The Moneychanger
Weekly Commentary
Friday, 9 December a.d. 2016 Browse the commentary archive
Here's the weekly scorecard:
  2-Dec-16 9-Dec-16 Change % Change
Silver, cents/oz. 1,675.30 1,689.70 14.40 0.9
Gold, dollars/oz. 1,175.10 1,159.40 -15.70 -1.3
Gold/silver ratio 70.143 68.616 -1.527 -2.2
Silver/gold ratio 0.0143 0.0146 0.0003 2.2
Dow in Gold Dollars (DIG$) 337.24 352.26 15.02 4.5
Dow in gold ounces 16.31 17.04 0.73 4.5
Dow in Silver ounces 1,144.30 1,169.25 24.95 2.2
Dow Industrials 19,170.42 19,756.85 586.43 3.1
S&P500 2,191.95 2,259.53 67.58 3.1
US dollar index 100.86 101.51 0.65 0.6
Platinum 931.00 913.70 -17.30 -1.9
Palladium 744.80 735.15 -9.65 -1.3

Not much joy in Gold- & Silverville this week. Silver managed to climb a pittance but gold lost ground, along with platinum & palladium. Stocks continued to rise in the Trump rally, gaining more than 3% this week. US dollar came back from a minor correction to end the week above resistance.

Still figuring that the Dow Industrials traced out a pennant at the half way point of a rally, the index ought to rise to 19,800 or so before it stops. Today the Dow gained 142.04 (0.72%) for a close at 19,756.85. SP500 rose 13.34 (0.59%) to 2,259.53.

How long can it run? Till it stops. Peaks often reach further than you can expect or imagine.

US dollar index gained 50 basis points (0.49%) to end at 101.51. That takes it above resistance/support about 101. Seems like a mighty brief correction, so maybe the dollar index has one more leg up. We'll see on Monday what happens around 102. None of this makes sense, with Trump announce big spending plans which can only weigh down the federal government with more debt and force the Fed to create more new money. But what do I know? Dad durn people may have invented a perpetual money machine.

Euro is bumping along the bottom of its range, trying to break down. Chart's here, Fell 0.51% to $1.0531. Yen did break down through support. Lost 1.12% today to 86.71. Ugly.

If I sound demoralized, it's because I am. Trump campaigned on a promise to "drain the swamp" but durned if he don't go back to the swamp to drag out the Creature from the Bank Lagoon. Searched among the legions of parasites, leeches, and liver flukes and picked out Gary Cohn of Goldman Sachs to head his National Economic Council, after he has already nominated Steven Mnuchin, a second generation Goldman-Sachser suffering from acute consonant poisoning (look at his last name). All I can say is, if this is draining the swamp, I'd hate to have to feed the mosquitoes after he's done.

But I'm demoralized about silver & gold, too. I thought silver would have to back & fill some after that big advance on Wednesday, but gold just plopped down on it rear. Silver lost 12.3¢ (0.7%) to 1689.7¢. Gold lost $10.40 (0.9%) to $1,159.40.

Gold is teetering on the verge. Last intraday low was $1,158.60, today it hit $1,156.85. Okay to re-visit a low, but doing so requires a smart advance following. Gold simply can't climb out of an oversold state. Chart's here,

Silver doesn't look so bad,

It still is holding on above the bottom of the old trading channel. Okay. MACD & ROC are positive, but RSI took a hit today and ended below 50. Not okay. Yet silver continues to hold up better than gold.

Both markets act as if the selling has washed out and no new sellers are venturing to enter the game. That's good, but as in EEGs you don't want a flat line, so also in markets.

Next week the Fed Open Mouth Committee meets on the 13th & 14th, & the majority expects them to raise rates a timid 1/4 of one percent. If anything, that news will take pressure OFF silver & gold. We can only wait and see.

Next week I have to attend a funeral down in Dallas and won't be sending out commentaries on Monday, Tuesday, or Wednesday. I will genuinely miss y'all. I seldom see y'all's faces, but still feel like I know you personally.

On 9 December 1608 was born in London the poet and political writer, John Milton. His pamphlet, "Areopagitica," remains the best defense of free speech ever published. Active in the Puritan Commonwealth, he served as secretary to Cromwell the Protector, and was involved in diplomacy at the world's highest levels. Ranking as one of the foremost English writers. his magnum opus is the blank vere epic, Paradise Lost (1667). There may be better lines in it, but my favorite comes when Satan spies Adam & Eve for the first time and devises a plot to revenge himself on God by tempting them to disobey him. Moved for a moment by their beauty, he justifies his evil with his need. "So spake the Fiend, and with necessitie, The tyrant's plea, excused his devilish deed." Well, I also like another quote from Satan that so succinctly descries rebellion against God: "Better to reign in hell than serve in heaven."

By 1654 he had become totally blind, forcing him to dictate his poetry to helpers. One of his best known sonnets, "On His Blindness" attempts to come to grips with that blindness as originating in God's providence. He ends with the unforgettable, courageous line, "They also serve who only stand and wait."

When the Stuart king was restored to the throne in 1660, Milton went into hiding for his life and only re-surfaced after a general pardon was announced. He died at age 65 in 1674.

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
9-Dec-16 Price Change % Change
Gold, $/oz 1,159.40 -10.40 -0.9
Silver, $/oz 16.90 -0.12 -0.7
Gold/Silver Ratio 68.616 -0.610 -0.9
Silver/Gold Ratio 0.0146 -0.0001 -0.7
Platinum 913.70 -23.70 -2.5
Palladium 735.15 -4.15 -0.6
S&P 500 2,259.53 13.34 0.6
Dow 19,756.85 142.04 0.7
Dow in GOLD $s 352.26 5.68 1.6
Dow in GOLD oz 17.04 0.27 1.6
Dow in SILVER oz 1,169.25 16.80 1.5
US Dollar Index 101.51 0.50 0.5
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: 1,157.90      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,191.48 1,196.69 1,196.69
1/2 AE 0.50 590.02 610.79 1,221.58
1/4 AE 0.25 297.90 311.19 1,244.74
1/10 AE 0.10 121.47 126.79 1,267.90
Aust. 100 corona 0.98 1,129.30 1,138.30 1,161.29
British sovereign 0.24 274.61 287.61 1,221.81
French 20 franc 0.19 214.02 218.02 1,167.75
Krugerrand 1.00 1,172.95 1,182.95 1,182.95
Maple Leaf 1.00 1,167.90 1,181.90 1,181.90
1/2 Maple Leaf 0.50 665.79 607.90 1,215.80
1/4 Maple Leaf 0.25 295.26 309.74 1,238.95
1/10 Maple Leaf 0.10 122.74 126.21 1,262.11
Mexican 50 peso 1.21 1,386.19 1,397.19 1,158.82
.9999 bar 1.00 1,161.95 1,169.90 1,169.90
SPOT SILVER: 16.85      
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 12,544.68 12,830.68 17.95
US 40% silver 1/2s 0.30 4,777.53 4,927.53 16.70
100 oz .999 bar 100.00 1,664.50 1,699.50 17.00
10 oz .999 bar 10.00 169.95 174.95 17.50
1 oz .999 round 1.00 16.65 17.15 17.15
Am Eagle, 200 oz Min 1.00 18.35 19.85 19.85
SPOT PLATINUM: 913.70      
Platinum Platypus 1.00 928.70 958.70 958.70
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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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