The Moneychanger
Weekly Commentary
Friday, 2 September a.d. 2016 Browse the commentary archive
Here's the weekly scorecard:
  26-Aug-16 2-Sep-16 Change % Change
Silver, cents/oz. 1,865.10 1,927.60 62.50 3.4
Gold, dollars/oz. 1,321.50 1,322.10 0.60 0.0
Gold/silver ratio 70.854 68.588 -2.266 -3.2
Silver/gold ratio 0.0141 0.0146 0.0005 3.3
Dow in Gold Dollars (DIG$) 287.75 289.13 1.38 0.5
Dow in gold ounces 13.92 13.99 0.07 0.5
Dow in Silver ounces 986.30 959.33 -26.97 -2.7
Dow Industrials 18,395.40 18,491.96 96.56 0.5
S&P500 2,169.04 2,179.98 10.94 0.5
US dollar index 95.54 95.84 0.30 0.3
Platinum 1,075.20 1,059.50 -15.70 -1.5
Palladium 692.15 674.20 -17.95 -2.6

Gold & silver closed the week by roaring back, stocks dithered, and so did the US dollar index.

Sometimes an idea takes your mind and shakes it like a terrier shaking a rat, & just won't let go. Lo, I check not often the London Interbank Offer Rate (LIBOR), one of the world's chief interest rate bell wethers. An analyst I watch for his cleverness mentioned today that libor has been rising, which must inevitably squeeze the Fed to raise interest rates -- or the market will do it for them. That might explain Fed mouthpiece Stanley Fisher making so much noise about raising rates; it's the Fed's way of making virtue out of necessity.

I went and looked at the Libor chart. Merciful heavens! Since mid-May the rate has risen 20-1/2%, from 0.4340 to 0.5230. Look for yourself, http://schrts.co/iy2uGR

Zooming out on that rascal, look at the last year, http://schrts.co/ai0FFe Sort of jumps out at you, don't it, that huge rise beginning mid-November 2015 until January 2016? The Fed is getting squeezed. Sort of has a satisfying gloat to it, don't it?

Gravely, this threatens the bond market bubble which the Fed & other central banks have blown up by suppressing interest rates. That would fling more shrapnel than any stock market crash. Wouldn't hurt silver & gold, either.

Stocks stretched hard and reached up to touch their 20 day moving average today, but the effort left 'em plumb tuckered out. Dow in gold hooked down -- at last -- and closed at 13.94 oz. Look at this vexed chart, http://schrts.co/KfbQmg Looks ready to resume downtrend.

Here is the chart of the Dow Industrials valued in silver, http://schrts.co/NssDGW

After the December high for the 5 year correction, the Dow in Silver has swum like a man in a suit of armor, down, down, down. Broke down out of a falling right triangle, then after an August low, corrected back up to the break out point. Smack! Made a final kiss good-bye, then tanked today, closing at 954.87 oz, just below the 20 day moving average.

Both these indicators stand on the verge of stepping off an eight story building.

Shucks, I forgot to give y'all paper dollar values for stocks. Dow added 72.60 (0.39%) to 18,491.96 while the S&P500 rose 9,12 (0.42%) to 2,179.98. Look at the S&P500 chart, http://schrts.co/vtdPMb

See that flat trading range since July, as if stocks were walking a plank? That could be a consolidation before moving higher, or a top. Y'all ever remember anybody who walked a planked & lived to tell the tale? Me neither.

US dollar index got an 18 basis point (0.19%) to 95.84 from the lying yankee government jobs report. I reckon the market interpreted the lower than expected but not really that much lower jobs numbers as pushing the Fed toward raising interest rates. Right in an election year, before the election. Hardly.

Euro has lost everything gained by its August rally, & then some. Down 0.09% today to $1.1189. Yen is in full retreat, down another 0.7% to 96.16.

On Comex gold rose $9.90 (0.8%) to $1,322.10 but silver skipped, sprang, vaulted 41.9¢ (2.2%) to 1927.6¢.

