The Moneychanger
Weekly Commentary
Friday, 30 September a.d. 2016 Browse the commentary archive
Here's the weekly scorecard:
  23-Sep-16 30-Sep-16 Change % Change
Silver, cents/oz. 1,973.30 1,913.90 -59.40 -3.0
Gold, dollars/oz. 1,337.20 1,313.30 -23.90 -1.8
Gold/silver ratio 67.765 68.619 0.854 1.3
Silver/gold ratio 0.0148 0.0146 -0.0002 -1.2
Dow in Gold Dollars (DIG$) 282.20 288.18 5.97 2.1
Dow in gold ounces 13.65 13.94 0.29 2.1
Dow in Silver ounces 925.09 956.59 31.50 3.4
Dow Industrials 18,254.84 18,308.15 53.31 0.3
S&P500 2,164.69 2,168.27 3.58 0.2
US dollar index 95.39 95.39 0.00 0.0
Platinum 1,056.60 1,028.60 -28.00 -2.7
Palladium 706.40 720.50 14.10 2.0

Well, newsletter writers' prophecies to the contrary notwithstanding, the world did not come to an end today. Yea, even the US dollar survived and continues to circulate in the US & around the globe. I reckon they'll have to move that date to October 30. Make that November 15, for safety's sake.

Y'all 'magine that date-setting sells newsletters?

This week turned out just exactly contrary to what I expected. Silver & gold got slapped around like 98 lb. weaklings on the beach at a bodybuilders' convention. Stocks actually gained for the week, but it was mostly wheel spinning. US dollar index, parasite upon the world's nations, closed exactly where it was last week.

Let's try to make sense out of this mess. Whoa, before we do, y'all go read this Wall Street Journal article from today, Obama's political bank run,

Seems that after the Obama "Justice" Department smashed Deutsche Bank stock with its demand for $14.5 billion & right near took down world stock markets with it, today they are backing off and demanding only $5.4 bn. Purpose? To scare the other banks involved into caving. I keep telling y'all, Government is like cockroaches: it ain't what they steal & haul off that causes the problem, it's what they fall into and foul up.

US dollar index is truly weak. Today it reached for the stars, passed through the 50 DMA, touched 95.89, then collapsed to close down 9 basis points at 95.39. I don't know a durn thing, but I know that when a market rises into new territory & can't hold on and falls back, it's weak as state orphanage soup. Here's the chart. I don't even like to talk about the nasty thing.

Euro rose 0.17% to $1.1242 while the yen dropped 0.3% to 98.68. Both these currencies as well as the US dollar are the best argument I know for owning gold.

Stocks labored mightily to reach and regain all they lost yesterday. Dow reached yesterday's 18,350+ high, but backed off at the close to 18,308.15, up 164.70 or 0.91%. S&P500 couldn't work up quite that much enthusiasm, rising 17.14 or 0.8% to 2,168.27.

When I ain't sure what's happening, I find it useful & instructive to go back to basic definitions. "A downtrend is a series of lower highs and lower lows." Behold, the Dow Industrials' chart,

Gold today fell $8.40 (0.6%) to $1,313.30 but silver rose 2.4¢ to 1913.9¢.

Those numbers don't near about tell the tale. About 9:30 silver was trading at 1935¢, then it shot up like its tail was burning, straight up to 1970¢. Traded sideways, then gapped down and by 11:15 had given up all those gains and more. Don't make a bit of sense, unless floor traders were just "running the stops" they knew were above 1940¢, or the Nice Government Men were playing games. Caught my eye that silver was strong today, rising to contradict gold's fall.

About 9:30 gold began climbing from $1,322.50 to $1,328, where about 10:00 it met a wall of selling, gapped down, and fainted and flopped the rest of the day.

Look at gold's chart,

Gold has established a trading channel off the July high & low (blue dashed line). Everything is churning sideways that does not break through that top channel line (now about $1,360) or the bottom (now about $1,290). Yes, 'tis possible gold could visit that lower channel line, & mired in the uncertainty of elections, keep trading sideways until the election. It continues to hover around that green uptrend line from the December 2015 lows, but indicators are negative and call for lower prices.

Here's silver's snapshot,

Silver's performance today was enthusiastic, but without accomplishing more than 2.4¢. For silver as for any other market, a break to a new high without holding onto the gain is weak as hash house coffee. Silver must break through the top channel line (about 2000¢) or fall back to the bottom line (1775¢).

On 30 September 1965 President Lyndon "Landslide" Johnson signed legislation establishing the National Foundation for the Arts & the Humanities, a.k.a., Gummint Artz. And look at how much good it's done! Why, how much better are the Artz today than they were in 1965?

Meanwhile, I'm wearing out my imagination trying to picture Wm. Shakespeare, J.S. Bach, Rembrandt, or Beethoven applying for a Gummint Art grant.

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
30-Sep-16 Price Change % Change
Gold, $/oz 1,313.30 -8.40 -0.6
Silver, $/oz 19.14 0.02 0.1
Gold/Silver Ratio 68.619 -0.440 -0.6
Silver/Gold Ratio 0.0146 0.0000 0.1
Platinum 1,028.60 -2.20 -0.2
Palladium 720.50 2.00 0.3
S&P 500 2,168.27 17.14 0.8
Dow 18,308.15 164.70 0.9
Dow in GOLD $s 288.18 4.44 1.6
Dow in GOLD oz 13.94 0.21 1.6
Dow in SILVER oz 956.59 7.42 0.8
US Dollar Index 95.39 -0.09 -0.1
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SPOT GOLD: 1,316.20      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,351.74 1,360.29 1,360.29
1/2 AE 0.50 670.75 694.30 1,388.59
1/4 AE 0.25 338.66 353.73 1,414.92
1/10 AE 0.10 138.10 144.12 1,441.24
Aust. 100 corona 0.98 1,278.53 1,287.53 1,313.54
British sovereign 0.24 312.16 325.16 1,381.30
French 20 franc 0.19 243.28 247.28 1,324.46
Krugerrand 1.00 1,325.41 1,335.41 1,335.41
Maple Leaf 1.00 1,326.20 1,340.20 1,340.20
1/2 Maple Leaf 0.50 756.82 691.01 1,382.01
1/4 Maple Leaf 0.25 335.63 352.08 1,408.33
1/10 Maple Leaf 0.10 139.52 143.47 1,434.66
Mexican 50 peso 1.21 1,577.29 1,588.29 1,317.32
.9999 bar 1.00 1,320.81 1,328.20 1,328.20
SPOT SILVER: 19.16      
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 13,770.90 14,056.90 19.66
US 40% silver 1/2s 0.30 5,460.45 5,610.45 19.02
100 oz .999 bar 100.00 1,896.00 1,931.00 19.31
10 oz .999 bar 10.00 193.10 198.10 19.81
1 oz .999 round 1.00 18.96 19.46 19.46
Am Eagle, 200 oz Min 1.00 20.66 22.16 22.16
SPOT PLATINUM: 1,028.60      
Platinum Platypus 1.00 1,043.60 1,073.60 1,073.60
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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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