The Moneychanger
Daily Commentary
Thursday, 6 October a.d. 2016 Browse the commentary archive

Yes, today is my day to eat crow. How d'ya like your crow, charred or boiled? I think I'll take it charred, with feathers on. Lots of protein in them feathers.

Continuing weakness in silver & gold should have made me expect a larger correction, especially with those high commitment of traders. That's the price of not being born clairvoyant. Chew, chew. Hey, these feathers get stuck in your teeth!

Lay that aside. Today we probably saw the bottom of the move because both silver & gold hit their 200 day moving averages, usual target of intermediate term corrections. Both punctured that 200 DMA slightly, then bounced back in what could be bottoms. Yep, both might drop further, might even terrorize with a sudden spike down just as suddenly reversed upward. However, the vast bulk of this drop lies in the past.

British pound has been under attack this week, dropping through resistance & may have broken down for another move down. That will shortly become evident, if so. This driven by moronic investors who think they are sophisticated. Hard to imagine how Brexit will harm the UK economy. Anyway, would you rather own pounds or euros? Rather have a cold, or cholera?

US Dollar index has reversed its trend from sewer to sky, crossing its 200 DMA, besting its last two highs (which were also double tops), and surging toward 97.00. Remember that the pound sterling makes up nearly 12% of the US dollar index, enough for a plunging pound to explain most of the dollar index's strength. Add to that the broken yen (13.6%) and the euro (57.6%) & you get the feeling it's not so much the dollar rising as it is other currencies swirling down the drain. Today the dollar index gained 58 basis points or 0.6% to 96.69. Chart's here, http://schrts.co/OkJ5UT

Stocks are stalled Dow lost 12.53 (0.07%) to 18,268.50 while the S&P500 rose 1.04 (0.05%) to 2,160.77. Confused. Timid. Both indices have been trending down since mid-August, both have formed even-sided triangles that will shortly -- next week or 10 days -- resolve up or down, dramatically.

Another reason to expect silver & gold have spent their downside momentum are the Dow in Gold and Dow in Silver. DiG crossed its 200 DMA but remains in a broadening top. DiS, with silver still showing stronger, punched into its overhead 200 DMA and downtrend line. Both are overbought, so due for a turnaround.

Gold stumbled another $15.40 (1.2%) to end Comex at $1,249.80. Silver lost 34.6¢ (2%) to 1728.8¢.

Making sense of these numbers begs a look at the daily chart. Remember that gold's 200 DMA is today at $1,256.21. Gold started falling from 9:00, and by 12:00 (Eastern time) had reached its low at $1,248.60. It rallied sharply to $1,258 (by 1:00, but then fell off again for another low around 3:00 at about the same place. From there it came back to $1,255 in the aftermarket.

That leaves behind a "W" pattern which could mark a reversal. We will find out tomorrow if Gold can stay above $1,255 all day. Otherwise it has more correction ahead.

Silver's daily chart fell from 1770 about 9:00 to 1708.3¢ at 12:15 (200 DMA is at 1708¢). Sharp rally from 12:15 to 1735 by 1:00 looks like a V-bottom, but silver must float above 1735¢ tomorrow to prove it.

Yes, eating crow makes me want to puke in my wastebasket, but that's precisely the time we ought to gird up our loins, get out the compass, & identify where we are. This is a "correction" in a new, several-year-long upward move in silver & gold. Has anything fundamental changed? Central bankers been arraigned, tried, and executed? Central banks abolished? Interest rates turned loose to make sense? Government & central bank meddling with the economy been halted? Pigs been taught to sing? 'Cept for that last, all those others still exist, and are the forces driving silver & gold relentlessly higher, so it's time to BUY, not to panic and not to puke.

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
6-Oct-16 Price Change % Change
Gold, $/oz 1,249.80 -15.40 -1.22%
Silver, $/oz 17.29 -0.35 -1.96%
Gold/Silver Ratio 72.293 0.545 0.76%
Silver/Gold Ratio 0.0138 -0.0001 -0.75%
Platinum 962.30 -10.00 -1.03%
Palladium 665.10 -9.45 -1.40%
S&P 500 2,160.77 1.04 0.05%
Dow 18,268.50 -12.53 -0.07%
Dow in GOLD $s 302.16 3.47 1.16%
Dow in GOLD oz 14.62 0.17 1.16%
Dow in SILVER oz 1,056.72 20.02 1.93%
US Dollar Index 96.69 0.58 0.60%
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: 1,254.90      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,288.78 1,296.94 1,296.94
1/2 AE 0.50 639.49 661.96 1,323.92
1/4 AE 0.25 322.88 337.25 1,349.02
1/10 AE 0.10 131.66 137.41 1,374.12
Aust. 100 corona 0.98 1,218.98 1,227.98 1,252.79
British sovereign 0.24 297.62 310.62 1,319.54
French 20 franc 0.19 231.95 235.95 1,263.78
Krugerrand 1.00 1,263.68 1,273.68 1,273.68
Maple Leaf 1.00 1,264.90 1,278.90 1,278.90
1/2 Maple Leaf 0.50 721.57 658.82 1,317.65
1/4 Maple Leaf 0.25 320.00 335.69 1,342.74
1/10 Maple Leaf 0.10 133.02 136.78 1,367.84
Mexican 50 peso 1.21 1,503.83 1,514.83 1,256.39
.9999 bar 1.00 1,259.29 1,266.90 1,266.90
SPOT SILVER: 17.36      
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 12,480.33 13,052.33 18.26
US 40% silver 1/2s 0.30 4,927.98 5,077.98 17.21
100 oz .999 bar 100.00 1,715.50 1,750.50 17.51
10 oz .999 bar 10.00 175.05 180.05 18.01
1 oz .999 round 1.00 17.16 17.66 17.66
Am Eagle, 200 oz Min 1.00 18.86 20.36 20.36
SPOT PLATINUM: 962.30      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 977.30 1,007.30 1,007.30
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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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