three moving averages and teeters on the boundary of 95.50 support. The dollar has the look of a market about to jump off a high cliff.

I am not merely snuffing up spooks & ghosts when I say this dollar behavior bothers me. Considering what the BoJ and ECB have done to their balance sheets in the last year, and what the Fed has not done, the dollar ought to be stepping on their necks and kickin' 'em in the ribs, but it's not. What does the market know that we can't see? Can the Fed manipulating the dollar down to benefit the euro explain it all? I'm clueless, but fretted.

Euro rose 0.48% to $1.1175. Still trash, still to be avoided like a leper with cholera. Yen rose, too, 0.58% to 98.74; gapped up. Nuts.

Stocks rolled down today. Dow lost 37.39 (0.2%0 to 18,495.66 & kissed its 20 DMA. S&P500 didn't quite behave that rudely, but lost 0.3% or 6.25 to 2,175.49. Ridin' on air.

I am not a professional worrier, but y'all know that I have before mentioned that weakness shows when a market trades up into new ground and can't hold on to the gain. So silver and gold today . . .

Comex gold closed up $5.30 (04%) to $1,344.30, but the high came at $1,363.60, nearly twenty bucks higher. Look at the chart,

On the other hand it did move higher away from that uptrend line, and was saved from breaking down through that uptrend. Today's gold strength can fairly fully be explained by the US dollar's weakness. No great gain was made, no upward trend change proved.

Watch that blue uptrend line and $1,378. Lest it correct sharply, gold must hold the uptrend line AND cross over $1,357.

Comex silver closed 32¢ higher (1.6%) at 2013.4¢. It did close above its 20 DMA, good, good, but still lies below that blue uptrend line. It must not puncture that uptrend line, and needs to close swiftly above 2080¢ and then 2125¢.

Silver's chart is here,

I remain bewildered. Silver & gold ought to have broken down, but instead at the point of breakdown have turned higher. Today's weakness leaves the feeling that we will yet see lower prices.

On 10 August 1792 Parisian mobs attacked King Louis XVI's palace and took him into custody. He remained there until they guillotined him the next January. They exchanged a King, Louis XVI, for a Queen -- Madame Guillotine -- who would soon cut off their heads. Not a great trade, but really democratic.

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
10-Aug-16 Price Change % Change
Gold, $/oz 1,344.30 5.30 0.40%
Silver, $/oz 20.13 0.32 1.62%
Gold/Silver Ratio 66.768 -0.811 -1.20%
Silver/Gold Ratio 0.0150 0.0002 1.21%
Platinum 1,180.60 24.40 2.11%
Palladium 725.15 32.05 4.62%
S&P 500 2,175.49 6.25 0.29%
Dow 18,495.66 -37.39 -0.20%
Dow in GOLD $s 284.41 -1.70 -0.60%
Dow in GOLD oz 13.76 -0.08 -0.60%
Dow in SILVER oz 918.63 -16.72 -1.79%
US Dollar Index 95.57 -0.56 -0.58%
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: 1,344.60      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,375.53 1,389.64 1,389.64
1/2 AE 0.50 685.24 709.28 1,418.55
1/4 AE 0.25 345.98 361.36 1,445.45
1/10 AE 0.10 141.08 147.23 1,472.34
Aust. 100 corona 0.98 1,308.75 1,317.75 1,344.37
British sovereign 0.24 318.89 331.89 1,409.91
French 20 franc 0.19 252.92 256.92 1,376.11
Krugerrand 1.00 1,352.67 1,362.67 1,362.67
Maple Leaf 1.00 1,354.60 1,368.60 1,368.60
1/2 Maple Leaf 0.50 773.15 705.92 1,411.83
1/4 Maple Leaf 0.25 342.87 359.68 1,438.72
1/10 Maple Leaf 0.10 142.53 146.56 1,465.61
Mexican 50 peso 1.21 1,608.08 1,619.08 1,342.86
.9999 bar 1.00 1,349.31 1,356.60 1,356.60
SPOT SILVER: 20.13      
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 14,246.38 14,604.38 20.43
US 40% silver 1/2s 0.30 5,745.13 5,895.13 19.98
100 oz .999 bar 100.00 1,992.50 2,057.50 20.58
10 oz .999 bar 10.00 202.75 207.75 20.78
1 oz .999 round 1.00 19.93 20.68 20.68
Am Eagle, 200 oz Min 1.00 21.63 23.13 23.13
SPOT PLATINUM: 1,180.60      
Plat. Platypus 1.00 1,195.60 1,225.60 1,225.60
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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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