The Moneychanger
Weekly Commentary
Friday, 15 May a.d. 2015 Browse the commentary archive
Here's the weekly scorecard:
  8-May-15 15-May-15 Change % Change
Silver, cents/oz. 1,627.20 1,754.50 127.30 7.8
Gold, dollars/oz. 1,182.40 1,225.50 43.10 3.6
Gold/silver ratio 72.665 69.849 -2.816 -3.9
Silver/gold ratio 0.0138 0.0143 0.0006 4.0
Dow in Gold Dollars (DIG$) 313.37 308.22 -5.14 -1.6
Dow in gold ounces 15.16 14.91 -0.25 -1.6
Dow in Silver ounces 1,101.53 1,041.47 -60.06 -5.5
Dow Industrials 17,924.07 18,272.56 348.49 1.9
S&P500 2,088.00 2,122.73 34.73 1.7
US dollar index 94.75 93.29 -1.46 -1.5
Platinum 1,131.40 1,168.00 36.60 3.2
Palladium 785.75 794.95 9.20 1.2

This week was as good for silver & gold as last week was bad. Silver made huge gains. Even the white metals joined the romp. Stocks rose, but by millimeters, grudgingly, wearily, heavily. US dollar index continued to fall toward its intrinsic value, zero.

Today I'm going to do something a little different. I'll talk about the markets I usually follow, but then I want to list the reasons that gold and silver appear to have turned up.

The S&P500 made a new high today by 1.63 (0.08%) to close at 2,122.73. New highs by microns are not the food of optimists. Dow closed at 18,272.56, up 20.32 (0.11%), still not able to confirm the S&P500's new highs.

Besides, if stocks are in such great shape, why are the Dow Transports AND the Dow Utilities below their 200 day moving averages? Why has the German DAX broken?

Most of all, there are the Dow in Gold & Dow in Silver. With great patience & indulgence y'all have been watching with me the gator jaws broadening or megaphone tops in these indicators since last November. These patterns are slow to unfold, but O so reliable, and both point down. That means silver & gold have turned up against stocks, & most probably, against the dollar as well.

Dow in gold today fell 0.25% to $308.22 gold dollars (14.91 oz), well below its 20 & 50 DMAs. Pivotal sign will be falling below the slow-moving 200 DMA, now a scant G$11.17 (0.54 oz) below at G$297.05 (14.37 oz). Chart's at http://schrts.co/8Sv0tc

Behold, the Dow in Silver brings even more joy! Fell 0.42% today to S$1,345.16 silver dollars (1,040.40 oz)/ 200 DMA lies only S$14.16 (10.95 oz) below at S$1,331.01 (1,029.45 oz).

US dollar index fell yet again, 22 basis points (0.24%) to 93.29. Watch out, though, there's a double bottom yesterday and today on the dollar index chart, which may signal a rally. Any close below today's wrecks that possibility. Only support I see below is the 200 DMA at 90.46.

Euro rose 0.28% to $1.1446, finally if lethargically rallying. Yen fell 0.2% to 83.74, still stone cold dead.

Yields on the 10 and 30 year US treasuries fell for the second day, in fact, gapped down. 10 year yield closed below the 200 DMA and the downtrend line from 2014. 30 year did NOT close below the 200 DMA. This might signal a break in the rally, or merely a correction. Too early to say. If the markets have wrested interest rate control from the Fed's hands, or are about to, things are going to get as interesting as a bar fight when somebody shoots out the light & hands out serrated knives.

WTIC broke its uptrend line last week, but took all week to trade down to its 20 DMA, then bounced up off that today to close at $59.69/barrel. Correcting, but I don't think the uptrend has been killed. Copper remains above its 200 DMA where it has been forming a flag or it has just plumb stalled -- but it ain't falling.

Now, silver & gold, then my list of rising reasons.

