The Moneychanger
Weekly Commentary
Friday, 23 January a.d. 2015 Browse the commentary archive
Here's the weekly scorecard:
  16-Jan-15 23-Jan-15 Change % Change
Silver, cents/oz. 1,773.90 1,828.40 54.50 3.1
Gold, dollars/oz. 1,276.90 1,292.60 15.70 1.2
Gold/silver ratio 71.983 70.696 -1.287 -1.8
Silver/gold ratio 0.0139 0.0141 0.0003 1.8
Dow in Gold Dollars (DIG$) 283.50 282.63 -0.87 -0.3
Dow in gold ounces 13.71 13.67 -0.04 -0.3
Dow in Silver ounces 987.18 966.56 -20.62 -2.1
Dow Industrials 17,511.57 17,672.60 161.03 0.9
S&P500 2,019.42 2,051.82 32.40 1.6
US dollar index 92.99 95.24 2.25 2.4
Platinum 1,269.80 1,268.00 -1.80 -0.1
Palladium 754.30 775.40 21.10 2.8

The scoreboard don't lie, and what a story it do tell! Silver up 3.1%, gold 1.2% higher, stocks for all the sound & fury up only 0.9% & 1.6%. Big mover was the US dollar index, now in a hyperbolic rise, a move that endeth always in tears & great reversals. White metals slept away the week.

I really only want to talk about metals, but I'm in it now so I'll look at the others.

Stocks gave back today most of yesterday's gains. Dow coughed up 141.38 (0.79%, out of yesterdays 259.7 gain) to 17,672.60 while the S&P500 refunded 11.33 (0.55%) to close at 2,051.82.

If I say to you, "This acts like a market that is struggling, a weakening market," what do I mean? First, these indices couldn't hold on to those big gains, even though they weren't new highs. Second, that left the Dow below the (presently intertwined) 20 & 50 DMAs which yesterday it had overpassed: gave back the milestone. Third, Dow hit the downtrend line from the December high & closed barely above it yesterday; today, it again closed under. S&P did not match those, & closed yesterday further through its downtrend line, but another question arises: Why are they not confirming each other? If the S&P500 could stay up there, why not the Dow. Whoops, every other important index except the Nasdaq twins (up 0.16 & 0.18%), closed down. Well, okay, the Wilshire 5000 was unchanged. Arguing against my liverish outlook are some momentum indicators which might be turning up. Looks like a market struggling to me, but remember stocks are a huge market and roll over slowly.

Dow in gold fell a minute 0.06% to G$282.58 gold dollars (13.67 troy ounces). Eyecatching, because it bounced down off the uptrend line from August 2013. Might be readying an upward correction. Remember the Dow in Gold and Dow in Silver FALL when metals outperform stocks, and rise when stocks outpace metals. Look at the chart here, http://scharts.co/1soU67t

Dow in silver tripped 0.58% to S$1,248.61 silver dollars (965.72 troy ounces). Both indicators have broken down from a Gator Jaws formation (Broadening Top) which implies that the trend dominating since September 2011, namely, metals losing value against stocks, has changed & now metals will gain against stocks for several years. http://scharts.co/1sHAvQ1

There's an old technical saw that says when a market breaks upward out of its trading channel, you can draw a new top channel line ABOVE at the same width as the old channel, so that the old top channel line becomes the mid-line of the channel. Since the US dollar index, scrofulous parasite upon the earthball's peoples, has burst through its top channel line, we add that new top channel line and find it crosses the scale at 99.5. That's not saying it will reach that level, only to give you warning it might reach for that line.

Just as likely (in my little mind) is that the dollar has been shoved up here by the ECB announcement yesterday, so is not a permanent move. Also, the criminals at the Fed are certainly dealing with the pressure of the US export industry which is finding itself priced out of the market by the dollar rising against the yen & euro. Sort of thing that gives Nice Government Men intestinal distress & headaches. Chart's at http://scharts.co/1tvzNLY

Euro keeps on falling, down another 1.35% to $1.1210. Yen rose 0.55% to 84.88c/Y100.

