The Moneychanger
Daily Commentary
Monday, 16 March a.d. 2015 Browse the commentary archive

From an 11 March 2015 interview in The Gold Report with John Hathaway, senior portfolio manager at Tocqueville Asset Management fund:

TGR: Is this a good time to buy gold or should people wait and see if it goes even lower?

JH: It seems to be a good time. Gold is already strong in every currency other than the dollar. Negative interest rates in much of the world and the overly strong dollar should eventually result in political pressure to cheapen the dollar, but against what? The only monetary asset left standing will be gold.

You'll find the entire interview at http://bit.ly/18oUbV1

Lo, I'm warning y'all. It's getting that time of year when the sun shines and the daffodils bloom & the birds "machen melodye and sclepen all the night with open eye." Blue birds are nesting outside my window somewhere, as I keep seeing the proud male perched on the rail. I ain't worth killin' this time of year.

Strange gainsaying and contradiction in business media today. Headlines say the stock market rose because the dollar sank ahead of the F(ederal) O(xygen-wasting) M(onetary) C(retins) meeting on Wednesday. Problem is, on the market I watch the dollar index rose 63 basis points or 0.63% to 100.04. Current market shows about 99.70, which is still up from Friday. Looks like to me the dollar kept rising today.

But stocks rose, too. Dow jumped 228.11 (1.29%) to 17,977.42 & the S&P500 added 27.79 (1.35%) to 2,081.19.

Fix this in your mind: As long as they cannot surpass the last highs at 18,288.63 & 2,120 they are doomed.

Which brings me to a meditation upon the 2-Wave. Markets tend to advance -- whether advancing up or down -- in five waves. Biggest of those is usually the 3-wave. Safest place to buy for the best gain is the peak or trough of the 2-wave, so you catch the big 3-Wave setting out.

Now think of a peaking market about to make an impulse move down. It drops sharply to the bottom of a 1-wave, then recovers with a strong-as-a-garlic-milkshake 2-wave up, then it reaches the peak of that 2-wave up & falls off the edge of the escarpment where Tarzan used to live, or IguaƧu Falls, or Niagara Falls, or the height of your choice into that vast 3-wave abyss, itself divided into five down waves.

Meseemeth it likely that somewhere between here and 18,228.63, the last high, that this two wave will top. If all this is accurate, that top in the next few days would be a very profitable place to short stocks.

At least, that's what my friend Bob the Market Genius taught me years ago, always sell the peaking 2-wave and buy the troughing 2-wave. Trick is to identify them.

Dow in gold moved up to a new high above the top gator jaw at G$322.27 gold dollars (15.59 troy oz). Yep, that's enough to make even a seasoned gator hunter itch, buy it won't exceed the last high by 3% until it beats G$326.62 (15,80 troy ounces). Besides, the Dow in Silver did no such thing. It closed at S$1,487.11 silver dollars ($1,150.19 oz), about even with the last high at S$1,487.45 (1,150.45 oz). I'm just cranky enough to insist a breakout exceed by 3%. See charts at http://scharts.co/1LTqEBF and http://scharts.co/1GfhkEN

That said, silver & gold have been as sorry as gully dirt the last three days & dead as a ball-peen hammer. Gold rose 70 cents today to $1,153.30; rose 50 cents Friday, and 140 cents last Thursday. Dead, but there is life hid in death. Think about it: Us dollar index has been on a tear, but silver & gold have held on at the roughly $1,150 & 1550c levels.

And when you look at the gold chart, http://scharts.co/1Gfi8tl and silver, http://scharts.co/1Gfid07 , well, 'tain't so bad.

Gold is hanging on bouncing along that shoulder line support, which has to be thin as cheap cotton socks. Silver hangs on in that falling wedge (Chart is beginning to look like one of those bill-dipper toys that dips its bill in water then straightens up).

Of course, I can't thank like one of them snaiks in the Fed, for which I am grateful to heaven, but if I could, I'd be thanking 'bout how to knock the smart-aleck & spunk out of that dollar & send it down about 10 points before the whole universe unbuckles. If I was sitting on the FOMC, that's what I'd do, but shucks, I ain't got a pair of pointy-toe shoes to my name, let alone a silk suit or Harvard BAM. Or MAB, or BMA, whatever the letters. They wouldn't let me in the door as a tourist!

On 16 March 1867 Joseph Lister first published an article outlining his discovery of antiseptic surgery. Don't you reckon THAT saved some lives!

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
16-Mar-15 Price Change % Change
Gold, $/oz 1,153.30 0.70 0.06%
Silver, $/oz 15.60 0.01 0.08%
Gold/Silver Ratio 73.925 -0.014 -0.02%
Silver/Gold Ratio 0.0135 0.0000 0.02%
Platinum 1,108.90 -7.30 -0.65%
Palladium 779.75 -8.65 -1.10%
S&P 500 2,053.40 -12.55 -0.61%
Dow 17,977.42 -145.91 -0.81%
Dow in GOLD $s 322.23 -2.81 -0.87%
Dow in GOLD oz 15.59 -0.14 -0.87%
Dow in SILVER oz 1,152.32 -10.28 -0.88%
US Dollar Index 100.04 0.63 0.63%
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: 1,153.80      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,186.11 1,194.18 1,194.18
1/2 AE 0.50 593.69 608.63 1,217.26
1/4 AE 0.25 296.85 310.08 1,240.34
1/10 AE 0.10 121.04 126.34 1,263.41
Aust. 100 corona 0.98 1,121.91 1,130.91 1,153.75
British sovereign 0.24 273.64 278.64 1,183.69
French 20 franc 0.19 217.03 221.03 1,183.88
Krugerrand 1.00 1,168.80 1,178.80 1,178.80
Maple Leaf 1.00 1,161.80 1,178.80 1,178.80
1/2 Maple Leaf 0.50 663.44 605.75 1,211.49
1/4 Maple Leaf 0.25 294.22 308.64 1,234.57
1/10 Maple Leaf 0.10 122.30 125.76 1,257.64
Mexican 50 peso 1.21 1,381.28 1,392.28 1,154.75
.9999 bar 1.00 1,157.84 1,169.80 1,169.80
SPOT SILVER: 15.61      
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 11,979.83 12,337.33 17.26
US 40% silver 1/2s 0.30 4,411.73 4,561.73 15.46
100 oz .999 bar 100.00 1,550.50 1,610.50 16.11
10 oz .999 bar 10.00 161.05 162.05 16.21
1 oz .999 round 1.00 15.71 16.21 16.21
Am Eagle, 200 oz Min 1.00 17.11 17.91 17.91
SPOT PLATINUM: 1,108.90      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,123.90 1,153.90 1,153.90
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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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