Gold today closed Comex a measly 10 cents higher at $1,225.50, but above the symbolically important $1,225. Silver added 9.6 cents to 1754.5c. That took the Gold/Silver ratio to 69.849 its lowest lever since 8 October 2014 on its way higher. Most important, it's below the 200 DMA AND below the uptrend line from the April 2011 low! Y'all go look, http://schrts.co/bTpEMH

Silver & gold have risen to and slightly through resistance, and today, end of the week, did NOT fall back. Here are the technical reasons they can continue rallying:

1. The gold/silver ratio has clearly broken down, and a falling ratio generally accompanies gold and silver rallies.

2. Silver and gold have advanced smartly for four days. For three days running, they closed above the previous day's high. That's how I define "smartly" and "strong".

3. This week's strong rises have taken place in the teeth of rising interest rates. Since silver & gold pay no interest or dividends, the higher interest rates rise the greater the opportunity cost of holding metals. Stout, rising in the teeth of that

4. After seven months in the Gator Jaws, the Dow in Gold & Dow in Silver appear to have turned down -- but still need confirmation.

5. Gold closed above the downtrend line from October 2012 on its monthly chart.

6. Gold and silver have risen nearly to their 50 week moving averages on a weekly chart.

7. Since mid-2015, silver & gold have flattened out. Rate of fall has slowed and stopped as they have refused to break further for the past six months.

8. Bowls or rounding bottoms in silver & gold are nearing completion and point to higher prices.

9. Gold/US dollar index spread (gold divided by the US dollar index) is in full out gapped-up, tank full of nitro rally mode. Look at http://schrts.co/lEHI64

10. Gold stands above its 200 day moving average ($1,225.50 against $1,219.94).

11. Silver, yes, silver has burst through its 200 DMA (1754.5c against 1711c).

Yes, yes, all this needs further confirmation by silver climbing over 1860c & gold above $1,310, but this is far more than silver & gold have had on their side in a coon's age. I'm having to fight my own expectations for them to fail because the seasonal low time is coming up in June. But I have been buying both, and I won't be ashamed of that even if they do fall back. Whoa! Also, better swap gold for silver if you have any gold left.

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
15-May-15 Price Change % Change
Gold, $/oz 1,225.50 0.10 0.0
Silver, $/oz 17.55 0.10 0.6
Gold/Silver Ratio 69.849 0.002 0.0
Silver/Gold Ratio 0.0143 0.0001 0.6
Platinum 1,168.00 6.70 0.6
Palladium 794.95 15.45 2.0
S&P 500 2,122.73 1.63 0.1
Dow 18,272.56 20.32 0.1
Dow in GOLD $s 308.22 0.35 0.1
Dow in GOLD oz 14.91 0.02 0.1
Dow in SILVER oz 1,041.47 -4.57 -0.4
US Dollar Index 93.29 -0.22 -0.2
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SPOT GOLD: 1,224.50      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,251.44 1,267.36 1,267.36
1/2 AE 0.50 623.99 645.92 1,291.85
1/4 AE 0.25 315.05 329.08 1,316.34
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British sovereign 0.24 290.41 303.41 1,288.91
French 20 franc 0.19 230.33 234.33 1,255.11
Krugerrand 1.00 1,236.75 1,246.75 1,246.75
Maple Leaf 1.00 1,232.50 1,248.50 1,248.50
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VG+ Morgan $B4 1905 0.77 23.00 26.00 33.99
VG+ Peace dollar 0.77 18.50 21.00 27.45
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US 40% silver 1/2s 0.30 4,973.70 5,123.70 17.37
100 oz .999 bar 100.00 1,741.00 1,791.00 17.91
10 oz .999 bar 10.00 174.10 179.60 17.96
1 oz .999 round 1.00 17.61 18.11 18.11
Am Eagle, 200 oz Min 1.00 19.01 19.86 19.86
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PLATINUM Fine Tr.Oz. BID ASK $/oz
Platinum Platypus 1.00 1,183.00 1,213.00 1,213.00
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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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