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

Sorry I missed y'all yesterday, but I just had too much day to fit into 24 hours. After a week's absence, here's what markets look like:

Look at the US dollar index and tell me if it don't look sorry as gully dirt, ,

It broke down through the neckline of a head & shoulders top, and has kept on breaking down. It failed at an attempt to recover up through the latest broken support. Right now it must re-conquer 96.26 above, a mere 75 basis points. No signs of life in other indicators.

This chart does not show today's trading. Dollar index closed up 9 basis points (0.09%) at 95.56. Dollar index has made no move toward recovering, and still points down.

Stocks today rose. Dow gained 123.07 (0.57%) to $21,532.14 & the S&P500 added 17.72 (0.73%) to 2,443.25. See S&P500 chart right here,

Stocks took well today Fed Chairthing Janet Yellen's congressional testimony demonstrating that she doesn't know sic 'em from come here & that she still plans to wreck the economy. I don't understand anything any more. I reckon I AM aonly a nat'ral born durn fool from Tennessee.

Technically both the Dow & S&P500 have traced out megaphone or broadening top formations. Those usually end by succumbing to gravity, but stocks are at a manic top, so expect no sense.

Today Comex gold rose $4.50 (0.4%) to $1,218.10. Silver gained 14.2¢ to 1583.9¢.

Start with the gold chart right here,

First glance looks wretched, but look closer. After the plunge on 7 July gold made a low at $1,204 on 10 July with a key reversal upward confirmed by the last two days' trading. The RSI has turned up from a deep low and the MACD is hooking up as if it means to turn up, too. None of this amounts to a hill of beans until gold can penetrate that downtrend line, today about $1,225. Closing at $1,218.10 leaves it below resistance. Trend in force remains in force until broken, and right now gold's trend is down. That key reversal has turned the short term trend up, but is it strong enough to escape the dungeon below that downtrend line? Only whispered answer I hear is this: premiums on gold coins have strengthened, indicating retail buying.

Silver chart is a doozy,

I know not what afflicted the usually reliable, but the 7 July bar contains a gross error. Comex low that day was $15.30, but this chart shows a 1434¢ low that day. If it was indeed 1530¢, then the next day traded to a new low fort he move, but closed higher: a key reversal, since confirmed by two more days' climb.

The RSI above shows an overbought low on the 7th silver, followed by a rise. So far, so good. The MACD below also is hooking upwards. To my taste silver must clear 1600¢, then quickly after that 1625¢ to confirm any turnaround. This being the seasonal low time of the year, there's a good chance that low on 7 July might have marked the decline's end, but that must first be confirmed by higher prices and upward breaks through downtrend lines.

Now glance at the gold/silver ratio here,

Again I believe we are dealing with an erring entry at that 79.62 high. That bar is the entry for 7 July, same day that the silver chart shows a low 96¢ lower than actual. Since then the ratio has fallen back under the dotted green channel line, but it must fall through the dotted red uptrend line to PROVE it has turned down.

So the last week has produced a lot of turmoil, but view that against a background of summer markets lightly traded and at seasonal lows for silver & gold & it's risky to jump to any conclusions. Working hypothesis at this moment is that silver & gold bottomed last week but will not begin any serious gains before August, and that stocks are topping. US dollar index might turn up again, but the weight of present appearance opposes that.

I vacationed in Eugene, Oregon where I stayed with long-time friends. As the Germans say to describe living high on the hog, you can live like God in France in Oregon. If it may be eaten or drunk, they've got it there. Even if it may be smoked, as long as it's only dope and not the demon tobacco, it may be smoked there. Providence kept me out of the dope and drugs scene: I was a senior in college and 21 years old before I ever even saw anybody smoke a joint.

Oregon's the place where you can fire up a joint but are forbidden by law to pump your own gas. I nearly got arrested one time for chewing gum [sic] in the state aquarium. That's when I learned the Oregon state motto, "We never met a rule we didn't like." Odd how old hippies turn into dictators. I guess the Greeks were right, that eventually any extreme turns into its opposite.

Susan & I took numerous vacations in Oregon. Whole trip I was having "flashbacks," remembering what Susan & I did there, or there. I'd see women who by some gesture or mannerism or hair do brought Susan to remembrance. I confess, I can't get her out of my mind after 50 years of loving her. At least now much of the sorrow has departed, but I am still filled with the most intense longing for her. Every time I see a young woman with small children I want to run up to her husband & say, "Look! Look what you've got! Don't miss a moment, love her!"

But if I had done that in Oregon, I'd have been arrested for sure, either as a lunatic or a rulebreaker. They'd have locked me in that jail where they keep fools who try to pump their own gas.

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-Jul-17 Price Change % Change
Gold, $/oz 1,218.10 4.50 0.37%
Silver, $/oz 15.84 0.14 0.90%
Gold/Silver Ratio 76.905 -0.409 -0.53%
Silver/Gold Ratio 0.0130 0.0001 0.53%
Platinum 916.30 20.30 2.27%
Palladium 872.65 14.70 1.71%
S&P 500 2,443.25 17.72 0.73%
Dow 21,532.14 123.07 0.57%
Dow in GOLD $s 365.41 0.74 0.20%
Dow in GOLD oz 17.68 0.04 0.20%
Dow in SILVER oz 1,359.44 -4.46 -0.33%
US Dollar Index 95.56 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: 1,218.70      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,236.98 1,259.53 1,259.53
1/2 AE 0.50 639.90 630.68 1,261.35
1/4 AE 0.25 313.56 322.96 1,291.82
1/10 AE 0.10 129.08 132.23 1,322.29
Aust. 100 corona 0.98 1,183.82 1,192.82 1,216.91
British sovereign 0.24 289.03 302.03 1,283.07
French 20 franc 0.19 225.26 229.26 1,227.94
Krugerrand 1.00 1,227.23 1,237.23 1,237.23
Maple Leaf 1.00 1,224.79 1,234.79 1,234.79
1/2 Maple Leaf 0.50 700.75 639.82 1,279.64
1/4 Maple Leaf 0.25 310.77 326.00 1,304.01
1/10 Maple Leaf 0.10 129.18 132.84 1,328.38
Mexican 50 peso 1.21 1,456.04 1,467.04 1,216.75
.9999 bar 1.00 1,220.70 1,228.70 1,228.70
SPOT SILVER: 15.84      
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 11,003.85 11,289.85 15.79
US 40% silver 1/2s 0.30 4,495.80 4,643.80 15.74
100 oz .999 bar 100.00 1,534.00 1,609.00 16.09
10 oz .999 bar 10.00 157.40 160.90 16.09
1 oz .999 round 1.00 15.79 16.19 16.19
Am Eagle, 200 oz Min 1.00 17.49 17.89 17.89
SPOT PLATINUM: 916.30      
Plat. Platypus 1.00 931.30 961.30 961.30
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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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