The Moneychanger
Daily Commentary
Wednesday, 8 February a.d. 2017 Browse the commentary archive

Silver & gold have me a little bit baffled. They show great runs & highs during the day, but then fall back. Invisible Thumb on the scale? Bothers me.

Markets hate uncertainty, and Trump can produce more uncertainty than Carter's can pump out little liver pills. Stocks just don't like that.

Dow today gave back yesterday's gains, falling 35.95 (0.18%) to 20,054.34. S&P500 gainsaid that fall with a 1.59 rise (0.07) to 2,294.67, but other stock indices also spake out of both sides of their mouth, some rising, some falling, none much. Volatility Index, $VIX, is at a ten year low, which mirrors sleepy smugness & complacency in stocks. In other words, that leaves them vulnerable to sudden shocks.

Part of gold's trouble today may have been falling interest rates. Ten year Treasury yield fell third day in a row, down today by 1.6% to 2.351%. That kicked the dollar index up 43 basis points yesterday, but today, oddly, the dollar index closed unchanged. Looks weak & watery as orphanage milk.

I've been warning y'all that when silver & gold finally break into rally speed that they will not move in little crawls but in large jumps. This morning I found gold about $1,443, but on Comex it closed up only $3.40 (0.3%) at $1,237.60. Yesterday it busted though $1,233, reached $1,237.5, but closed only$1,234.20.

Gold's chart, however, looks fine,

Breakout above the bowl lip is advancing smartly toward the 200 DMA resistance at $1,280 and $1,310. I just fret over that falling back.

Ponder the silver chart,

Silver yesterday hit 1780¢ but closed at 1773.3¢, up only 6.6¢. Today it hit a new high for the move, 1788¢, but closed down 5¢ at 1768.3¢. Today's rise into a new high with a lower close was also, ominously, possibly, the first half of a key reversal downward. We'll see how that works out tomorrow.

Cutting silver a little slack, it is also very near the post-July downtrend line & the 200 day moving average, both about 1795¢ now. A surge through 1795¢ will carry silver to 1900¢, which I expect to see before this rally pauses to breathe. I am fretting, however.

On 8 February 1861 the Confederate States organized a government in Montgomery, Alabama.

On 8 February 1587 Mary, Queen of Scots, was beheaded in England. Although a lot of tears have been shed over Mary as a tragic character, that doesn't stand up on closer investigation. Here first husband was murdered, and a month after the Earl of Bothwell was acquitted on charges of having engineered her husband's death, she married him. More troubles and rebellions followed, and in 1567 she fled south to seek the protection of her second cousin, Queen Elizabeth I -- pretty generous of Elizabeth, since she was a rival claimant for Elizabeth's throne. When spent 18-1/2 years under a sort of house arrest, and at the last was found guilty of plotting to assassinate Elizabeth. This was not a clever plan against one of the notoriously unforgiving Tudors like Elizabeth, hence Mary met the headsman. Hard to sympathize with a woman who so relentlessly worked against her own interest.

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
8-Feb-17 Price Change % Change
Gold, $/oz 1,237.60 3.40 0.28%
Silver, $/oz 17.68 -0.05 -0.28%
Gold/Silver Ratio 69.988 0.389 0.56%
Silver/Gold Ratio 0.0143 -0.0001 -0.56%
Platinum 1,016.40 6.90 0.68%
Palladium 769.80 5.30 0.69%
S&P 500 2,294.67 1.59 0.07%
Dow 20,054.34 -35.95 -0.18%
Dow in GOLD $s 334.97 -1.52 -0.45%
Dow in GOLD oz 16.20 -0.07 -0.45%
Dow in SILVER oz 1,134.10 1.17 0.10%
US Dollar Index 100.25 0.00 0.00%
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SPOT GOLD: 1,240.70      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,270.48 1,281.64 1,281.64
1/2 AE 0.50 638.45 653.23 1,306.46
1/4 AE 0.25 325.42 333.44 1,333.75
1/10 AE 0.10 130.17 135.86 1,358.57
Aust. 100 corona 0.98 1,207.01 1,216.01 1,240.58
British sovereign 0.24 294.25 307.25 1,305.23
French 20 franc 0.19 231.64 237.64 1,272.84
Krugerrand 1.00 1,256.83 1,266.83 1,266.83
Maple Leaf 1.00 1,250.70 1,264.70 1,264.70
1/2 Maple Leaf 0.50 713.40 651.37 1,302.74
1/4 Maple Leaf 0.25 316.38 331.89 1,327.55
1/10 Maple Leaf 0.10 131.51 135.24 1,352.36
Mexican 50 peso 1.21 1,484.57 1,495.57 1,240.42
.9999 bar 1.00 1,240.70 1,252.70 1,252.70
SPOT SILVER: 17.75      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 23.00 27.00 35.29
VG+ Peace dollar 0.77 17.00 20.00 26.14
90% silver coin bags 0.72 12,476.75 12,762.75 17.85
US 40% silver 1/2s 0.30 5,044.50 5,194.50 17.61
100 oz .999 bar 100.00 1,765.00 1,790.00 17.90
10 oz .999 bar 10.00 179.00 184.00 18.40
1 oz .999 round 1.00 18.00 18.30 18.30
Am Eagle, 200 oz Min 1.00 19.25 20.75 20.75
SPOT PLATINUM: 1,016.40      
Plat. Platypus 1.00 1,031.40 1,061.40 1,061.40
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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.
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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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