The Moneychanger
Daily Commentary
Thursday, 20 October a.d. 2016 Browse the commentary archive

Don't y'all get caught up in little day to day moves. Step back & look harder.

Yesterday silver & gold bettered their Tuesday breakouts. But alas! They fell back today. Does that mean the whole promise has been broken?

Not hardly. Usually when markets break out (up or down), they trade back to the breakout for a final kiss good-bye. Offers the watchful a superb place to buy.

Gold lost $2.30 (0.2%) today to $1,265.60. Comex silver lost 11.4¢ (0.7%) to 1750.2¢.

Here's a gold chart,

Gold poked through the 200 day moving average yesterday (yeah!), then kissed back to it today. Meanwhile rate of change is straight up and MACD has turned unequivocally positive.

Silver chart's right here,

Silver followed a similar pattern. Broke out of triangle Tuesday, advanced yesterday, dropped back to breakout line today. So where are we? With a rally beginning, PROVIDED silver & gold keep rising again.

Here's more evidence of strong physical demand. The cheap small gold coins I've been begging y'all to buy have plumb disappeared from the market, and most low premium gold coins are hard to locate. (Add this to what I told y'all earlier about the rising US 90% silver coins premium and rising gold coin premiums.) And this is happening suddenly.

Y'all don't reckon the sight of those two teenagers swapping insults on TV last night is panicking folks into buying gold, do you?

Not gonna waste time talking about stocks. They are trending down and without closes above 18,350 or 2170, downtrend will continue marching toward the cliff, and at last reach it.

US Dollar index chart is here. Hold your nose & look at it,

It has now risen past the July intraday high (97.62) & closed today above that at 98.31, having gained 37 basis points today (0.38%). Remains a bit iffy until it pulls past this new high, but assumption is it will continue higher. Odd, today's fairly meaty rise did not cause a big bruise on gold & silver.

Keep watching the bond markets for a Big Bang. 10 year treasury yield fell a little today, but stands above its 200 DMA.

Bottom line: silver & gold have a good sprout on a rally, but that sprout has to grow. Stocks are waiting for catastrophe. Can the Fed allow the dollar to keep climbing? I wonder. Sweat, Janet, sweat!

I hope y'all won't mind my sharing one more little Susan story. I said in her eulogy that she "adored planning parties & celebrations. She taught us to rejoice. Love made her play on purpose, just as she controlled everything else about herself on purpose."

First Christmas we were married we spent Christmas Eve with Susan's parents. She woke up as dawn cracked and danced downstairs like a six-year old . I clumped downstairs swollen and sullen with sleep. Susan was dancing around the tree, pulling out presents to show me. Clearly, I did not share her enthusiasm. She didn't like that. Finally she took a deep breath and searched for the worst name she could call me: "You're just a . . . mean, grumpy old person!" I deserved it.

A friend who is also widowed reminded me that his late wife (and our friend) often quoted C.S. Lewis' line: "Joy is the serious business of heaven."

Joy, dear friends, is serious business, and y'all better get serious about it.

Now some of y'all will read than and it will roll off like water off a duck's back, because you are too busy for joy. Others will see, & taste, & drink, & begin to understand why the most serious souls are also the very merriest.

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
20-Oct-16 Price Change % Change
Gold, $/oz 1,265.60 -2.30 -0.18%
Silver, $/oz 17.50 -0.11 -0.65%
Gold/Silver Ratio 72.312 0.337 0.47%
Silver/Gold Ratio 0.0138 -0.0001 -0.47%
Platinum 931.20 -8.90 -0.95%
Palladium 631.80 -2.65 -0.42%
S&P 500 2,141.34 -2.95 -0.14%
Dow 18,162.35 -40.27 -0.22%
Dow in GOLD $s 296.66 -0.12 -0.04%
Dow in GOLD oz 14.35 -0.01 -0.04%
Dow in SILVER oz 1,037.73 4.43 0.43%
US Dollar Index 98.31 0.37 0.38%
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: 1,264.90      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,299.05 1,307.27 1,307.27
1/2 AE 0.50 644.59 667.23 1,334.47
1/4 AE 0.25 325.45 339.94 1,359.77
1/10 AE 0.10 132.71 138.51 1,385.07
Aust. 100 corona 0.98 1,232.42 1,241.42 1,266.49
British sovereign 0.24 299.99 312.99 1,329.61
French 20 franc 0.19 233.80 237.80 1,273.68
Krugerrand 1.00 1,278.81 1,288.81 1,288.81
Maple Leaf 1.00 1,274.90 1,288.90 1,288.90
1/2 Maple Leaf 0.50 727.32 664.07 1,328.15
1/4 Maple Leaf 0.25 322.55 338.36 1,353.44
1/10 Maple Leaf 0.10 134.08 137.87 1,378.74
Mexican 50 peso 1.21 1,515.81 1,526.81 1,266.33
.9999 bar 1.00 1,269.33 1,276.90 1,276.90
SPOT SILVER: 17.48      
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 13,141.70 13,427.70 18.78
US 40% silver 1/2s 0.30 4,964.85 5,114.85 17.34
100 oz .999 bar 100.00 1,728.00 1,763.00 17.63
10 oz .999 bar 10.00 176.30 181.30 18.13
1 oz .999 round 1.00 17.28 17.78 17.78
Am Eagle, 200 oz Min 1.00 18.98 20.48 20.48
SPOT PLATINUM: 931.20      
Plat. Platypus 1.00 946.20 976.20 976.20
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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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