|Dow in Gold Dollars (DIG$)||296.83||290.02||-6.82||-2.3|
|Dow in gold ounces||14.36||14.03||-0.33||-2.3|
|Dow in Silver ounces||1,089.38||1,031.78||-57.60||-5.3|
|US dollar index||94.03||94.64||0.61||0.6|
|Gold Price, $/oz||1,273.40||3.20||0.3|
|Silver Price, $/oz||17.32||0.06||0.4|
|Dow in GOLD $s||290.02||-2.65||-0.9|
|Dow in GOLD oz||14.03||-0.13||-0.9|
|Dow in SILVER oz||1,031.78||-10.65||-1.0|
|US Dollar Index||94.64||0.65||0.7|
Sorry, this has to be fast because I've been driving all day to Chattanooga & back to get that wire out of my toe - thank heaven! Now I have to learn how to bend my foot again, but I am grateful.
'Twas a crazy week. Silver shot up -- look at that! -- 5.9% and gold rose 2.7%. Gold/silver ratio dropped 3.1% (perfect! Direction we want it to move). Stocks were mixed, as they say, or better yet, mixed up. They hit new highs this week, but puked back all the gains. Dow ended the week up by a splinter and S&P500 down a sliver. Yet slivers can be portentous, & this one threatens to mark completion of a head and shoulders top in stocks. US dollar index wobbled and tumbled and tried to stand up this week, but only found feet today. Of that 61 basis point gain for the week, 65 came today. Gold/Bank Stock Index spread shot up this week, a sign confidence is draining out of financial markets (stocks) & into gold.
Let's beat this dead horse plumb to a pulp: Dow Jones Industrial Average & the S&P500 are forming head and shoulders topping patterns. This week the new highs only marked the top of the right shoulder.
Today the fell like bricks out a second story window. Without closes above May 2015's highs, both will keep edging off for a couple of more weeks, maybe three, then they will tank. When they cut through that neckline, rate-of-fall will accelerate.
Today both indices fell off a cliff. Dow sank 119.85 (0.67%) to 17,865.34. S&P500 fell more yet, down 19.41 (0.92%) to 2,096.07. If y'all will look at the charts, you'll understand what I mean. No, the slightly higher high on the right shoulder of the S&P500 doesn't make any difference.
Stocks faint today took the Dow in Gold down even more, finishing the week at 14.00 oz. Chart is here, completing a megaphone reversal. http://schrts.co/8Sv0tc
Dow in silver is here, http://schrts.co/ohwLZP
Once the Dow in silver drops through 995 oz (it closed at 1,030.89 oz today), it will hit the gas pedal in its flight earthward.
Time to sell stocks and put the proceeds into silver & gold.
US dollar index had a better day after fumbling all week. It rose 65 basis points (0.69%. Here's a chart, http://schrts.co/OkJ5UT
It surprises me a bit that the dollar punched through its 50 dma and the top boundary of the downtrending channel. However, I don't set no store by that till it shows it can keep doing it.
Euro has no strength of its own and is probably coming under pressure from the possibility the UK on June 23 will vote to leave the European Union. It lost 0.52% to $1.1258. Yen gained 0.1% to 93.52. Makes no sense from an economic or currency management standpoint, but the yen is the strongest of the three big currencies in the market. Forget reality.
Silver added another 6.2¢ (0.4%) for a 1731.5¢ Comex close. Gold raked in $3.20 (0.25%) to $1,273.40.
I wish y'all would look at gold's weekly chart since 2011: http://schrts.co/zecBlu Notice that it climbed above that green downtrend form the October 2012 high, AND through the blue line marking the top border of the post 2013 trading channel. Don't miss this: Gold traded nearly to its 200 week moving average (now $1,315.45), backed off to $1,201.50, which just happened to be the top boundary of that post 2013 trading channel. Whoa! I know what that is -- a final kiss good-bye before shooting the moon.
Here's gold's monthly since 2010, http://schrts.co/WU6cr7 On this chart it has broken out upward through the upper boundary of a falling wedge, and through its 20 month moving average. All indicators point up.
Don't miss the Daily Chart, http://schrts.co/vXBRMC
Gold bounced off the lower range boundary at 2015, shot through its clustered 20 & 50 DMAs, then shot through the downtrend line from the 1 May high at $1306. Now it has reached territory ($1,272 - $1,287) where resistance will be stiffer, since it was stopped there earlier in the year. So far it's stronger than a garlic milkshake, but it must keep proving itself, next by piercing this resistance.
Y'all please look at the Gold/Bank Stock Index, http://schrts.co/PBJpq4
Look here: it's been dropping since 2011, and from late 2013 through January of this year, it traded in a slightly downtrending range. In January it broke up out of that range, topped in February, then entered a correction until about 1 June. It formed a new trading channel & touched the bottom, and the 200 DMA, end-May/beginning of June. It has gapped up THREE times, and now is challenging the top of that trading channel. The Gold/BKX is fixin' to blow out the top.
Remember, the spread is a fraction with Gold as the numerator and BKX as the denominator. More gold rises against the bank stock index, the larger the fraction becomes and the more the spread rises.
Silver's weekly chart looks far better than gold's. Here it is, http://schrts.co/Vn4K54
WHY do I make so bold? Look, silver has conquered the downtrend line from the 2011 high and broken out to the upside, all the way to 1806¢. Then it went back to the line for a kiss good-bye, and now it has taken off again. On the monthly chart it has done the same. What more confirmation do y'all want?
On the daily silver chart, http://schrts.co/TjoUfK y'all can trace silver's astonishing climb this week. It cleared the 20 & 50 DMA's then poked through that downtrend line like it was wet cardboard. But now silver approacheth more resistance from 1762 - 1772¢.
Next week silver & gold may lollygag, digesting its gains like a big old black snake eats a hen egg and basks in the sun to digest it. However, watch $1,308 and 1806¢. If gold & silver climb above those last highs, BACK UP THE TRUCK and buy. Meantime any backsliding must not violate the 50 day moving average.
What (at this point) seems to be the successful test of silver & gold's gains from the first of the year clinches in spades the conclusion that silver & gold bottomed in December 2015.
- Franklin Sanders, The Moneychanger
© 2016, The Moneychanger. May not be republished in any form, including electronically, without our express permission. 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 is up targeting 16:1 gold/silver ratio or $195.66; stocks' primary trend is down, targeting Dow under 2,900 and worth only one ounce of gold or 18 ounces of silver. US $ and US$-denominated assets, primary trend down; real estate bubble has burst, primary trend down.
WARNING AND DISCLAIMER. 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 one 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.
One final warning: NEVER insert a 747 Jumbo Jet up your nose.