The Moneychanger
Daily Commentary
Monday, 20 April a.d. 2015 Browse the commentary archive

Chinese authorities on Friday announced measures to slow down the smoking stock market there. I reckon they waxed fearful of the outcome, because early today they announced new loose money measures. If you can believe the media reports today, that's what pumped the US stock market.

Shanghai stock exchange has doubled in the last nine months. Explosion waiting for a spark. Might blow up more than China.

Stocks gave us another taste of rank volatility today, surging after plunging on Friday. Dow shot up 208.63 (1.17%) to 18,034.93. Not quite as enthusiastically the S&P500 rose 19.22 (0.92%) to 2,100.40.

Oddest thing, that close at 18,034.93. It almost matched the close on 14 April at 18,036.70. If you look at the three intervening trading days, the indices shot up, clawed for footing without catching, then plunged the third day (Friday). Okay, so both closed above their closely spaced 50 & 20 DMAs after Friday's plunge below them. Somehow, today's boozy bounce, drunk on Chinese monetary mismanagement, doesn't leave me overawed, awed, or even slightly awed. Just looks like sawing back and forth from a topping market that hath not enough juice to make new highs. But what do I know, a ridge-runner who was only introduced to shoes last week?

Dow in gold zigged up, regaining most of last week's loss. Ended up 2.03% at G$312.35 gold dollars (15.11 oz). Dow in silver made a new high for this leg at $1,467.55 silver dollars (1,135.06 troy oz). Both are still safely within the gator jaws.

US dollar index has had a lot of the pride & brashness knocked out of it. Still, it added 43 basis points today (0.44%) to close at 98.14. This came barely under the 20 DMA (98.15). Sometimes those tiny differences are portentous. Dollar index bounced off an internal trend line. Let's see if it can fight that downtrend and rise again tomorrow.

Euro lost 0.58% to $1.0738, down below its 20 DMA again. Just can't get ahead, that euro. Japanese yen lost 0.25% to 83.86, but it ain't trying to get ahead.

WTIC rose 0.55% to $56.38/barrel. It hath made good its escape from the trading range into a rally.

Silver & gold "experienced negative volatility" today (that's a phrase worthy of a Nice Government Man). Silver lost 33.8 cents (2.08%) for a Comex close at 1588.3. Gold tumbled $9.40 (0.8%) to $1,193.50.

Silver & gold themselves don't look that bad, but that Gold/Silver ratio makes me gasp. It rose as high as 75.85 today, higher than the March high, higher than everything since the late January high. Now it didn't close up there but at 75.02 (end of day close, not Comex). It also gapped up. Good chance it will lose steam here as the January & March highs did, but if not we are looking at some pain. Chart's at http://scharts.co/1Fq4lmt

Gold only repeated its performance of the past fortnight, dancing above & below 1,200. Today's $1,190.80 low was not the lowest of the series, That came at $1,183.50 last Tuesday. Momentum indicators are negative. If gold doesn't suddenly turn around, it will fall further.

Silver closed only pennies above the uptrend line from the 1 December 15 low. Tomorrow it stands at 1577c. Yet silver has formed a falling wedge & that might turnaround. Most of the witnesses, however, point further down.

Last week I talked about rounding bottoms forming in silver & gold. Those bottoms tomorrow give gold a safety net about $1,160 & silver stopped right at it today. Breaking out the bottoms of those bowls would blow icy breath on us.

On 20 April 1792 France declared war on Austria, the beginning of the French Revolutionary Wars.

On 19 April 1775 American militia fought off British troops sent to confiscate their firearms in Lexington & Concord, Massachusetts. It was the beginning of the American Revolution.

I won't be publishing a daily commentary tomorrow because I'll be finishing my monthly Moneychanger newsletter for paid subscribers. See y'all Wednesday, God willing.

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
20-Apr-15 Price Change % Change
Gold, $/oz 1,193.50 -9.40 -0.78%
Silver, $/oz 15.88 -0.34 -2.08%
Gold/Silver Ratio 75.143 0.986 1.33%
Silver/Gold Ratio 0.0133 -0.0002 -1.31%
Platinum 1,147.30 -18.70 -1.60%
Palladium 773.05 -10.55 -1.35%
S&P 500 2,081.18 19.22 0.93%
Dow 18,034.93 208.63 1.17%
Dow in GOLD $s 312.37 6.03 1.97%
Dow in GOLD oz 15.11 0.29 1.97%
Dow in SILVER oz 1,135.49 36.52 3.32%
US Dollar Index 97.53 -0.08 -0.08%
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: 1,194.90      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,218.80 1,236.72 1,236.72
1/2 AE 0.50 608.89 630.31 1,260.62
1/4 AE 0.25 307.43 321.13 1,284.52
1/10 AE 0.10 125.36 130.84 1,308.42
Aust. 100 corona 0.98 1,165.38 1,174.38 1,198.11
British sovereign 0.24 283.39 296.39 1,259.09
French 20 franc 0.19 224.76 228.76 1,225.29
Krugerrand 1.00 1,205.65 1,215.65 1,215.65
Maple Leaf 1.00 1,202.90 1,218.90 1,218.90
1/2 Maple Leaf 0.50 687.07 627.32 1,254.65
1/4 Maple Leaf 0.25 304.70 319.64 1,278.54
1/10 Maple Leaf 0.10 126.66 130.24 1,302.44
Mexican 50 peso 1.21 1,427.61 1,438.61 1,193.17
.9999 bar 1.00 1,199.08 1,206.90 1,206.90
SPOT SILVER: 15.91      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 23.00 26.00 33.99
VG+ Peace dollar 0.77 18.50 21.00 27.45
90% silver coin bags 0.72 11,801.08 12,158.58 17.01
US 40% silver 1/2s 0.30 4,500.23 4,650.23 15.76
100 oz .999 bar 100.00 1,580.50 1,645.50 16.46
10 oz .999 bar 10.00 158.05 164.55 16.46
1 oz .999 round 1.00 16.01 16.51 16.51
Am Eagle, 200 oz Min 1.00 16.91 18.26 18.26
SPOT PLATINUM: 1,147.30      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Plat. Platypus 1.00 1,162.30 1,192.30 1,192.30
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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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