The Moneychanger
Daily Commentary
Thursday, 30 March a.d. 2017 Browse the commentary archive

Mercy. I take two days off & markets turn upside down.

The sorry, rotten, scrofulous US dollar index turned around at 99 & turned up. Chart is here,

Y'all will note that after a spike low through 99 support & lunge toward the 200 day moving average, the scurvy US dollar index has risen the last three days. Today it hit the downtrend line from 1 March -- resistance. It closed at 100.38, up 54 basis points (0.54%), just below the 100.6 50-DMA & even more resistance -- good place to fail. Interest rates fell a little yesterday, but rose again today. US ten year Treasury yield ended at 2.416%. Chart,

Seems to me that the 10 year yield is range trading & is just coming up off the bottom range boundary, which whispers that it will rise. But what do I know?

Stocks caught a bounce up off the 50 DMA, but soon will hit the downtrend line overhead. Behold the chart,

Today the Dow added 69.17 (0.33%) to reach 20,728.49. S&P500 clawed back 6.93 (0.29%) to end at 2,368.06. Dow needs to penetrate 20,850 above & the S&P500 2,380 to rupture that downtrend line.

Gold stumbled and fell $8.70 (0.7%) to $1,245. Silver lost 4.6¢ (0.3%) to 1818.5¢.

Last few days the gold silver ratio has fallen nearly 3% from 70.44 to 68.463. Silver is kicking sand in gold's face like the musclebound fellow in an old Charles Atlas comic book ad for weightlifting instruction: "Don't let them call you skinny!" What gives? Silver's performance correlates closely to the stock market. With stocks rallying, you are seeing that correlation. If gold continues to weaken, however, don't expect silver to stand tall all by itself. Here's the Gold/Silver ratio chart, Mark where 4 days ago it fell through the ganged moving averages (20, 50, & 200) & through the downtrend line from March 2015. Mark also how momentum & direction indicators point down, suggesting the fall can continue for some time.

Gold chart is hiding right here, Looks like a defeat & turn down from the 200 DMA, but wouldn't be surprising that gold needed more than one try to conquer that significant mile marker. For right now, though, it's a nasty chart that gold needs to correct within very short order.

Throw an eye over silver,

Silver has tangled itself in the 200 DMA, backing down today with a lower close. If silver intends to rise further, it has no choice but to advance & repair this little damage soon, as in tomorrow.

On 31 March 1596 was born Rene Descartes, destined to become a philosopher in his native France. In founding the certainty he existed on himself -- "I think, therefore I am" -- he shifted both truth & certainty from the objective to the subjective, & thus became the grand ancestor of those brilliant thinkers who today declare, "I think I am a warthog, therefore I am." Now I ain't no more'n a nat'ral born durn fool from Tennessee, but I am pretty certain there ain't a particle of common sense, or any other kind of sense, in that.

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
30-Mar-17 Price Change % Change
Gold, $/oz 1,245.00 -8.70 -0.69%
Silver, $/oz 18.19 -0.05 -0.25%
Gold/Silver Ratio 68.463 -0.304 -0.44%
Silver/Gold Ratio 0.0146 0.0001 0.44%
Platinum 951.60 -0.90 -0.09%
Palladium 797.50 7.30 0.92%
S&P 500 2,368.06 -12.65 -0.53%
Dow 20,728.49 69.17 0.33%
Dow in GOLD $s 344.17 3.53 1.04%
Dow in GOLD oz 16.65 0.17 1.04%
Dow in SILVER oz 1,139.87 6.67 0.59%
US Dollar Index 100.38 0.54 0.54%
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SPOT GOLD: 1,241.80      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,266.64 1,282.16 1,282.16
1/2 AE 0.50 632.81 655.05 1,310.10
1/4 AE 0.25 319.51 333.11 1,332.45
1/10 AE 0.10 127.80 135.73 1,357.29
Aust. 100 corona 0.98 1,208.08 1,217.08 1,241.67
British sovereign 0.24 294.51 307.51 1,306.34
French 20 franc 0.19 231.84 237.84 1,273.94
Krugerrand 1.00 1,255.46 1,265.46 1,265.46
Maple Leaf 1.00 1,251.80 1,264.80 1,264.80
1/2 Maple Leaf 0.50 714.04 651.95 1,303.89
1/4 Maple Leaf 0.25 316.66 332.18 1,328.73
1/10 Maple Leaf 0.10 131.63 135.36 1,353.56
Mexican 50 peso 1.21 1,485.89 1,496.89 1,241.51
.9999 bar 1.00 1,241.80 1,253.80 1,253.80
SPOT SILVER: 18.11      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 22.50 25.25 33.01
VG+ Peace dollar 0.77 15.50 18.00 23.53
90% silver coin bags 0.72 12,662.65 13,020.15 18.21
US 40% silver 1/2s 0.30 5,150.70 5,300.70 17.97
100 oz .999 bar 100.00 1,801.00 1,826.00 18.26
10 oz .999 bar 10.00 182.60 187.60 18.76
1 oz .999 round 1.00 18.36 18.66 18.66
Am Eagle, 200 oz Min 1.00 19.61 20.26 20.26
SPOT PLATINUM: 951.60      
Plat. Platypus 1.00 946.60 991.60 991.60
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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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