• Silver and Gold Prices Have Already Bottomed So it's Time to Buy

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    28-Aug-15 4-Sep-15 Change % Change
    Gold Price, $/oz. 1,133.10 1,120.60 -12.50 -1.1
    Silver Price, $/oz. 14.535 14.544 0.009 0.1
    Gold/Silver Ratio 77.957 77.049 -0.908 -1.2
    Silver/gold ratio 0.0128 0.0130 0.0002 1.2
    Dow in Gold $ (DIG$) 303.63 297.04 -6.59 -2.2
    Dow in gold ounces 14.69 14.37 -0.32 -2.2
    Dow in Silver ounces 1,145.03 1,107.15 -37.88 -3.3
    Dow Industrials 16,643.01 16,102.38 -540.63 -3.2
    S&P500 1,988.87 1,921.22 -67.65 -3.4
    US dollar index 96.14 96.24 0.10 0.1
    Platinum Price 1,021.30 991.60 -29.70 -2.9
    Palladium Price 589.55 576.80 -12.75 -2.2

    3 Day Gold Price Chart
    30 Day Gold Price Chart
    5 Year Gold Price Chart
    3 Day Silver Price Chart
    30 Day Silver Price Chart
    5 Year Silver Price Chart
    Gold Price

    The PRICE OF GOLD shaved off $3.10 (0.3%) to close Comex at $1,120.60. The SILVER PRICE gave up 15.8 cents (1.1%) to $14.544.

    Today’s close took the GOLD PRICE firmly below its 50 day moving average ($1,127.08) but even at today’s $1,115.70 low it didn’t quite reach my $1,110 target for this move. Anyway, it ought to turn up next week, maybe after one last dip.

    There’s a huge physical silver shortage (more on that below). Oddly enough, there’s no shortage of physical gold, at least not in the one ounce and larger sizes. Europe long ago bought up most of the fractional coins. Oh, there are a few small gold out there but not cheap. In 2008 before the silver situation got this scarce gold had become tight, too. The premiums never rose as high but deliveries stretched out six to eight weeks.

    I reckon silver’s like a mercilessly beautiful but mysterious woman. You can’t ever exactly figure her out. Silver’s low today reached $14.48, and strong support rests under that at $14.35. Truth is, my betting that silver’s already bottomed back in August rests on the seasonal window, an 11 and 7 year cycle due to bottom in July, and the great length of the bear phase since 2011. Right now, though, silver remains below its 20 and 50 DMAs and needs to step out and strut its stuff.

    Another thing that rests on my mind is that premium on US 90% silver coin. It has now reached the same dollar level that it reached in 2008 and 2013, at the highs. In 2008 that premium high marked the price low, too.

    The physical silver supply shortage is running wild. One large mint is backlogged 3.8 million ounces. Two other mints are so backlogged they are not selling. One other is quoting twelve week delivery even for 100 oz. bars, and not quoting delivery for one ounce rounds at all. Twelve weeks equals 27 November.

    Eventually they will sort it out and all that silver will be delivered. In the meantime very little physical silver is available. Some US 90% can be had, but at $4.70 an ounce over spot. We managed to find some one ounce Brittannias, an official coin minted by the British mint, but not many and they cost about $1.50 more than privately minted silver rounds. We have them live, at least.

    Ponder what this backwardation means: The futures price for spot silver is 1454.4 cents, but US 90% silver coin, when you can find it, costs 1924.4 cents an ounce AT WHOLESALE, 32.3% above spot silver.

    This is worse than the silver supply situation in the 2008 Financial panic. And while our little corner of the world silver market is small, the supply dearth still argues that the public has HUGE monetary demand for silver.

    And look, this is not the wild, raving imaginings of some anonymous internet guru. These are the numbers and realities I am dealing with daily.

    The week was not kind to stocks. Dow lost 3.2%, S&P500 lost 3.4%, and they’re beginning to install wrought iron grates over the windows in stock brokerage high rises. Somebody’s a-feared it’s gonna start raining stock brokers. Dollar index tried but failed to reach escape velocity. Gold took a correctional whipping this week while silver held on. Better days coming for metals.

    Law, it’s times like this the Nice Government Men have to earn their money. That stock market plunges 470 points in a day but all they can push back is 129, then it drops off another 272.

    Today the Dow looked like a lazy man trying to get out of bed after a long night of drinking bustskull whiskey. Just couldn’t do anything but lie back down. Dow dove 272.38 (1.66%) to 16,102.38 and the S&P500 sank 29.91 (1.53%) to 1,921.22. It warn’t their shiningest day ever.

    Stocks have likely sketched out a flag or pennant, which gives us a measuring stick for the depth of this move: 13,904.

    I keep telling y’all this, piling my little grain of corrective sand on the scales against the tons of hogwash pouring out of Washington and New York: It ain’t over yit. Stocks will sink, sink, sink for lo, five to seven years, for the trend hath turned from up to down.

    Dow in Gold

    Look at the chart on the left, if you doubt. It’s the Dow in Gold chart. It has broken down, down, down, and now is coiling up for yet another nosedive. Closed today down 1.47% at G$296.64 gold dollars (14.35 oz). Not coming back.

    Dow in Silver

    Dow in silver fell 0.68% to S$1,430.87 (1,106.69 ounces). It’s playing at the 200 day moving average, but will soon enough crash through. Floor’s rotten.

    US Dollar index looked mighty brave yesterday, but today like a plucked chicken. Day’s trading undid all yesterday’s gains and then some. Dollar lost 18 basis points to close at 96.24. Today looked an awful lot like the first half of a key reversal, but let’s see what Tuesday brings. ‘Pears that the dollar is following stocks.

    Euro is going nowhere but the yen has itself a little ol’ rally going. Rose 0.91% today to 84.00 and will go higher.

    I saw some media clowns talking today about how the low unemployment report today might lead the Fed to raise interest rates next month. Listen to me, hear what I’m saying and I’ll stick to it: the Fed is as likely to raise rates this month, next month, or this year, as Hillary Clinton is to win the Most Charming Woman contest. Ain’t no chance they’ll raise rates. They’re scairt to death of the stock market.

    All the gentlemen prognosticators forecasting deflation better take another look. Oil had a great two weeks, as did Copper and the CRB commodity index. Oil came up out of the hole 27 August and has been blowing a gusher ever since.

    Next week I’ll be vacationing with my family, so I won’t be sending any commentaries, unless I just get itchy and take a notion. Anyway, y’all all know what I think: stocks will drop way more and probably take the US dollar with ’em. Silver and gold (I believe) have already bottomed, so it’s the time to buy ’em.

    Our crew next week will be right skinny, so be patient and somebody’ll call back.

    Y’all enjoy your weekend.

    Aurum et argentum comparenda sunt — — Gold and silver must be bought.

    – Franklin Sanders, The Moneychanger
    The-MoneyChanger.com

    © 2015, 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. 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.

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