The Moneychanger
Daily Commentary
Tuesday, 9 January a.d. 2018 Browse the commentary archive

Wouldn't have written today except that interest rates have broken out upside. Well, the 10 year T-note yield, found here http://schrts.co/nBmvJj

Bear in mind that interest rates (yields) move opposite to bond prices, and the longer the bond's duration, the more the price moves. Also, EVERY asset acts like a bond when interest rates rise, which means a widespread and thoroughgoing re-rating of all asset values: stocks, real estate, beanie babies.

So behold the US 30 year T-bond chart, http://schrts.co/IoR0Nw See how that yield surge helped the price?

Or what about the junk bond ETF, HYG? Looky, looky, http://schrts.co/cWwts6

But stocks apparently didn't hear about what awaits them as interest rates rise, since they are still in Cloud Cuckoo Land. Dow rose 113.86 to 25,396.86, up 0.45%. Other indices didn't do as well. S&P500 augmented only 4.9 or 0.18%. Lessee -- interest rates rising which cause asset re-rating, and higher operating costs, and Fed Reserve is deflating the money supply. What could possibly go awry?

US dollar index rose 15 basis points (0.16%) to 92.24. That sucker punched the euro, sending it down 0.23% to $1.1939. Yen benefited from a Bank of Japan announcement they intend to stop buying bonds, implying tighter money supply. Yen climbed 0.43% to 88.79.

Comex gold tumbled $6.90 (0.52%) for a close at $1,311.70. Silver dropped three-quarters of one percent or 12.8¢ to 1693.6¢. Ratio floated up to 77.450, from 77.274 yesterday.

Gold chart here http://schrts.co/zHujx8 shows gold falling back from its punch through the downtrend line, and lays out support areas in those yellow lines, around $1,300 and $1,265, or around the 50 DMA ($1,280) or the 200 DMA ($1,274).

Silver's chart http://schrts.co/o96FnV shows silver nearing simultaneously the 200 DMA (1701¢) and the green uptrend line. Support lies beneath around 1650¢ and the 50 DMA (1669¢).

Small correction we expected in the metals ain't over yet, but longer term rally is healthy as a Percheron.

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-Jan-18 Price Change % Change
Gold, $/oz 1,311.70 -6.90 -0.52%
Silver, $/oz 16.94 -0.13 -0.75%
Gold/Silver Ratio 77.450 0.177 0.23%
Silver/Gold Ratio 0.0129 -0.0000 -0.23%
Platinum 967.90 -4.40 -0.45%
Palladium 1,100.80 2.25 0.20%
S&P 500 2,752.61 5.90 0.21%
Dow 25,396.86 113.86 0.45%
Dow in GOLD $s 400.24 3.88 0.98%
Dow in GOLD oz 19.36 0.19 0.98%
Dow in SILVER oz 1,499.58 17.92 1.21%
US Dollar Index 92.24 0.15 0.16%
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: 1,311.60      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,323.40 1,355.54 1,355.54
1/2 AE 0.50 668.41 691.87 1,383.74
1/4 AE 0.25 337.48 352.49 1,409.97
1/10 AE 0.10 137.61 143.62 1,436.20
Aust. 100 corona 0.98 1,272.77 1,285.63 1,311.60
British sovereign 0.24 311.07 324.07 1,376.66
French 20 franc 0.19 242.43 246.43 1,319.91
Krugerrand 1.00 1,316.85 1,326.85 1,326.85
Maple Leaf 1.00 1,319.60 1,335.60 1,335.60
1/2 Maple Leaf 0.50 754.17 688.59 1,377.18
1/4 Maple Leaf 0.25 334.46 350.85 1,403.41
1/10 Maple Leaf 0.10 139.03 142.96 1,429.64
Mexican 50 peso 1.21 1,569.41 1,580.41 1,310.78
.9999 bar 1.00 1,306.60 1,324.60 1,324.60
SPOT SILVER: 16.93      
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 11,604.45 11,890.45 16.63
US 40% silver 1/2s 0.30 4,802.60 4,949.60 16.78
100 oz .999 bar 100.00 1,673.00 1,708.00 17.08
10 oz .999 bar 10.00 170.80 175.80 17.58
1 oz .999 round 1.00 16.73 17.33 17.33
Am Eagle, 200 oz Min 1.00 18.18 18.93 18.93
SPOT PLATINUM: 967.90      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 982.90 1,012.90 1,012.90
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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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