The Moneychanger
Daily Commentary
Thursday, 1 September a.d. 2016 Browse the commentary archive

Y'all might be edified to know that the FDIC is bragging about how it's reserves have now nearly reached the Q1-2007 level at $77.9 bn. FDIC was created during the New Deal as a propaganda device to "assure" depositors their deposits were covered if the bank failed. The reserves are the FDIC's rainy day fund for banks that fail.

Sounds great, huh? Until you hear that $77.9 bn amounts to only 1.17% of insured deposits, down from about 1.2% in 2007.

Lightning fast estimate: a 1.7% reserve means that if all the banks turned hooves in the air, every depositor would receive $1.70 for every $100 of his deposits.

Smoke & mirrors, Mushrooms, the FDIC is smoke & mirrors.

US dollar index drew nigh the 200 DMA (96.38) today & fainted like Superman breathing Kryptonite. Whomp! Down 35 basis points (0.37%) to 95.66. Closed below the 50 DMA (95.90). Not fatal, but not the sort of thing you'd found a dynasty on, either. Chart's here, y'all look for yourselves, http://schrts.co/OkJ5UT

Today the dollar index is arguing that the boost it got from Yellen's eructation was merely temporary & fleeting. Must hold 95.60 or swim like an anvil in Chesapeake Bay.

Yen rose 0.15%, although it is in freefall, closing 96.84 after touching 100.6 mid-August. Euro's no healthier, up today 0.36% to $1.1198. Nasty.

Stocks are stalled. Dow barely rose today, 18.42 to 18,419.30. S&P500 lost 0.09 to 2,170.86. Watch 18,350 & 2,165.

Gold bounced up today 0.4% or $5.30 to close $1,312.20 on Comex. Silver rose 1.3% or 23.5¢ to 1885.7¢.

Can't tell yet whether today's rise was gold's inward yearning or a mere knee jerk to the dollar's fainting spell. Possible that it made its low today at $1,303.60. That would all fit, but don't put the pieces together until gold moves higher, at least above $1,325.

Silver has stopped sliding at or near 1860¢ the last three days, trampolining off that today to shoot up to 1892¢. Great, wunderbar, but must BEAT 1892¢ now, since it hit that same high on Monday.

Best hope of a turn around today was seen on the Gold/Silver ratio chart, http://schrts.co/kh9gOy

The ratio dropped back under the upper channel boundary it had two weeks ago punched up through, and is trying to close below the 20 DMA (69.21). Also, the MACD & RSI are pointing down, and a falling ratio walks hand in hand with rising gold and silver.

On 1 September 1939 Germany invaded Poland, beginning World War II.

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
1-Sep-16 Price Change % Change
Gold, $/oz 1,312.20 5.30 0.41%
Silver, $/oz 18.86 0.24 1.26%
Gold/Silver Ratio 69.587 -0.594 -0.85%
Silver/Gold Ratio 0.0144 0.0001 0.85%
Platinum 1,046.20 -4.60 -0.44%
Palladium 661.25 -7.45 -1.11%
S&P 500 2,170.86 -0.09 -0.00%
Dow 18,419.30 18.42 0.10%
Dow in GOLD $s 290.17 -0.89 -0.30%
Dow in GOLD oz 14.04 -0.04 -0.30%
Dow in SILVER oz 976.79 -11.34 -1.15%
US Dollar Index 95.66 -0.35 -0.36%
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: 1,312.50      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,347.94 1,356.47 1,356.47
1/2 AE 0.50 668.87 692.34 1,384.69
1/4 AE 0.25 337.71 352.73 1,410.94
1/10 AE 0.10 137.71 143.72 1,437.19
Aust. 100 corona 0.98 1,276.22 1,285.22 1,311.18
British sovereign 0.24 311.28 324.28 1,377.57
French 20 franc 0.19 242.59 246.59 1,320.80
Krugerrand 1.00 1,319.06 1,329.06 1,329.06
Maple Leaf 1.00 1,322.50 1,336.50 1,336.50
1/2 Maple Leaf 0.50 754.69 689.06 1,378.13
1/4 Maple Leaf 0.25 334.69 351.09 1,404.38
1/10 Maple Leaf 0.10 139.13 143.06 1,430.63
Mexican 50 peso 1.21 1,572.86 1,583.86 1,313.64
.9999 bar 1.00 1,317.09 1,324.50 1,324.50
SPOT SILVER: 18.87      
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 13,559.98 13,845.98 19.37
US 40% silver 1/2s 0.30 5,373.43 5,523.43 18.72
100 oz .999 bar 100.00 1,866.50 1,901.50 19.02
10 oz .999 bar 10.00 190.15 195.15 19.52
1 oz .999 round 1.00 18.67 19.17 19.17
Am Eagle, 200 oz Min 1.00 20.37 21.87 21.87
SPOT PLATINUM: 1,046.20      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,061.20 1,091.20 1,091.20
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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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