The Moneychanger
Daily Commentary
Monday, 8 May a.d. 2017 Browse the commentary archive

Weird. Flat weird.

The Volatility Index ("VIX") is also knows as the smugness or fear index. When investors are smug & complacent, it's low. When they wax fearful, the VIX shoots up.

Get this: according to Reuters, today the VIX read 9.77, the lowest reading since 1993, twenty-four years ago. What do we know about rare, extreme numbers? Well, they're RARE. Don't happen often, & when the do occur often signal some reversal. When a pendulum swings as far right as it can, there's no place left to swing but left.

It gets weirder. Look at this S&P500 chart,

After making a new all-time high close on Friday, the S&P500 today tried to rise, even made a marginally higher new intraday high, but stalled. Gained a microscopic 0.09 point to close 2,399.38. And this comes after Immanuel Macron was elected in France, which, to hear the globalist media tell it, means the world was saved from death by Le Pen. Seems stocks should have driven higher, with the Le Pen threat removed. On the other hand, since Macron's victory as already widely expected, they bought the rumor and today sold the news. French & German stocks fell, too. Dow Industrials rose a piddling 5.34 to 20,012.28.

None of this says stocks are likely to crash tomorrow, but it does paint a question mark over them.

US dollar index jumped 41.2 basis points (0.42%) to 99.86. Lo, the chart,

That boosts it away from the bottom support line and constitutes the first half of a key reversal, but didn't quite penetrate to the light above the 200 day moving average. Odds are the dollar index has turned up.

Silver & gold were confused today, too. I really expected that the French election outcome would take pressure off silver & gold, but they spun wheels & gained no traction. Gold rose fifty cents on Comex to $1,225.30 while silver lost 1.6¢ to 1619.9¢.

At 8:00 Eastern gold had reached $1,236, but it slid down the slope the rest of the day, at the bottom bouncing twice off $1,226.50 (I'm not looking at a chart of Comex trading). Best I can say for gold is that it's been falling some time and seems supported around $1,225.

Silver has sunk for 14 out of the last 15 days. View the carnage here,

The arrow at the RSI shows an extremely oversold reading at 19.30, lowest since late 2014. MACD is at a 9 month low. For now the 1620¢ area is holding it, but if that gives silver will fall to 1600¢.

But I have to wonder about that -- a fifteen day losing streak, continued? It's another case of a rare reading begging for the pendulum to reverse.

Here's a little Susan story. Susan looked at housework somewhat the same way a mongoose looks at a cobra. She did it, but it did not rank high on her list. And with (at that time) five children to care for, she really didn't have time. My mother was a natty housekeeper, but Susan's wasn't. Oh, she was clean, she just wasted daylight washing the tops of the baseboards, etc.

So I got to pondering. Busy as Susan was, it was pointless, even cruel, for me to complain about things out of order. How could I please both of us? I found and hired a housekeeper for Susan.

One of my best ideas ever, hiring Ada, but as it turned out she wasn't much of a housekeeper either, and none too speedy. However, she loved children, and they loved her, and she did take a lot of the work off Susan. In the end, I learned that the only thing important for me to care about was two happy women in the house who were busy loving children. That beats clean baseboards any day.

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-May-17 Price Change % Change
Gold, $/oz 1,225.30 0.50 0.04%
Silver, $/oz 16.20 -0.02 -0.10%
Gold/Silver Ratio 75.640 0.105 0.14%
Silver/Gold Ratio 0.0132 -0.0000 -0.14%
Platinum 917.10 9.40 1.04%
Palladium 812.90 -7.50 -0.91%
S&P 500 2,399.38 0.09 0.00%
Dow 21,012.28 5.34 0.03%
Dow in GOLD $s 354.49 -0.05 -0.02%
Dow in GOLD oz 17.15 -0.00 -0.02%
Dow in SILVER oz 1,297.13 1.61 0.12%
US Dollar Index 99.86 0.41 0.41%
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SPOT GOLD: 1,224.40      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,239.71 1,249.71 1,249.71
1/2 AE 0.50 617.82 645.87 1,291.74
1/4 AE 0.25 308.91 328.45 1,313.78
1/10 AE 0.10 123.56 133.83 1,338.27
Aust. 100 corona 0.98 1,189.36 1,198.36 1,222.56
British sovereign 0.24 288.22 293.22 1,245.64
French 20 franc 0.19 228.60 232.60 1,245.82
Krugerrand 1.00 1,232.97 1,242.97 1,242.97
Maple Leaf 1.00 1,234.40 1,245.40 1,245.40
1/2 Maple Leaf 0.50 704.03 642.81 1,285.62
1/4 Maple Leaf 0.25 312.22 327.53 1,310.11
1/10 Maple Leaf 0.10 129.79 133.46 1,334.60
Mexican 50 peso 1.21 1,462.85 1,473.85 1,222.40
.9999 bar 1.00 1,222.40 1,235.40 1,235.40
SPOT SILVER: 16.18      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 22.50 25.50 33.33
VG+ Peace dollar 0.77 15.00 18.00 23.53
90% silver coin bags 0.72 11,422.13 11,779.63 16.48
US 40% silver 1/2s 0.30 4,579.88 4,729.88 16.03
100 oz .999 bar 100.00 1,597.50 1,642.50 16.43
10 oz .999 bar 10.00 159.75 165.25 16.53
1 oz .999 round 1.00 15.98 16.58 16.58
Am Eagle, 200 oz Min 1.00 17.33 18.33 18.33
SPOT PLATINUM: 917.10      
Plat. Platypus 1.00 927.10 940.10 940.10
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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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