WTIC gave up another 2% today to $45.49/barrel. Could be turning up.

Gold stumbled $8.10 (0.62%) to $1,392.60 on Comex; silver shaved off 6.2 cents (0.34%) to 1828.4.

Gold/Silver ratio fell again, to 70.696. Looking at the chart it left a little gap behind between 72 & 72.25. If we see a correction, it ought to rise at least that far to close that gap. Here's a chart, http://scharts.co/17rG0hX

On the weekly chart gold has now closed two weeks above the downtrend line from the October 2012 top, and closed above its 20 & 50 week moving averages. Folks, this is a breakout. Take not my word for it, see with your own eyes, http://scharts.co/1GKoaqa

Depending on where you draw the line, weekly silver has either broken out or is about to break out. I'll be conservative and draw the line above. Has surpassed its 20 week moving average (1684c) but rests beneath its 50 week MA (1684c). http://scharts.co/1BlPLrY

Gold has hit that downtrend line from the 2012 high and the $1,300 resistance, but could break through this time. That's all right. It makes a little correction here, maybe as far back as the 200 DMA at $1,255.33 but probably not that far. After that it will surge for the target, $1,350. Of course, if it opens next week above $1,300, it doesn't intend to correct.

By the way, y'all go look at Gold in Euros, http://scharts.co/1AuUO8W. And I noticed last night that Pat Heller of Liberty's Outlook reported that gold was the second best performing currency in 2014, after the dollar.

Silver has reached its 200 DMA and the 1850c resistance. Whether it corrects here or bulls on through, it's natural it would pause at this line for a breather. Target for this move completed remains $20.60.

On 23 January 1579 the Union of Utrecht was signed, creating the Dutch Republic. They fought the Spanish 80 years (1568-1648) to make good their independence. What a people! Tiny country, mighty hearts. At the siege of Leyden (1573/4) one of the leaders addressed the starving people and said, "Starvation is preferable to dishonored death. . . my life is at your disposal; here is my sword, plunge it into my breast, & divide my flesh among you. Take my body to appease your hunger, but expect no surrender, so long as I remain alive."

Encouraged, the defenders returned to the walls & hurled renewed defiance at their enemies. "Ye call us rat- eaters and dog-eaters, and it it true. So long, then, as ye hear dog bark or cat mew within the walls, ye may know that the city holds out. And when all has perished save ourselves, be sure that we will each devour our left arms, retaining our right to defend our women, our liberty, and our religion against the foreign tryant." http://bit.ly/1BlUERC Giants say such things; giants do them.

Y'all enjoy your weekend.

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
23-Jan-15 Price Change % Change
Gold, $/oz 1,292.60 -8.10 -0.6
Silver, $/oz 18.28 -0.06 -0.3
Gold/Silver Ratio 70.696 -0.441 -0.6
Silver/Gold Ratio 0.0141 -0.0000 -0.3
Platinum 1,268.00 -16.00 -1.2
Palladium 775.40 1.80 0.2
S&P 500 2,051.82 -11.33 -0.5
Dow 17,672.60 -141.38 -0.8
Dow in GOLD $s 282.63 -0.46 -0.2
Dow in GOLD oz 13.67 -0.02 -0.2
Dow in SILVER oz 966.56 -4.44 -0.5
US Dollar Index 95.24 0.52 0.5
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GOLD Fine Tr.Oz. BID ASK $/oz
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US 40% silver 1/2s 0.30 5,202.33 5,352.33 18.14
100 oz .999 bar 100.00 1,818.50 1,878.50 18.79
10 oz .999 bar 10.00 187.85 188.85 18.89
1 oz .999 round 1.00 18.39 18.94 18.94
Am Eagle, 200 oz Min 1.00 20.04 20.69 20.69
SPOT PLATINUM: 1,268.00      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Platinum Platypus 1.00 1,293.00 1,333.00 1,333.00
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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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