The Moneychanger
Daily Commentary
Monday, 16 October a.d. 2017 Browse the commentary archive

Something passing weird happened to silver & gold this afternoon, but let me first get other things out of the way.

US dollar index closed above 93 at 93.15, up 22 basis points or 0.2%. By itself today's action means nothing, but look at it against the background in this chart,

An upside down head and shoulders pattern signals a coming upside reversal. Resistance at 94 is the neckline, and you can see the left shoulder, head, and now- forming right shoulder. Target for a head and shoulders is estimated by adding the depth of the head, here about 300 basis points, to the neckline at 94. that works out to 97, or about where the red arrow points to the 200 day moving average.

A dollar rally will be fast and sharp, but should peter out by mid-November. Dollar strength did not cause the perturbation in silver & gold today, but will tilt their march sharply uphill as it rallies.

Lest y'all mistake me, I hasten to add that any dollar rally will be the countertrend type, because the dollar's uptrend since mid-2015 has been broken. After this rally that downward reversal will become evident to all.

Dow pushed 85.29 points closer to 23,000 today, closing at 22,956.96, up 0.37%. S&P500rose 0.48% or 4.47 to 2,557.64. This experience will not last forever Happy Days ain't here again, he said liverishly.

One Comex silver backed up immaterially, 4¢, to 1731.5¢. Gold pinched off $1.660 to $1,299.90.

So far, so good, but look at this one day chart from, All's calm until after the close right at 3:00 p.m. eastern, when suddenly gold gaps down, avalanches, gaps twice again, and on this chart reaches a low about $1,291. It recovers to about $1,294.

Sorry, I couldn't find even a plausible news item to account for this fainting spell. It doesn't show up on the end of day daily chart here,

Is it an anomaly, a footprint of high frequency trading, or a sign of coming weakness like a lousy electrocardiogram? I can't answer. The EOD chart shows that gap up off the low, then trading clustered under that red downtrend line. Generally that leads you to expect another burst of strength, maybe with another gap, once gold penetrates that line. This aftermarket break took gold nearly to the bottom of that cluster, and below its 50 DMA. Sounds waffly, but only tomorrow will tell what's happening. Lower gold, as in below $1,290, would argue that the uptrend has expired. A close above that uptrend line, say above $1,306, would signal more expensive gold. All thing weighed, this aftermarket break casts a dark cloud over gold.

Here's the one day silver chart, that displays the same behavior. Not much range during the day with a collapse beginning at 3:00 p.m. with a gappy avalanche down to a low, with lackluster comeback. Also not shown on the silver EOD chart,

I can't say whether this is just a glitch or some trder's raid into a thin market, or a bad omen for silver and gold, like buzzards perching on the tree outside your window when you've been ailin' a few days. We'll know tomorrow.

On 16 October 1859 John Brown mounted his raid on the US Armory at Harpers Ferry, Virginia intending to start a slave uprising across the South. Brown had practiced his terrorist skills in Bleeding Kansas in 1856, massacring five people in the Pottawatomie massacre.

Brown's violence was secretly financed by outwardly respectable Yankee preachers and abolitionists, Thomas Wentworth Higginson, Samuel Gridley How, Theodore Parker, Franklin Benjamin Sanborn, Gerrit Smith, & George Luther Stearns.

Brown's 18 men easily overpowered the single watchman at the Armory and began collecting hostages from surrounding farms. They ran out of luck when a train approached Harpers Ferry and the baggage master, Hayward Shepherd, tried to warn the passengers. Brown's men shot and killed Shepherd, a free black man, as well as two of the hostages' slaves.

Brown allowed his group to be bottled up by local militia. By morning of the 18th the building was surrounded by a US Marine Company under overall command of Col. Robert E. Lee of the United States army. After Brown refused to surrender, the Marines broke down the door with a battering ram and in 3 minutes subdued Brown and the others.

At the subsequent trial Brown & the other survivors were convicted of murder and treason and hanged.

In many ways John Brown presents the archetype fanatic of the 20th & 21st centuries, so determined to impose his ideology that even overthrowing society and mass murder does not hinder him for a moment. "Let us kill human beings to save humanity!." He is the perfect forerunner of Communism, fascism, and the abortion movement. God preserve us from humanitarian do-gooders!

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
16-Oct-17 Price Change % Change
Gold, $/oz 1,299.90 1.60 0.12%
Silver, $/oz 17.32 -0.04 -0.23%
Gold/Silver Ratio 75.074 0.265 0.35%
Silver/Gold Ratio 0.0133 -0.0000 -0.35%
Platinum 945.20 -5.30 -0.56%
Palladium 986.60 -9.20 -0.92%
S&P 500 2,557.64 4.47 0.18%
Dow 22,956.96 85.24 0.37%
Dow in GOLD $s 365.08 0.91 0.25%
Dow in GOLD oz 17.66 0.04 0.25%
Dow in SILVER oz 1,325.84 7.97 0.60%
US Dollar Index 93.15 0.22 0.24%
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: 1,295.45      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,318.77 1,327.84 1,327.84
1/2 AE 0.50 653.70 665.45 1,330.89
1/4 AE 0.25 330.08 336.73 1,346.94
1/10 AE 0.10 133.33 137.33 1,373.28
Aust. 100 corona 0.98 1,260.28 1,269.80 1,295.45
British sovereign 0.24 302.97 308.47 1,310.39
French 20 franc 0.19 239.44 244.44 1,309.28
Krugerrand 1.00 1,305.45 1,313.45 1,313.45
Maple Leaf 1.00 1,297.45 1,310.45 1,310.45
1/2 Maple Leaf 0.50 657.44 669.84 1,339.68
1/4 Maple Leaf 0.25 330.08 336.73 1,346.94
1/10 Maple Leaf 0.10 133.76 138.11 1,381.05
Mexican 50 peso 1.21 1,550.21 1,562.92 1,296.28
.9999 bar 1.00 1,297.45 1,309.45 1,309.45
SPOT SILVER: 17.25      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 21.00 24.00 31.37
VG+ Peace dollar 0.77 14.50 17.50 22.88
90% silver coin bags 0.72 12,012.00 12,298.00 17.20
US 40% silver 1/2s 0.30 4,911.75 5,059.75 17.15
100 oz .999 bar 100.00 1,700.00 1,753.00 17.53
10 oz .999 bar 10.00 171.00 176.00 17.60
1 oz .999 round 1.00 17.20 17.75 17.75
Am Eagle, 200 oz Min 1.00 18.80 19.20 19.20
SPOT PLATINUM: 945.20      
Plat. Platypus 1.00 943.20 990.20 990.20
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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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