The Moneychanger
Daily Commentary
Monday, 21 August a.d. 2017 Browse the commentary archive

In two cars with children and grandchildren, something like Okies & Arkies headed California-ward during the Depression but minus the mattresses tied to the car roof, I rode up to Nashville today to view the eclipse. Nashville was right on the centerline. I confess my enthusiasm for staring at a white hot sun is probably not the stuff myths and legends are made of, but the whole experience was still other-worldly. The giant dragon in the sky began taking bites out of the sun, steadily eating it up until totality. An eerie twilight settled on everything, the air cooled markedly, and at last, all of the sun you could see was a bright corona around a black spot. I was relieved when the sun didn't agree with the dragon's digestion and he coughed it back up.

First, y'all look at the US Dollar Index,

Today the dollar index fell 35 basis points to 93.01, broke down through the 20 DMA (93.28), fell out of the rising flat topped triangle it had been forming, and generally puked all over itself. Today's failure points to a target of the last low at 92.83, but more likely the low before last -- and low for the move so far -- at 92.39. Should the dollar break that point, well, they'll be applying for food stamps at the Federal Reserve.

Now just like you don't pick up a half frozen rattlesnake and put it in your shirt to warm it up, the US Dollar is a political being, thoroughly manipulated and therefore fundamentally unpredictable. I won't pick that rattlesnake up by predicting that it will most surely collapse, because it is more likely to RALLY still, even though it may make a new low first. I just don't trust rattlesnakes unless they're headless.

Stocks bounced like a one-legged grasshopper today, not very convincingly. Dow added 29.24 (0.13%) to 21,703.75 & the S&P500 gained 2.82 (0.12%) to 2,438.37. Nasdaq, Nasdaq-100, and Russell 2000 all dropped, gainsaying the other indices' little plusses.

Nothing happened today to change the outlook for stocks. They made megaphone tops and now are breaking down, the S&P500 through its 50 DMA, along with the Nasdaq & Nasdaq 100, and the Russell 2000 & Dow Transports through their 200 DMAs.

If this was the movie Jaws, y'all would hear that music in the background, signaling that monster shark was cruising around somewhere.

Silver added 1.5¢ today to close Comex at a morale-bruising 1699.5. Gold gained a respectable $5.10 (0.4%) to $1,290.80.

I'm about to change my short term mind about silver & gold. Oh, I know a rally is unfolding, I don't mean that. Rather, I'm not sure they both won't take a little vacation this week, sunning themselves down around the 20 day moving averages ($1,276.57 & 1675¢). Might drop down to the rising uptrend line. Silver might even hit its 50 DMA at 1650¢, but I don't believe gold would. drop that low ($1,255.32).

Gold's chart may be seen right here, Gold's technical lay is superior to golds: it stands above the 200, 50, & 20 day moving averages, which are stacked above one another in bullish alignment. So why my vexatious concern? More that I think about it, more I distrust the combination of Friday's thrust to $1,307, through $1,300 resistance, with a lower close, PLUS today's lackluster move. At $1,299.70, the high didn't even crack $1,300. Looks like its time for gold to take a little -- little - breather.

As your teenaged son might say after he flipped your pickup & totaled it, silver's situation is "complicated." It stands BELOW its 200 dma (1709¢), but above the 20 (1675¢) & 50 (1675¢). Indicators favor higher prices, but not necessarily immediately and the chart seems to say, "Just let me drop a leetle here and I'll be fine."

As I said, I'm not looking out much more than a week, and silver & gold are STILL in an ongoing rally. The fireworks will begin exploding when gold clears $1,306 & silver clears 1725¢. Be patient, sit back, take a deep breath, hug your spouse and say, "I love you." First things first.

I note that the University of Texas -- Texas! -- president sneaked around in the middle of the night and had statues of four Confederate heroes removed, including Robert E. Lee. Let me state this briefly: You could take all the left wing protestors, all the leftist governors & mayors, all the politicians in the United States and throw in all the right wing protestors AND university presidents, and you could stack 'em all the way to the moon, and you STILL wouldn't have enough character & integrity to make a man one-tenth the stature of Robert E. Lee -- and they all know it.

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
21-Aug-17 Price Change % Change
Gold, $/oz 1,290.80 5.10 0.40%
Silver, $/oz 17.00 0.02 0.09%
Gold/Silver Ratio 75.952 0.233 0.31%
Silver/Gold Ratio 0.0132 -0.0000 -0.31%
Platinum 982.70 3.10 0.32%
Palladium 941.40 11.90 1.28%
S&P 500 2,438.37 2.82 0.12%
Dow 12,703.75 29.24 0.23%
Dow in GOLD $s 203.45 -0.34 -0.17%
Dow in GOLD oz 9.84 -0.02 -0.17%
Dow in SILVER oz 747.50 1.06 0.14%
US Dollar Index 93.01 -0.35 -0.37%
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: 1,291.00      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,297.46 1,307.46 1,307.46
1/2 AE 0.50 651.45 664.87 1,329.73
1/4 AE 0.25 330.56 337.27 1,349.10
1/10 AE 0.10 137.39 140.07 1,400.74
Aust. 100 corona 0.98 1,254.05 1,263.05 1,288.56
British sovereign 0.24 306.18 319.18 1,355.91
French 20 franc 0.19 238.62 242.62 1,299.51
Krugerrand 1.00 1,296.16 1,306.16 1,306.16
Maple Leaf 1.00 1,294.87 1,304.87 1,304.87
1/2 Maple Leaf 0.50 742.33 677.78 1,355.55
1/4 Maple Leaf 0.25 329.21 345.34 1,381.37
1/10 Maple Leaf 0.10 136.85 140.72 1,407.19
Mexican 50 peso 1.21 1,542.42 1,553.42 1,288.40
.9999 bar 1.00 1,289.00 1,301.00 1,301.00
SPOT SILVER: 16.97      
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 11,954.80 12,240.80 17.12
US 40% silver 1/2s 0.30 4,829.15 4,977.15 16.87
100 oz .999 bar 100.00 1,687.00 1,727.00 17.27
10 oz .999 bar 10.00 168.70 297.13 29.71
1 oz .999 round 1.00 16.92 17.35 17.35
Am Eagle, 200 oz Min 1.00 17.72 18.97 18.97
SPOT PLATINUM: 982.70      
Plat. Platypus 1.00 1,000.70 1,022.70 1,022.70
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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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