The Moneychanger
Daily Commentary
Wednesday, 9 August a.d. 2017 Browse the commentary archive

Well, sure enough the stasis destabilized today, on Trump's saber-rattling at North Korea.

Like business, stocks (other than arms makers) don't like turmoil & threat of war. Dow fell 36.64 (0.17%) to 22,048.70. S&P500 backed off less, 0.9 (0.04%) to 2,474.02. S&P500's chart is plainest & most instructive, so look here,

Recall that yesterday the S&P500 broke down through the bottom boundary of that rising wedge. It followed through today by plunging into the 20 day moving average, although it recovered enough to close above that. However, the trap door is open for a further fall.

I understand that the catalyst for this may be the snarling between North Korea & Trump. but in a sense that doesn't matter technically. Any catalyst would have work to have sparked a move waiting to unfold. Look also at the Dow in Gold, which has been refusing to yield to the Dow by making new highs even though the Dow itself was making new all-time highs. Dow in gold still needs to break down through that lower uptrend line but very near is the 50 DMA at 17.17, not far from today's 17.23 oz close.

Yesterday the US dollar turned back at its 50 DMA (95.49), and today fell again, 13 basis points or 0.14% to 93.39. Fall though it be, today's close remains equivocal. The dollar may have turned up with the 2 August low. It has to prove that with a close above 94.

Yen rose today 0.3% to 90.94. Wonder why? Seems illogical. If Pyongyang starts lobbing nukes, Tokyo is a lot closer than California. Euro also rose an insignificant 0.06% to $1.1758. The euro looks as it should if it has topped and turned down. Too early to call yet, but likely. That strengthens the suspicion that the dollar has turned up.

10 year treasury yield fell today 1.84% to 2.241%. Bond yields fall when prices rise, and international turmoil encourages bond buying, That might explain today, but look at this 10 month chart,

The 10 year note yield is struggling to break out through the downtrend line from 2007. It is forging a pivotal break with the interest rate suppression of the last 35 years. Should the bond market wrest the steering wheel away from the Fed, no telling where interest rates might end up, but there will be swallows up there nesting. Central bankers will be jumping out of windows.

Y'all grab hold by looking first at the gold/silver ratio,

The ratio GAPPED down through the 20 DMA and sliced into the 50 DMA. Still closed slightly above the 50 DMA, but the damage is done since it broke down out of that deadly rising wedge. Reasonable target for the first leg of this move would be 71.

I desire not to be obscure: the ratio says that silver & gold are breaking out to the upside. Stratosphere-ward.

On Comex gold closed today at $1,279.30, up $16.60 (1.32%) and one thin dime below the high close on 1 August. Any higher close tomorrow suffices to ignite a gold rally. Silver leapt 47.4¢ (2.9%) to 1683.4¢, actually a new high close from the low July 7.

Lo, the gold chart,

Y'all can see gold tapping at the ceiling of the last high. RSI (above) has spiked up, volume has risen, MACD hooked up, and rate of change is positive and rising. All that screams that gold is reaching upward escape velocity.

Now here is silver,

All silver's indicators are positive, too, it is about to cross resistance of the green uptrend line from the December 2015 low, and at last silver is drawing a bead on its 200 DMA, above at 1712¢.

Folks, it's a rally. Needs just one more day to quench all gainsaying.

One great thing about being a nat'ral born durned fool from Tennessee is you never run out of reasons to laugh at yourself. That keeps pomposity forever at bay. Yesterday I sent y'all that special offer, but gave you an 888 number for Sears rather than our own. Our number is (888) 218-9226, and I'll still honor the special offer tomorrow. Mercy. What a fool.

I have to drive to Memphis for a funeral tomorrow, but somebody will be manning the phones all day to help y'all. I won't return in time to send a commentary.

I don't know where the image came from, but sometimes I used to wake up in the morning next to Susan asleep in bed and imagine us as two little kids, holding hands and walking innocently through the world. Just a picture, but it felt like it captured reality.

Ironically I was cleaning up some piles in my office today & came across a card Susan had sent me on 21 June 2016, a little over a year ago. It shows the up-in-the-air legs of two kids, boy & girl, lying on their stomachs. The shot is taken from the direction of their heads, so all you can see is four legs & feet sticking up in the air. Two of the feet have reached over to touch each other. Inside is printed, "My favorite place in the world is next to you."

Below that Susan wrote, "So very thankful that I belong to you! 'Cause my life without you would be very dull! I might have had to take up tennis just to keep myself busy. Love you, Susan."

The mere thought of Mrs. Always-Busy playing tennis still makes me guffaw. Sure.

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
9-Aug-17 Price Change % Change
Gold, $/oz 1,273.00 16.60 1.32%
Silver, $/oz 16.83 0.47 2.90%
Gold/Silver Ratio 75.621 -1.176 -1.53%
Silver/Gold Ratio 0.0132 0.0002 1.56%
Platinum 973.30 1.60 0.16%
Palladium 896.85 -6.55 -0.73%
S&P 500 2,474.02 -0.90 -0.04%
Dow 22,048.70 -36.64 -0.17%
Dow in GOLD $s 358.04 -5.33 -1.47%
Dow in GOLD oz 17.32 -0.26 -1.47%
Dow in SILVER oz 1,309.77 -40.19 -2.98%
US Dollar Index 93.39 -0.13 -0.14%
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SPOT GOLD: 1,275.70      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,283.35 1,293.35 1,293.35
1/2 AE 0.50 643.72 656.99 1,313.97
1/4 AE 0.25 326.64 333.28 1,333.11
1/10 AE 0.10 135.76 138.41 1,384.13
Aust. 100 corona 0.98 1,239.19 1,248.19 1,273.40
British sovereign 0.24 302.55 315.55 1,340.49
French 20 franc 0.19 235.79 239.79 1,284.37
Krugerrand 1.00 1,283.35 1,293.35 1,293.35
Maple Leaf 1.00 1,279.53 1,289.53 1,289.53
1/2 Maple Leaf 0.50 733.53 669.74 1,339.49
1/4 Maple Leaf 0.25 325.30 341.25 1,365.00
1/10 Maple Leaf 0.10 135.22 139.05 1,390.51
Mexican 50 peso 1.21 1,524.14 1,535.14 1,273.24
.9999 bar 1.00 1,273.70 1,285.70 1,285.70
SPOT SILVER: 16.87      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 20.50 24.50 32.03
VG+ Peace dollar 0.77 14.50 17.50 22.88
90% silver coin bags 0.72 11,811.80 12,097.80 16.92
US 40% silver 1/2s 0.30 4,799.65 4,947.65 16.77
100 oz .999 bar 100.00 1,677.00 1,717.00 17.17
10 oz .999 bar 10.00 167.70 293.75 29.38
1 oz .999 round 1.00 16.82 17.25 17.25
Am Eagle, 200 oz Min 1.00 17.62 18.87 18.87
SPOT PLATINUM: 973.30      
Plat. Platypus 1.00 991.30 1,013.30 1,013.30
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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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