{!-- ra:0000000006b9b8b10000000036e35c71 --} Weekly Market report, Friday, 12 February a.d. 2016
The Moneychanger
Weekly Commentary
Friday, 12 February a.d. 2016 Browse the commentary archive
Here's the weekly scorecard:
  5-Feb-16 12-Feb-16 Change % Change
Silver, cents/oz. 1,476.40 1,578.50 102.10 6.9
Gold, dollars/oz. 1,157.80 1,239.10 81.30 7.0
Gold/silver ratio 78.420 78.499 0.078 0.1
Silver/gold ratio 0.0128 0.0127 -0.0000 -0.1
Dow in Gold Dollars (DIG$) 289.33 266.49 -22.84 -7.9
Dow in gold ounces 14.00 12.89 -1.10 -7.9
Dow in Silver ounces 1,097.60 1,011.96 -85.64 -7.8
Dow Industrials 16,204.97 15,973.84 -231.13 -1.4
S&P500 1,880.05 1,864.78 -15.27 -0.8
US dollar index 97.01 95.54 -1.47 -1.5
Platinum 902.00 957.30 55.30 6.1
Palladium 499.65 527.25 27.60 5.5

Res ipsa loquitur -- "The thing speaks for itself." I might just give y'all this table & say nothing else. Seldom will you see a week like this: silver & gold up 7%, platinum up 6.1%, Palladium up 5.5%, Dow in gold & Dow in Silver down 8%, Dow down only 1.4%, by the hair of the Nice Government Men's chinny-chin-chin today, US dollar index down 1.5% (a huge move). Confidence in the financial system and central banks is crumbling like week old pecan sandies. Behold! More & stronger awaiteth.

One word to the wise before today's markets: never forget that gold & silver are severely undervalued from an historical (centuries) standpoint, & that even at these low prices, the physical gold & silver markets are tiny. The door into gold & silver is simply too low & narrow to accommodate great crowds. When everybody tries to walk through at once, some get crushed, some get left out, & some get nothing -- witness the 2008 panic when silver premiums shot up to 50% and more over melt, and deliveries on silver & gold stretched out 8 weeks or more. Mercy, silver deliveries were delayed during 5 months this summer & fall, stretching out as long as 12 weeks. Product is not there, smelting capacity is not there, dealer network is small. Don't expect to wait till some crisis hits to buy your silver & gold.

One other word to the wise: the gold and silver industry is filled with crooks -- companies that hire slick salesmen with persuasive patter to sell grossly overpriced items. Typically they mark up obscure products 45% so they can pay a salesman 25%. Compare that to bullion dealers who charge commissions of 3.5% to 1% over wholesale. FORGET buying fancy modern "rarities" and proof American Eagles and numismatic (collector's) coins. If you want to hedge monetary risk, stick with bullion-type gold or silver, coins or bars. One more thing: karatage on a bullion gold coin doesn't meandoodle. 21.6 karat or 22 karat is just as good as 24 karat, period. Be very careful before you buy gold & silver.

For this reason I publish here every day WHOLESALE prices, so that you can see exactly how much dealers are marking up their retail prices. NOWHERE ELSE on the internet can you find these wholesale prices. Nowhere.

TODAY'S MARKETS:

This week slammed the door. Gold broke out on record volume through 4-1/2 year resistance lines on monthly & weekly charts. Dow in gold & Dow in silver have broken down through their uptrend lines from 2011. Dollar has avalanched down through long-standing support. The Great Shift of money out of stocks & into gold & silver I thought we saw in the Dow in Gold chart has now been confirmed & re-confirmed. The long correction in silver & gold has ended. Now is the time to buy.

Speaking of "bull" and "Bear" markets I may have confused y'all. In strict usage -- which the financial media does not observe -- a bull market is a primary up trend that last 15 - 20 years (bear is a 15-20 year primary downtrend.) A stock bull market died in 2000 and a bear market began, although stocks were goosed after 2008 by new Fed money. Gold entered a new bull market in 1999 and silver in 2001.

But what about the last 4-1/2 years' correction? Every bull market has a mid-life crisis that lasts long enough for the unwary to call it a bear market. After the mid-life crisis, the bull phase resumes and tends to outperform its first half. From 1999 - 2011 gold rose 7.5 times and silver 12.5 times. From their $1,045 & 1362¢ correction lows, I expect gold & silver to outperform that earlier run. Y'all are smart: do the math yourselves.

After losing 354.2 points Wednesday & Thursday, the Dow gained 313.66 points (2%) today to close at 15,973.84. Y'all can call that progress if you are a Fed economist, but for it hick like me that's only sliding backwards. S&P500 rose 35.7 (1.95%)

We've seen stocks react up in an A-wave (mid January to 1 Feb), then collapse in a B-wave, and now they OUGHT to mount a C-wave up before collapsing again.

When brokers tout their own position, it's called "talking your book." They're trying to convince others to do something to help their own position. Ultimate "talking your book" event came today when Jamie Dimon, Chmn. of JPMorgan Chase, announced he bought 500,000 shares of JPM yesterday. At yesterday's $53 close, that's 26.5 million, almost as much as his $27 million pay for 2015. Naww, he ain't talking his book.

