The Moneychanger
Daily Commentary
Monday, 24 April a.d. 2017 Browse the commentary archive

Zut alors! Today we discovered one force that had been floating gold and depressing stocks: the French presidential election.

Moi, I have no chien in that fight, but I was curious enough to do some deep research: I went read the Wikipedia article on Immanuel Macron, the "outsider" who came first in the voting with 24% to Marine Le Pen's 22%.

Sacre bleu! He's more wet cardboard than a Clinton. Investment banker, government bureaucrat, apparatchik, he left the Socialist party last August to form his own "independent" party. Those of a suspicious and conspiratorial nature would basely deduce that the Elite created this imposter out of whole cardboard (How do you say "Barack Obama" in French?) because their little globalist Eurohearts were fibrillating over the prospect of LePen's election sparking a French withdrawal from the European Onion (union, union, make that union). Get this: He enunciated no platform until 3 March 2017!

Putting forward this faker screams that the Elite are terrifié!

Results of the election roiled several markets. The euro rose 1.33% to $1.088. Chart's here,

Euro gapped up through the existing downtrend line and range boundary & even closed above its 200 DMA. Now whether it can stay there & advance after the boost from the election fades remains another question. Yen suffered, too, losing 0.64% to 91.15. Behold,

As the euro gapped up, so the US dollar index (57% euro) gapped down. Painful chart may be found right here,

Dollar careened 91 basis points (0.9%) to close at 98.97, barely above its 200 day moving average & below its support around 99. Has its mouth set to move lower, lower.

Both in Europe & the US, stocks were encouraged by removing the specter of an immediate Le Pen victory. Dow Industrials & S&P500 both flashed unequivocal signals they were finished correcting & beginning yet another leg up. Dow is here, & S&P500 here,

The Dow leapt 216.13 (1.05%) to 20,763.89 and the S&P500 vaulted 25.46 (1.08%) to 2,374.15. Look at either chart. The gap o'erleapt both the 50 DMA & the downtrend line from the 1 March high. On large volume. It ways what it says: higher prices coming, till Macron-fever wears off.

Comex Gold closed $11.60 (0.9%) lower at $1,275.80. In fact the election results sent it tumbling more than $20 but it regained half of that later. Silver, having already taken its beating last week, was not so ill-treated. Fell as low at 1756¢ but ended at 1784.8¢, actually up 1.8¢ from Friday.

I hate it when people say I told y'all so, but I do remember SOMEbody remarking that geopolitical crisis/safe haven buying had only a passing effect on gold prices and could be dangerous bait. But then, there's no reason to worry about that bait because other reasons abound to buy gold, not the least being the newly-globalized Trump on the throne. Eventually his Rooseveltian policies will have their paralyzing, withering economic result. Just hope they don't end in another World War.

Behold, the gold chart!

Gold fell through the bottom of that rising wedge all the way to the 20 DMA (1,267). That break says gold will fall more, and targets abound. Sure, the 200 DMA at $1,259 might catch it, or the 50 DMA at $1,246. That is also close to the halfway point of the last upmove, and a reasonable target. Gold may fiddle in a correction till mid-May before it marches upward again with gusto, but march it will.

The chart shows the breakdown from the wedge, the peaked and falling RSI indicator, the downturning MACD, and rising volume on the fall. Correction has begun that will take it lower, but the upmove that began in December hath not nearly ended yet.

Look at the gold/silver ratio chart,

It was bound to correct, and did so by silver holding still while gold fell. Friends, I'm going to bare my soul to y'all. In 2008 I overlooked a ratio breakout I should have seen. That's left me pretty respectful of broken trend lines eve since, like a hound once shocked by an electric fence. As you can see from this 14 month chart, , the ratio has already broken downtrend lines several times, fanning out to the right as it continued falling. Is this just another. one of those, or a change of trend that will reach much higher? Can't tell yet, can only watch.

What's my point? That if I'm wrong and silver is not strong as I judge, but weak, the ratio might climb back to 85. You always have to look the worst in the eyeball without flinching. I want to see that gold/silver ratio fall below its 200 DMA again.

I am not sweating silver, & less so since the weekend. Sure, it fell on the French election news, but it popped back. It's completed a 50% correction of the last upmove already, but could still fall further, to 1740¢ or lower. Sorry to disappoint you bargain hunters, but I am not looking for a deep correction.

On 24 April 1877, twelve years after hostilities had ended, the last yankee occupation troops were withdrawn from the South -- from New Orleans.

Today is Confederate Memorial Day in Alabama. Memoral day began in Friendship Cemetery in Columbus, Mississippi in 1865 when the ladies began decorating graves of blue & gray alike.

I thank y'all for your prayers for my dog Bridget, but I still haven't found her, and not for want of looking. I'm afraid she'll never find her way home, and Susan really loved that dog.

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
24-Apr-17 Price Change % Change
Gold, $/oz 1,275.80 -11.60 -0.90%
Silver, $/oz 17.85 -0.02 -0.10%
Gold/Silver Ratio 71.481 -0.577 -0.80%
Silver/Gold Ratio 0.0140 0.0001 0.81%
Platinum 957.20 -17.30 -1.78%
Palladium 795.30 4.70 0.59%
S&P 500 2,374.15 -12.65 -0.53%
Dow 20,763.89 216.13 1.05%
Dow in GOLD $s 336.44 6.50 1.97%
Dow in GOLD oz 16.28 0.31 1.97%
Dow in SILVER oz 1,163.37 13.27 1.15%
US Dollar Index 98.97 -0.91 -0.91%
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: 1,275.80      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,293.66 1,303.66 1,303.66
1/2 AE 0.50 650.15 672.98 1,345.97
1/4 AE 0.25 328.26 342.23 1,368.93
1/10 AE 0.10 131.30 139.44 1,394.45
Aust. 100 corona 0.98 1,239.28 1,248.28 1,273.50
British sovereign 0.24 302.58 315.58 1,340.59
French 20 franc 0.19 238.19 244.19 1,307.94
Krugerrand 1.00 1,284.73 1,294.73 1,294.73
Maple Leaf 1.00 1,285.80 1,298.80 1,298.80
1/2 Maple Leaf 0.50 733.59 669.80 1,339.59
1/4 Maple Leaf 0.25 325.33 341.28 1,365.11
1/10 Maple Leaf 0.10 135.23 139.06 1,390.62
Mexican 50 peso 1.21 1,524.26 1,535.26 1,273.34
.9999 bar 1.00 1,275.80 1,287.80 1,287.80
SPOT SILVER: 17.89      
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 12,433.85 12,791.35 17.89
US 40% silver 1/2s 0.30 5,085.80 5,235.80 17.75
100 oz .999 bar 100.00 1,779.00 1,804.00 18.04
10 oz .999 bar 10.00 180.40 185.40 18.54
1 oz .999 round 1.00 18.14 18.44 18.44
Am Eagle, 200 oz Min 1.00 19.39 20.04 20.04
SPOT PLATINUM: 957.20      
Plat. Platypus 1.00 952.20 997.20 997.20
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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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