The Moneychanger
Daily Commentary
Tuesday, 18 October a.d. 2016 Browse the commentary archive

There's a saying describing some sign as "a little cloud like a man's hand on the horizon." Easy to overlook such things, but dangerous, as dangerous as over-estimating them.

Both silver & gold flashed that little sign today. Both broke out of even-sided triangles, or, you might call them "flags." Y'all look with me.

Here's the gold chart,

Lo and behold! Gold closed up 6.40 (0.5%) at $1,260.80. That close busted through the top of that triangle and closed barely below the 200 day moving average ($1,263.75). The MACD is turning up and the histogram is shrinking.

What must the little sign do to prove itself? First, close above that 200 DMA, preferably tomorrow. Second, keep marching upward. Third, keep on increasing volume, as it did today. Over the longer haul it needs to close above the 20 DMA and $1,300. Brutal, I know, but accurate.

Comex silver today rose 16.5¢ (0.9%) to 1759.1¢. Cast your eyes here for the chart,

Siler's chart looks way stronger than gold's, but then, it hadn't broken down as badly. For instance, when silver broke down, it fell out of its channel and tumbled, but stopped at its 200 DMA, screech! Now today it busted out the top of that even-sided triangle, and also closed barely above the channel line. Strong as a garlic milkshake. Well, strong as a shallot milkshake anyway.

RSI is rising after being oversold, MACD is turning up, histogram is thinning. All this is hopeful, but must continue. Silver next must re-conquer that last breakdown point at 1800¢. Not looking for glory rides here, merely for steady advance. That'll do.

Now ponder with me the gold/silver ratio, pictured here,

Recall that the ratio moves opposite to silver & gold, so a falling ratio points toward rising prices. The ratio broke above that interior (blue dashed) channel line and leapt plumb to the 200 DMA at 74. Panic passed, it dropped back. Has traced out a flag since then & come back to that interior channel line and is ready to punch through it. RSI is falling, MACD is turning eyes downward. It's giving all the signs of breaking down, now just needs to follow through.

Now add to this stew what I told y'all about rising silver AND gold premiums yesterday. That means buyers are hitting the market hard, soaking up available inventory. Dealers raise the premium they pay to try to attract sellers. That happeneth not when buyers are lethargic.

Now that scrofulous, wicked US dollar insect -- whoops, index -- blood sucker of nations, rose one small basis point today, to 97.89. It has crushed the euro & yen, but now appears to be rolling over or running out of steam. Dollar weakness here would certainly accelerate silver & gold.

I wonder sometimes if it's even worth mentioning the Gaga, Never-never Land of Stocks, so withdrawn from reality by central bank manipulating. I'll do it anyway, but with a not very good grace. Dow rose today 75.54 to 18,161.94, gaining today about what it lost yesterday, & sliding, sliding, sliding toward the abyss. S&P500 rose 13.1 to 2,139.60.

What seizes my attention and knocks out the pit of my stomach is interest rates. Oh, my, when central banks lose control of interest rates, the whole world will be dancing like a roach on a hot griddle. Looky here, at the 10 year US Treasury yield:

Ya'll see that it has been steadily rising since July's low, and is drawing a bead on that downtrend line from 2007? Today it stands at 1.749%, and that line stands at about 1.95%.

Here's the 30 year treasury bond. Look here,

That thing you see that marches from upper center to lower right is called a "Downtrend." The bond's price is trending down, and since the July all time high has lost nearly 8%. It "threw over" to the July high, broke back into the rising wedge, kept falling, sliced through the 200 DMA like Susan with a new Cutco knife slicing a Claussen's pickle (or her finger), fell through the bottom wedge boundary, and continueth to tumble. If I was Janet Yellen, I'd be working on my resume. If I were a central banker watching this bond rolling down the hill, I'd be sweatin' bullets and spittin' ahrn filin's. More trouble there than a roomful of drunks with guns , knives, and ill tempers.

This is waxin' int'resting. I noticed, too, that even the mainstream media says the Hillarbeast's poll numbers are falling. They just don't get it, the Insiders, the politicians, or the media. A world wide revulsion against globalism & all the post WW2 policies is taking place that will send them all running for the baseboards like cockroaches when the light switches on. No reason to cry about that, unless you like cockroaches.

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
18-Oct-16 Price Change % Change
Gold, $/oz 1,260.80 6.40 0.51%
Silver, $/oz 17.59 0.17 0.95%
Gold/Silver Ratio 71.673 -0.311 -0.43%
Silver/Gold Ratio 0.0140 0.0001 0.43%
Platinum 932.70 10.30 1.12%
Palladium 638.35 1.60 0.25%
S&P 500 21,396.00 13.10 0.06%
Dow 18,161.94 75.54 0.42%
Dow in GOLD $s 297.78 -0.27 -0.09%
Dow in GOLD oz 14.41 -0.01 -0.09%
Dow in SILVER oz 1,032.46 -5.44 -0.52%
US Dollar Index 97.89 0.01 0.01%
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SPOT GOLD: 1,261.20      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,296.51 1,303.45 1,303.45
1/2 AE 0.50 642.70 665.28 1,330.57
1/4 AE 0.25 324.50 338.95 1,355.79
1/10 AE 0.10 132.32 138.10 1,381.01
Aust. 100 corona 0.98 1,228.81 1,237.81 1,262.81
British sovereign 0.24 299.11 312.11 1,325.88
French 20 franc 0.19 233.11 237.11 1,270.01
Krugerrand 1.00 1,275.07 1,285.07 1,285.07
Maple Leaf 1.00 1,271.20 1,285.20 1,285.20
1/2 Maple Leaf 0.50 725.19 662.13 1,324.26
1/4 Maple Leaf 0.25 321.61 337.37 1,349.48
1/10 Maple Leaf 0.10 133.69 137.47 1,374.71
Mexican 50 peso 1.21 1,511.38 1,522.38 1,262.65
.9999 bar 1.00 1,265.61 1,273.20 1,273.20
SPOT SILVER: 17.58      
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 13,213.20 13,499.20 18.88
US 40% silver 1/2s 0.30 4,994.35 5,144.35 17.44
100 oz .999 bar 100.00 1,738.00 1,773.00 17.73
10 oz .999 bar 10.00 177.30 182.30 18.23
1 oz .999 round 1.00 17.38 17.88 17.88
Am Eagle, 200 oz Min 1.00 19.08 20.58 20.58
SPOT PLATINUM: 932.70      
Plat. Platypus 1.00 947.70 977.70 977.70
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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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