The Moneychanger
Weekly Commentary
Friday, 6 March a.d. 2015 Browse the commentary archive
Here's the weekly scorecard:
  27-Feb-15 6-Mar-15 Change % Change
Silver, cents/oz. 1,651.30 1,578.40 -72.90 -4.4
Gold, dollars/oz. 1,212.60 1,164.10 -48.50 -4.0
Gold/silver ratio 73.433 73.752 0.319 0.4
Silver/gold ratio 0.0136 0.0136 -0.0001 -0.4
Dow in Gold Dollars (DIG$) 309.12 317.10 7.98 2.6
Dow in gold ounces 14.95 15.34 0.39 2.6
Dow in Silver ounces 1,098.09 1,131.32 33.24 3.0
Dow Industrials 18,132.70 17,856.78 -275.92 -1.5
S&P500 2,104.50 2,071.26 -33.24 -1.6
US dollar index 95.32 97.67 2.35 2.5
Platinum 1,186.70 1,159.90 -26.80 -2.3
Palladium 818.45 818.05 -0.40 -0.0

Surprise ending to the week. US dollar index shot up to 97.67, & that was the last straw for stocks, which had been just barely hanging on. Also the last straw for silver, gold, & white metals. Now y'all think you know what that means, but maybe it don't. Bear with me a minute. Things may point the opposite direction you think they do.

Stocks plunged today. Remember that some time ago I pointed out they had broken their uptrend. Today that paid off in big bills. Dow crashed 278.94 (1.54%) to 17,856.78, wiping out all the year's gains. S&P500 dove 29.78 (1.42%) to 2,071.26. Both smashed their 20 day moving averages and skidded to a stop a little above the 50 DMA. Every indicator is pointing down, so this cascade shouldn't end soon.

Now ponder the Dow in Gold & Dow in Silver, with all their momentum & trend indicators turning down or rolling over. They are also near the top Gator Jaw, typical of this formation. It trades from one side clean to the other. If this is a broadening top, it implies that stocks have run out of steam against metals. Dow in Gold has nearly reached that top jaw, with a G$316.07 gold dollar close today (15.29 ounces), same as the last December high, so ought immediately turn down. That implies a price low for gold & past price high for stocks. http://scharts.co/1LTqEBF

Dow in silver has me vacillating over which line is the top Gator Jaw, but let's say it's that flat one about S$1480.40 silver dollars (1,145 troy ounces). DiS made its high for this move today at S$1,449.76 (1,121.30 tr. Oz). Looks mighty heavy up there, so far up. http://scharts.co/1zXhITo

Please don't miss what this implies: silver & gold must be very near a price reversal upward.

This would also be a likely place to mark the US Dollar Index' high. Closed up 1.31% at 97.67, taking it into way overbought territory, but, of course, overbought can get overboughter. Still, that's an 11-1/2 year high. Cycle people I follow say that fulfills a lot of targets. To a know-nothing nat'ral born durned fool from Tennessee, it just looks awful expensive for something the Fed makes out of electrons. Durn, in Tennessee electrons are FREE.

That dollar move poisoned the euro something fierce. It lost 1.7% to a new low, $1.0843. Way oversold, so maybe time for a turnaround. Even the Yen broke down out of that range it's been trading in since December - not much, but some. Lost 0.56% to 82.76.

The lying US government labor report said the US created 295,000 new jobs this week, leaving out the footnote that those jobs required 295,000 new hamburger spatulas. Thus spake the media that the dollar had risen on expectation the Fed would soon raise interest rates. In a pig's eye. Fed is scared to death to raise interest rates, & ought to be. Hide & watch.

But that same speculation did drive up the yield (drove down the price) on the US Treasury 10 year note, and I mean up a lot, 6.06% to end at 2.24%. That pushes that yield up against the downtrend line from the high that closed 2014. Wonder how the Fed feels about that? Wouldn't be like the Fed to let markets take away control of interest rates.

West Texas Intermediate Crude lost 2.38% to $49.78 but is trading in the same range without breaking down. Since everybody & his cousin already knows "oil is going down," we've probably seen the lows already.

Gold wiped out all its 2015 gains today. Dropped $31.80 (2.7%) to close Comex at $1,164.10. Silver resisted the urge to play right along by dropping only 34.8 cents (2.2%) to 1578.4c. That brought the Gold/Silver Ratio DOWN to 73.752.

Gold is shamefully oversold, but where will it go from here? One problem trying to read markets is that we always want to project today's move out into the infinite future. But sometimes it stops & turns. Gold today hit its last low. It might yet -- like Monday or Tuesday if ever -- revisit $1,141.70 (1 December low) or $1,130.40, the November low.

