The Moneychanger
Daily Commentary
Wednesday, 12 April a.d. 2017 Browse the commentary archive

Somethin' ain't right with the closing prices for the US dollar index. I use two sources & they ought to agree, but today they don't, by a big margin. So the Dollar index either closed down 59 basis points (-0.6%) or up 9 basis points at 100.71. I am inclined to believe that latter price is a computer fluke & the dollar index fell 60 bps.

What we do know is that the dollar index was fairly quiet around 100.70 until 3:00 p.m. Eastern time, when somebody pulled the plug on it. It sank to 100.09, below the 20 day moving average now at 100.14.

Cause of this bloodbath was apparently [who really knows] that in a Wall St. Journal interview Trump said the US dollar was too high and hurting trade. I can't find another story that would account for that fall, and it was datelined about 2 hours ago, same time the dollar index fell.

The dollar index's sinking spell goosed gold wildly. On Comex, remember, Gold closes at 12:30 Eastern time. It had closed at $1,275.30, up $4.10 (.3%). Although that was positive, it was a flat, lackluster day. It took about a hour after that Trump bomb hit the market, but gold jumped up another $10 to $1,286.1 in the aftermarket. That left the day up $19.20 or 1.2%, not shabby.

But silver rubbed the shine off gold's sprint. Comex silver rose 4.6¢ (0.3%) to 1827.9¢, then about 4:30 leapt to 1846¢, up 22.7¢ from yesterday's Comex close.

Silver & gold are gainsaying each other. Gold smashes resistance at $1,275, but silver still lags behind, cowering below 1850¢. That won't work. Either gold will pull silver up or silver will pull gold down.

Stocks cracked today, closing below their 50 day moving averages. Here's the S&P500 chart, http://schrts.co/vtdPMb

Notice that the S&P500 has broken down through the uptrend line (bottom boundary of that even-sided triangle) AND through the 50 DMA, which 'til now had acted as a safety net. Reckon the net tore.

More witnesses. Here's the Volatility Index (VIX) chart, http://schrts.co/U873Yf

A rising volatility index means falling stock prices. Notice how suddenly changes take place as fear bites into the market. See June 2016, for instance.

Now the VIX has punched through resistance that has held since Trump's election. Could take a big bite out of stocks.

Y'all might also ponder the Dow Transports chart, http://schrts.co/wCgJv7

It topped on 1 March and has been sliding down-gulch from there. Below 20 & 50 DMAs. Suggests stocks topped 1 March.

Another reason to believe stocks cracked today, although as yet it's a sign no bigger than a man's hand on the horizon, is the Dow priced in silver & gold. Dow in Gold chart's here, http://schrts.co/8Sv0tc

Yes, yes, it's a tiny break, the 7/100th of an ounce between the old low at 16.18 oz & today's close at 16.11 oz, but 'tis still a break, & long-awaited. Now look at the Dow in Silver, http://schrts.co/ohwLZP Razor thin breach there, too, 1,126.87 oz v. 1,125.24 oz today, but a breach is a breach. Let's see if they widen.

Here's a little poem for Susan's birthday:

All unforeseen & unawaited,

rain scattered husks

of tulip poplar bud & bloom

on walk & ground.

Surprised?

It was not possible

they should be held

by winter's death.

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
12-Apr-17 Price Change % Change
Gold, $/oz 1,275.30 4.10 0.32%
Silver, $/oz 18.28 0.05 0.25%
Gold/Silver Ratio 69.769 0.049 0.07%
Silver/Gold Ratio 0.0143 -0.0000 -0.07%
Platinum 964.90 -1.00 -0.10%
Palladium 796.15 -6.80 -0.85%
S&P 500 2,344.93 -12.65 -0.54%
Dow 20,591.86 -59.44 -0.29%
Dow in GOLD $s 333.78 -2.04 -0.61%
Dow in GOLD oz 16.15 -0.10 -0.61%
Dow in SILVER oz 1,126.53 -6.10 -0.54%
US Dollar Index 100.71 0.09 0.09%
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: 1,286.10      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,308.61 1,327.90 1,327.90
1/2 AE 0.50 655.40 678.42 1,356.84
1/4 AE 0.25 330.91 345.00 1,379.99
1/10 AE 0.10 132.37 140.57 1,405.71
Aust. 100 corona 0.98 1,249.29 1,258.29 1,283.71
British sovereign 0.24 305.02 318.02 1,350.97
French 20 franc 0.19 240.11 246.11 1,318.24
Krugerrand 1.00 1,297.67 1,307.67 1,307.67
Maple Leaf 1.00 1,296.10 1,309.10 1,309.10
1/2 Maple Leaf 0.50 739.51 675.20 1,350.41
1/4 Maple Leaf 0.25 327.96 344.03 1,376.13
1/10 Maple Leaf 0.10 136.33 140.18 1,401.85
Mexican 50 peso 1.21 1,536.57 1,547.57 1,283.54
.9999 bar 1.00 1,286.10 1,298.10 1,298.10
SPOT SILVER: 18.46      
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 12,877.15 13,234.65 18.51
US 40% silver 1/2s 0.30 5,253.95 5,403.95 18.32
100 oz .999 bar 100.00 1,836.00 1,861.00 18.61
10 oz .999 bar 10.00 186.10 191.10 19.11
1 oz .999 round 1.00 18.71 19.01 19.01
Am Eagle, 200 oz Min 1.00 19.96 20.61 20.61
SPOT PLATINUM: 964.90      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 959.90 1,004.90 1,004.90
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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.
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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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