Dow in gold rose 2.7% to 12.90 oz (G$266.67 gold dollars) but has smashed all support and the uptrend form the 2011 low. http://schrts.co/MgOe0h

Dow in silver added 2.04% to end at 1,011.64 ($1,307.98 silver dollars) after breaking 1,000 oz this week with a 991.46 oz low. Look: http://schrts.co/ohwLZP

Both indicators will rise if stocks mount that C-wave, maybe to the post-2011 trendline, maybe further. Mattereth not a whit, the threads of their fate have been measured & cut, &, will-they, nill-they, down they will descend in their primary trend.

US dollar today bounced up, after falling 8 of the last 10 days. Closed 95.95, up 35 basis points or 0.38%. Might trampoline off 95.50 support for a rally here, but that rally won't signal a trend change if it can't cut through the 50 day moving average, now 98.31.

Gold today took a break, giving back $8.40 (0.7%) for a Comex close at $1,239.10 -- $81.30 higher than last week's close. Silver shaved off 4/10 of 1¢ to 1578.5¢.

Gold has cleanly broken out on its monthly chart: http://schrts.co/WU6cr7 Likewise on the Weekly chart, breaking through the 150 week MA & the 50 week MA, see http://schrts.co/mjz73P Silver's monthly chart has not quite crossed the 20 WMA but is knocking on the post-2011 downtrend line: http://schrts.co/dIquep On the weekly, silver has broken above the post-2012 downtrend line & the 50 WMA.

Gold & silver run ain't near about over. Look for gold to reach $1,300 - $1,350 before it rests. Silver should reach 1700¢.

Big jump up in gold/silver ratio to near the 80 & the top of the trading range offers us a chance to cash in on silver's greater volatility & future outperformance by swapping gold for silver now, at a ratio of 78.1 oz of silver to one oz of gold, and swapping back when it reaches 30:1 (30 oz of silver buys one oz of gold). We won't capture all of that move of course, but theoretically it promises to increase gold ounces by 2.6 times.

The doctor gave my wife Susan a salve for her eye that has helped tame the pain, but leaves her looking at the world through Vaseline. Just takes time, he says. I say, y'all please keep on praying for her.

Y'all enjoy your weekend.

Argentum et aurum comparanda sunt —
Silver and gold must be bought.

— Franklin Sanders, The Moneychanger

Don't just survive. Thrive.
Market Snapshot See more charts and market data
12-Feb-16 Price Change % Change
Gold, $/oz 1,239.10 -8.80 -0.7
Silver, $/oz 15.79 -0.00 -0.0
Gold/Silver Ratio 78.499 -0.557 -0.7
Silver/Gold Ratio 0.0127 -0.0000 -0.0
Platinum 957.30 -5.10 -0.5
Palladium 527.25 2.55 0.5
S&P 500 1,864.78 35.70 2.0
Dow 15,973.84 313.66 2.0
Dow in GOLD $s 266.49 7.10 2.7
Dow in GOLD oz 12.89 0.34 2.7
Dow in SILVER oz 1,011.96 20.12 2.0
US Dollar Index 95.98 0.36 0.4
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: 1,238.60      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,269.57 1,289.38 1,289.38
1/2 AE 0.50 631.18 653.36 1,306.72
1/4 AE 0.25 318.68 332.87 1,331.50
1/10 AE 0.10 129.95 135.63 1,356.27
Aust. 100 corona 0.98 1,208.01 1,217.01 1,241.59
British sovereign 0.24 293.75 306.75 1,303.11
French 20 franc 0.19 232.98 236.98 1,269.31
Krugerrand 1.00 1,250.99 1,260.99 1,260.99
Maple Leaf 1.00 1,248.60 1,262.60 1,262.60
1/2 Maple Leaf 0.50 712.20 650.27 1,300.53
1/4 Maple Leaf 0.25 315.84 331.33 1,325.30
1/10 Maple Leaf 0.10 131.29 135.01 1,350.07
Mexican 50 peso 1.21 1,485.79 1,496.79 1,241.43
.9999 bar 1.00 1,242.94 1,250.60 1,250.60
SPOT SILVER: 15.75      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 22.50 26.00 33.99
VG+ Peace dollar 0.77 17.50 20.00 26.14
90% silver coin bags 0.72 12,870.00 13,227.50 18.50
US 40% silver 1/2s 0.30 4,528.25 4,690.25 15.90
100 oz .999 bar 100.00 1,600.00 1,625.00 16.25
10 oz .999 bar 10.00 159.00 164.00 16.40
1 oz .999 round 1.00 15.85 16.31 16.31
Am Eagle, 200 oz Min 1.00 17.25 18.50 18.50
SPOT PLATINUM: 957.30      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Platinum Platypus 1.00 972.30 1,002.30 1,002.30
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Copyright Notice

© 2015 Little Mountain Corporation, d.b.a. The Moneychanger. All rights reserved. May not be republished in any form, including electronically, without our express permission.

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.

Other Important Information

This is not an offer to buy or sell. Prices subject to change without notice. To enter an order, call us at (888) 218-9226 or (931) 766-6066. Sorry, no sales to Tennessee.

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