On the other hand, maybe that's the blow out. I've told y'all about Bollinger Bands, which work on the [WARNING!] questionable assumption that markets move randomly, and that those moves follow a normal distribution. That is, if you add or subtract two standard deviations (or sigma, which measures the variability) to the mean, you will capture 95% of all possible moves. Extend that to three sigma, & you'll snag 99.73% of all the data. In other words, not much lies outside 3 standard deviations.

Today at its low ($1,162.90) gold actually poked into that line, although it ended higher. Now that's no promise gold won't fall more, it just argues that it's fallen about as far as it intends. Go look a the chart, http://scharts.co/1zXmVdI Oh, it might lick its wounds here another day or two, but that's probably about exhausted the downside. Gold's also resting at the bottom boundary of its trading channel.

Silver punched into but closed above its two sigma Bollinger Band, shown on the chart, but never touched the 3 sigma (1555c) since it fell no lower than 1574c.

More, silver has been building a bullish falling wedge, & closed nearly on that wedge's bottom boundary. Manic-depressive silver is just too cheerful here, and it's holding up better than gold. http://scharts.co/1zXoqsn

Then there's that gold/silver ratio, that pictures silver's outperformance. Didn't it do something outlandish today. It broke up through the downtrend line on the open, then fell back sharply. Ended the day closing at the intertwined 20 & 50 DMAs, but most importantly, LOWER than yesterday's close. That's the first half of a key reversal downward. A lower close Monday clinches the key reversal. http://scharts.co/1Fq4lmt

So while some folks may be poor mouthing silver & gold & talking 'em on down, I'm happy to see this washout. It will clean the rest of the weakness out of the market and should give them a new foothold to rally from. Things sometimes don't mean what they seem to mean.

But I could be wrong.

My daughter says I ought to tell y'all about a documentary called Bought. It's free for a week to download at http://bit.ly/18YxgB1. Now I haven't seen it, but it advertises itself as "The hidden story behind vaccines, Big Pharma, & your food." I'm not warranting anything about it, but if it's like Food, Inc, you probably would profit from it.

On 6 March after 13 days of fighting the Mexican Army overwhelmed the Texians at the Alamo. Between 182 and 275 Texians died, including William Travis, Jim Bowie, & Tennessean Davy Crocket.

On 6 March 1899 Felix Hoffman of the German company Bayer patented a new miracle drug, "Aspirin." Englishman Edward Stone first discovered the active ingredient of aspirin from the bark of the willow tree in 1763, salicylic acid. Hoffman first synthesized that as acetylsalicylic acid.

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
6-Mar-15 Price Change % Change
Gold, $/oz 1,164.10 -31.80 -2.7
Silver, $/oz 15.78 -0.35 -2.2
Gold/Silver Ratio 73.752 -1.998 -2.6
Silver/Gold Ratio 0.0136 -0.0003 -2.1
Platinum 1,159.90 -21.30 -1.8
Palladium 818.05 -6.75 -0.8
S&P 500 2,071.26 -29.78 -1.4
Dow 17,856.78 -278.94 -1.5
Dow in GOLD $s 317.10 3.64 1.2
Dow in GOLD oz 15.34 0.18 1.2
Dow in SILVER oz 1,131.32 7.11 0.6
US Dollar Index 97.67 1.26 1.3
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: 1,169.20      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,194.92 1,210.12 1,210.12
1/2 AE 0.50 601.62 616.75 1,233.51
1/4 AE 0.25 300.81 314.22 1,256.89
1/10 AE 0.10 122.66 128.03 1,280.27
Aust. 100 corona 0.98 1,136.88 1,145.88 1,169.03
British sovereign 0.24 277.29 282.29 1,199.21
French 20 franc 0.19 219.93 223.93 1,199.39
Krugerrand 1.00 1,184.40 1,194.40 1,194.40
Maple Leaf 1.00 1,177.20 1,194.20 1,194.20
1/2 Maple Leaf 0.50 672.29 613.83 1,227.66
1/4 Maple Leaf 0.25 298.15 312.76 1,251.04
1/10 Maple Leaf 0.10 123.94 127.44 1,274.43
Mexican 50 peso 1.21 1,399.72 1,410.72 1,170.04
.9999 bar 1.00 1,173.29 1,185.20 1,185.20
SPOT SILVER: 15.96      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 23.00 26.00 33.99
VG+ Peace dollar 0.77 19.00 22.00 28.76
90% silver coin bags 0.72 12,162.15 12,519.65 17.51
US 40% silver 1/2s 0.30 4,516.45 4,666.45 15.82
100 oz .999 bar 100.00 1,586.00 1,646.00 16.46
10 oz .999 bar 10.00 164.60 165.60 16.56
1 oz .999 round 1.00 16.06 16.56 16.56
Am Eagle, 200 oz Min 1.00 17.46 18.26 18.26
SPOT PLATINUM: 1,159.90      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Platinum Platypus 1.00 1,174.90 1,204.90 1,204.90
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© 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.

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