The Moneychanger
Daily Commentary
Tuesday, 19 May a.d. 2015 Browse the commentary archive

For my paid Moneychanger monthly newsletter I interviewed Keith Weiner in April. Keith has a fresh and enlightening view of the outworking of zero interest rates. Article is "The ZIRP Boomerang, Conceptual Blindness, & the Way Out." See I also recommend the Gold Standard Institute,

I think I'll blame today's gold & silver performance on the US dollar index. Yeah, that works. Say, I can blame it on stocks, too!

As it happens, I am not that desperate, or quite naïve enough yet to attach gold & silver price movements to a single cause, however much the media likes that approach. It is, as the sophisticated like to say, more "nuanced" than that. (Next thing you know I'll be wearing pointy-toed patent leather shoes.)

Wreaking the vengeance of a falling wedge, the US dollar index today came blowing up out of that wedge's point and rose 110 basis points (1.16%) to close at 95.36, just above its 20 DMA (95.28). Well, come on now. After it fell from 100.27 to 93.15 without much of a rally, it's entitled to a little snapback now.

Since ALL (that's a-l-l) currency exchange rates are manipulated, we can't know whether this was a deal among our criminals at the Fed with the ECB and BOJ criminals, or just the market still hot to buy dollars because they worked for 10 months. By now, though, after all the pain the high dollar caused, I'd bet the Fed doesn't really want it to keep rallying. Technically it's goose is cooked, and cooked geese don't fly. This is a countertrend rally.

The Frankenkurrency, the euro, lost 1.44% to $1.1149, ignominiously gapping down. Y'all do understand why I emphasize these gaps, up or down? They witness an extraordinarily strong move, usually the foretaste of more moves to come in the same direction. Euro fell plumb to its 20 DMA & closed there. In this case, the euro also pierced its uptrend line, calling its rally into question. Man, that is one sorry currency, even amongst a world of sorry fiat currencies. How do you say "most scrofulous"?

Yen has sunk for 4 days, until now it's back below its 20 & 50 DMAs & headed for the bottom of the range (82.25). Sick as a dog eating strychnine meatballs.

Inflation markets don't look too pert today either. WTIC walked through its uptrend line days ago but hasn't followed through with a breakdown. Closed down 3.93% at $57.99/barrel today, just below its 20 DMA. Gravity's catching up with it. Copper took a nasty fall below its 200 dma today, which it had been riding. That party's over for a while.

Yields on the 10 and 30 year US treasuries rose again today. That makes their trip back to the 200 DMA look like a touchback before moving higher. Janet Yellen's going to be wishing she had another job, maybe operating an elevator someplace or changing tires.

Inching to a new high on measly volume, the Dow rose 13.51 (0.07%) to 18,312.39, a new high NOT confirmed by the S&P500. It lost 1.37 (0.06%) to 2,127.83.

Y'all ever involved in waiting for a baby to be born? You know the due date, but you keep thinking, "Well, maybe two more weeks, but maybe we have to go tonight." Same thing with stocks right now. Dow could rise another 200 points and I wouldn't be surprised, or they could fall 500 tomorrow. Either way, they will be lower a month from now, or my name's not Peg Leg Pete.

Wait -- that's not my name.

Silver & gold were thumped with a knobbly stick today. Gold peeled off $20.9 (1.7%) to land back on support at $1,206.90. Silver - oooo -- lost 3.74% or 66.2 cents to end at 1705c.

Both silver & gold sank beneath their 200 DMAs today. Now gold stands at all that support around $1,200 - $1,205. Silver has support at 1700, but more at 1680c. Gold's strongest support stands around $1,180.

Two ways to look at this. If silver & gold suddenly turn back up, it's merely a short correction in a much larger rally. If they stall and fall & trade sideways for a month, they're not ready to rally yet. If gold can hold above $1,195 and silver above 1680c, they'll look strong. Otherwise they can lollygag into seasonal low time in June.

Because previous declines have been stopped at the uptrend line from the December bottom, I expect that to stop them again.

Third way: Just now I ripped everything off the gold and silver charts & what emerged looks entirely different. Both charts show roughly even-sided triangles with an upside breakout in the last week. Okay, I don't mind admitting I was wrong. In that case, gold might trade all the way to the triangle's upper boundary at $1,180 in a touchback, or might stop at the 20 DMA (1,197.30) or 50 DMA ($1,191.27). Look here,

Top triangle boundary for silver is about 1665 tomorrow.

Now look at that: either way I view those charts, I come up with a support at 1660c - 1680c and $1,180. Always comforting when you arrive at the same answer figuring two different ways, sort of like "casting out nines."

I'm going to be watching close as a mongoose at a snakehole the next couple of days and if silver or gold draw near 1680c and $1,180 (maybe $1,190), I'll buy some.

But what do I know? Where I live electricity ain't been invented yet!

I see where the Los Angeles city government has voted to increase the city's minimum wage (never mind that cities have no authority to set minimum wages) at $15/hour. Shucks, I got a better idee than that. Let's set that minimum wage at $500 an hour! That way, by year end every derned one of us'll be millionaires! Why, if a city government can create enough wealth out of hot air & hogwash to make an economy rich enough to pay the least $15 an hour, it can sure make us all rich enough to pay $500 an hour. Derned if we ain't reached the promised land!

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
19-May-15 Price Change % Change
Gold, $/oz 1,206.90 -20.90 -1.70%
Silver, $/oz 17.05 -0.66 -3.74%
Gold/Silver Ratio 70.786 1.466 2.11%
Silver/Gold Ratio 0.0141 -0.0003 -2.07%
Platinum 1,149.80 -27.60 -2.34%
Palladium 775.15 -17.85 -2.25%
S&P 500 2,127.83 -1.37 -0.06%
Dow 18,312.39 13.51 0.07%
Dow in GOLD $s 313.65 5.57 1.81%
Dow in GOLD oz 15.17 0.27 1.81%
Dow in SILVER oz 1,074.04 40.91 3.96%
US Dollar Index 95.36 1.10 1.17%
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SPOT GOLD: 1,207.30      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,235.07 1,249.56 1,249.56
1/2 AE 0.50 615.21 636.85 1,273.70
1/4 AE 0.25 310.62 324.46 1,297.85
1/10 AE 0.10 126.66 132.20 1,321.99
Aust. 100 corona 0.98 1,176.30 1,185.30 1,209.24
British sovereign 0.24 286.33 299.33 1,271.58
French 20 franc 0.19 227.09 231.09 1,237.78
Krugerrand 1.00 1,219.37 1,229.37 1,229.37
Maple Leaf 1.00 1,215.30 1,231.30 1,231.30
1/2 Maple Leaf 0.50 694.20 633.83 1,267.67
1/4 Maple Leaf 0.25 307.86 322.95 1,291.81
1/10 Maple Leaf 0.10 127.97 131.60 1,315.96
Mexican 50 peso 1.21 1,445.33 1,456.33 1,207.87
.9999 bar 1.00 1,211.53 1,219.30 1,219.30
SPOT SILVER: 17.10      
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 12,727.00 13,084.50 18.30
US 40% silver 1/2s 0.30 4,852.75 5,002.75 16.96
100 oz .999 bar 100.00 1,700.00 1,750.00 17.50
10 oz .999 bar 10.00 170.00 175.50 17.55
1 oz .999 round 1.00 17.20 17.70 17.70
Am Eagle, 200 oz Min 1.00 18.60 19.45 19.45
SPOT PLATINUM: 1,149.80      
Plat. Platypus 1.00 1,164.80 1,194.80 1,194.80
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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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