Gold chart may be found here, Gentle Readers, http://schrts.co/kh9gOy

The yankee government lying jobs report was all gold needed to pull on its 7 league boots & scat. 8:30 a.m. hit and it climbed straight up from $1,314 to $1,329 in one jump. High came at $1,334. Settlement at $1,322.10 was likely a beauty pageant, no make that an ugly pageant, to make gold look worse. Aftermarket saw it trading from $1,324.5 - $1,328.

Short words say all: bottomed yesterday.

Behold, the silver chart http://schrts.co/kh9gOy

Silver like gold benefitted from the yankee government's statistical largesse. Busted through 18.90 at 9:30 and jumped to 1930¢. All Wall Street echoed with retching as the shorts grabbed for a wastebasket to puke in.

Bottom's past for silver. Don't want to get on the wrong side of that.

Best support for that conclusion comes from the Gold/Silver Ratio. Lo, the chart, http://schrts.co/kh9gOy

Appears the correction of the March - July plunge has now ended. Obligingly the ratio closed below its 20 & 50 DMAs today.

About the only hostile witness is that gold close below $1,325. Tuesday (Monday's Labor Day) gold will have to prove that $1,325 is no more than a bead curtain.

One final confirmation from higher prices on Tuesday and no doubt will be left that silver & gold have completed their correction. Considering the heavy seas looming before stocks and interest rates, now is the time to buy silver & gold.

Henry Frederic Amiel was a Swiss philosopher born in 1821. He died in 1880. In his Journal Intime for 9 May 1870 he wrote,

"If liberty is to be saved, it will not be by the doubters, the men of science, or the materialists; it will be by religious conviction, by the faith of individuals who believe that God wills man to be free but also pure; it will be by the seekers after holiness, by those old-fashioned pious persons who speak of immortality & eternal life, and prefer the soul to the whole world; it will be by the enfranchised children of the ancient faith of the human race."

Y'all enjoy your 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
2-Sep-16 Price Change % Change
Gold, $/oz 1,322.10 9.90 0.8
Silver, $/oz 19.28 0.42 2.2
Gold/Silver Ratio 68.588 0.499 0.7
Silver/Gold Ratio 0.0146 0.0003 2.2
Platinum 1,059.50 13.30 1.3
Palladium 674.20 12.95 2.0
S&P 500 2,179.98 9.12 0.4
Dow 18,491.96 72.60 0.4
Dow in GOLD $s 289.13 -1.01 -0.3
Dow in GOLD oz 13.99 -0.05 -0.3
Dow in SILVER oz 959.33 -17.47 -1.8
US Dollar Index 95.84 0.18 0.2
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SPOT GOLD: 1,324.60      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,359.04 1,368.97 1,368.97
1/2 AE 0.50 675.04 698.73 1,397.45
1/4 AE 0.25 340.83 355.99 1,423.95
1/10 AE 0.10 138.98 145.04 1,450.44
Aust. 100 corona 0.98 1,287.99 1,296.99 1,323.18
British sovereign 0.24 314.15 327.15 1,389.76
French 20 franc 0.19 244.83 248.83 1,332.78
Krugerrand 1.00 1,332.55 1,342.55 1,342.55
Maple Leaf 1.00 1,334.60 1,348.60 1,348.60
1/2 Maple Leaf 0.50 761.65 695.42 1,390.83
1/4 Maple Leaf 0.25 337.77 354.33 1,417.32
1/10 Maple Leaf 0.10 140.41 144.38 1,443.81
Mexican 50 peso 1.21 1,587.36 1,598.36 1,325.67
.9999 bar 1.00 1,329.24 1,336.60 1,336.60
SPOT SILVER: 19.44      
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 13,896.03 14,182.03 19.84
US 40% silver 1/2s 0.30 5,541.58 5,691.58 19.29
100 oz .999 bar 100.00 1,923.50 1,958.50 19.59
10 oz .999 bar 10.00 195.85 200.85 20.09
1 oz .999 round 1.00 19.24 19.74 19.74
Am Eagle, 200 oz Min 1.00 20.94 22.44 22.44
SPOT PLATINUM: 1,059.50      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Platinum Platypus 1.00 1,074.50 1,104.50 1,104.50
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© 2015 Little Mountain Corporation, d.b.a. The Moneychanger. All rights reserved. May not be republished in any form, including electronically, without our express permission.

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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