The Moneychanger
Daily Commentary
Thursday, 11 May a.d. 2017 Browse the commentary archive

Some boogeyman spooked stocks today early on. Dow dropped 144+ points to a low at 20,798.90 about 10:45, but buyers came in and it recovered steadily through the day. Still finished 23.69 (0.11%) lower at 20,919.42. S&P500 lost more, 5.19 (0.22%) for a close at 2,394.44. Catalyst might have been that the imaginary owner of the imaginary company Snapchat fell 21%. Ooooo. I say "imaginary" because social media websites are only imagining that they are real companies that produce a real product. Luring people to look at pictures of each other or engage in meaningless 50 word conversations does not produce anything -- except advertising revenue. One day -- alas! -- these bloated imaginary companies will begin seeking their true value: zero.

Here's the S&P500 daily chart,

Technically it didn't take quite the hit the Dow did, although it sank more percentagewise. At least it didn't prick its 20 day moving average. However, 'tis still locked in that island formation that increasingly reminds me of a broadening top. Size of today's intraday dive suggests a great deal of nervousness in the market, with many fingers poised above the sell button.

US dollar index tried to rally today but was slapped down about 99.90, and ended the day down six basis points at 99.50. Dollar index should keep rising.

If y'all haven't been watching oil, here's the latest WTIC chart,

WTIC looked like it wanted to sink massively, but spiked down and recovered. In spite of this reaction, oil is headed further down unless it can climb over 51.

Dr. Copper is sick, too: Notwithstanding today's upsurge, trend is down.

Naaa, Comex silver & gold still dawdled today. Silver rose 5.8¢ (0.4%) to 1620.9¢. Gold augmented $5.40 (0.4%) to $1,222.70.

Remember the hurdles gold and silver needed to pass were $1,224 & 1620¢? Closes didn't get them there, but in the aftermarket they are trading at $1,225 & 1636¢.

Last few days these Comex closes have smelled like very old sardines sleeping in the sun. I look at the screen through the day & see higher prices, but then day's end arrives & somebody paints the tape with a low close. Maybe it's me. Maybe I'm just suspicious of everything that comes out of New York City. After all, how could a nat'ral born durn fool from Tennessee expect to grasp the vast & complex musheenry of hi fy-nance?

Silver & gold leaves us at the same crossroads. Gold is going nowhere until it throws a leg over $1,225 and steps out. Silver I'm raising the ante on: it needs to clear (close above) 1635¢.

One of the history websites I haunt has this entry for 11 May 1934: "A severe two-day dust storm stripped the topsoil from the great plains of the US and created a `Dust Bowl.'" Might as well say wet streets cause rain. Since storms had been blowing over the Great Plains for thousands of years without ever creating a dust bowl, how could a storm "strip the topsoil" in 1934?

Simple. The Great Plains were one vast grassland, with sod 18 inches deep or deeper -- impossible for a storm to blow away. But the Plains had been opened to "sodbusters," farmers who, instead of raising the livestock that thrived naturally in that environment (think zillions of buffalo), broke up the sod with plows. Stripped of its protective sod & exposed to the sun, it didn't take too many years to dry out that soil, so a "dust storm" could carry it away.

Worst thing you can do to soil is leave it naked to the sky.

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
11-May-17 Price Change % Change
Gold, $/oz 1,222.70 5.40 0.44%
Silver, $/oz 16.21 0.06 0.36%
Gold/Silver Ratio 75.433 0.063 0.08%
Silver/Gold Ratio 0.0133 -0.0000 -0.08%
Platinum 915.20 7.80 0.86%
Palladium 798.80 -0.40 -0.05%
S&P 500 2,394.44 -5.19 -0.22%
Dow 20,919.42 -23.69 -0.11%
Dow in GOLD $s 353.68 -1.97 -0.55%
Dow in GOLD oz 17.11 -0.10 -0.55%
Dow in SILVER oz 1,290.61 -6.10 -0.47%
US Dollar Index 99.50 -0.06 -0.06%
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: 1,225.00      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,240.31 1,250.31 1,250.31
1/2 AE 0.50 618.12 646.19 1,292.38
1/4 AE 0.25 309.06 328.61 1,314.43
1/10 AE 0.10 123.62 133.89 1,338.93
Aust. 100 corona 0.98 1,189.94 1,198.94 1,223.16
British sovereign 0.24 288.37 293.37 1,246.24
French 20 franc 0.19 228.71 232.71 1,246.42
Krugerrand 1.00 1,233.58 1,243.58 1,243.58
Maple Leaf 1.00 1,235.00 1,246.00 1,246.00
1/2 Maple Leaf 0.50 704.38 643.13 1,286.25
1/4 Maple Leaf 0.25 312.38 327.69 1,310.75
1/10 Maple Leaf 0.10 129.85 133.53 1,335.25
Mexican 50 peso 1.21 1,463.57 1,474.57 1,223.00
.9999 bar 1.00 1,223.00 1,236.00 1,236.00
SPOT SILVER: 16.36      
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 11,518.65 11,876.15 16.61
US 40% silver 1/2s 0.30 4,634.45 4,784.45 16.22
100 oz .999 bar 100.00 1,616.00 1,661.00 16.61
10 oz .999 bar 10.00 161.60 167.10 16.71
1 oz .999 round 1.00 16.16 16.76 16.76
Am Eagle, 200 oz Min 1.00 17.51 18.51 18.51
SPOT PLATINUM: 915.20      
Plat. Platypus 1.00 925.20 938.20 938.20
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© 2015 Little Mountain Corporation, d.b.a. The Moneychanger. All rights reserved. May not be republished in any form, including electronically, without our express permission.

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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