The Moneychanger
Daily Commentary
Wednesday, 27 May a.d. 2015 Browse the commentary archive

Sorry I missed y'all yesterday, but I was finishing up my paid subscription monthly newsletter.

What a difference a day makes! World is sliding all over the place, & markets with it.

First, put yesterday into the rotten perspective it deserves. It was options expiry on Comex, the day when hundreds of gold and silver options expire. With gold above $1,200 and $1,190 and silver above 1700c, a bunch of call options were about to expire in the money and their writers were going to have to pony up -- but NOT if the spot price dropped.

So, it dropped, or was pushed. Happens nearly every month on options expiry day. Cheap chiseling. Markets are not benevolent.

Yesterday on fears of Greece defaulting and an anti-austerity government being elected in Spain over the weekend and who knows what else, the US dollar index jumped up 129 basis points (1.35%) to 97.4), a colossal move. That took the dollar intraday to a perfect 61.8% retracement of its April - May fall, and through resistance at 96.50. Also rose past the 50 DMA, a prime target for corrections.

Today the US Dollar index fell back 3 basis points to 97.38. Now the big question becomes, Is the dollar's big rise over or will it keep on rising past the April high at 100.27. And the answer is . . . I haven't a clue. Next day or so will tell as the dollar index will either stall at this level or blow on past it. Clearly, a strongly rising dollar won't help silver & gold, but in a little I'll come back to that question as it bears on which way the dollar will go.

Now was the dollar's surge helpful to the euro, shabby, pretentious fiat currency of the continent. On the chart here Y'all can see a breakaway gap down between $1.1130 and $1.1120, and another yesterday between $1.1000 and $1.0950. That second looks like an exhaustion gap, & if it is 'twill mark the extent of the move. However, it left the euro below its 50 day moving average and 20 DMA, which leaves momentum down. Of course, that needs to be confirmed.

Yesterday's drop hurt the yen's feelings the most. It dropped clean through the bottom of the 6 month trading channel (82.25) with a giant gap, so it has further to go. Closed today at 80.84, down 0.48%. Stinker.

10 year bond yield closed below it s200 DMA for the second time today. 30 year bond yield is hovering above its 200 DMA. Both appear to have pointed their noses earthward. The inflation markets copper & WTIC are disagreeing. WTIC walked through its uptrend line, even in the last two days closed below its 20 DMA, but hasn't fallen sharply. Today lost 1.44% to $57.51/barrel. Copper, on the other hand, sank through its 200 DMA 6 days ago and has made a stout business of falling ever since. Lost 0.31% today to end at $2.77.

Dow gained back 121.45 of the 190.48 it lost yesterday to close at 18,162.99. S&P500 won back 19.28 of the 21.80 it lost Tuesday and ended at 2,123.48.

Yesterday both the Dow & S&P500 fell out of rising wedges building for nearly 2 months. That took them below their 20 DMAs then today whipsawed them back above, but it still looks like a breakdown.

Remember that Dow Theory requires that the Transports confirm the Industrials. Dow transports broke yesterday below its trading range. Utilities are sick. Dow Jones Composite average which adds up all three has traded slightly lower sideways sine end-December. It has already walked through its uptrend line from the 2009 low. These are not positive developments if you wear pointy toed patent leather shoes & work on Wall Street.

Dow in gold again touched the upper gator jaw today, closing at 15.32 oz. Dow in Silver is still halfway between the top gator jaw and its 200 DMA. All this still points to higher silver & gold and lower stocks.

Gold today shaved off $1.30 to close Comex at $1,185.60. Silver gave back 9.6 cents to 1663.8c.

With pessimists breathing down my neck like the arctic wind, I am trying to look at these charts realistically, but durn! Both gold and silver broke out of even-sided triangles, traded up through their 200 DMAs, made highs higher than previous highs, and then dropped back to the upper boundary of the triangle. Friends, that ain't deadly. Sure, if they break through that boundary they'd look puking sick, but not till then.

I don't fancy the Gold/Silver Ratio climbing as it is, but that's to be expected in a correction. More than that, the ratio punched through the 200 DMA yesterday, but closed way below it, and doesn't even stand above its 20 DMA today.

Then I went and looked at the Gold/US Dollar Index spread. It fell with a breakaway gap on 19 May but yesterday left what looks like an exhaustion bap, meaning the move should have nearly spent itself. Look for yourself at

Silver/US Dollar Index Spread looks even stronger, However, it has reached its 50 DMA and must turn around here.

Mind also we are moving into the time (June-July) when gold & silver show a seasonal low, usually with a strong upmove out of July & into August and later. That does not bode well for metals.

I have ot say it: even putting the worst gloss possible, I don't see any massive drop from here, so I'm going to pull on a turtleneck to keep off the arctic breeze and stay with it: buy silver at 1655c or gold at $1,175. I caution y'all, if I'm wrong gold can fall to $1,155 7 silver to 1600c, maybe lower.

Welcome to the totalitarian regulation and surveillance society!

Once we believed everyone was sinful but redeemable, and we had freedom & privacy. We expected everyone to do his duty & behave, and most did.

Today we claim everyone is good, but trust no one, so we have watchers and regulators & no freedom or privacy. Few do their duty, few keep their word.

We have traded the presumption of innocence for the presumption of guilt, and it's a wretched way to live.

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
27-May-15 Price Change % Change
Gold, $/oz 1,185.60 -1.30 -0.11%
Silver, $/oz 16.64 -0.10 -0.57%
Gold/Silver Ratio 71.259 0.331 0.47%
Silver/Gold Ratio 0.0140 -0.0001 -0.46%
Platinum 1,118.50 -4.90 -0.44%
Palladium 785.00 4.60 0.59%
S&P 500 2,123.48 19.48 0.93%
Dow 18,162.99 121.45 0.67%
Dow in GOLD $s 316.68 2.46 0.78%
Dow in GOLD oz 15.32 0.12 0.78%
Dow in SILVER oz 1,091.66 13.52 1.25%
US Dollar Index 97.38 -0.03 -0.03%
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SPOT GOLD: 1,187.00      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,214.30 1,228.55 1,228.55
1/2 AE 0.50 604.86 626.14 1,252.29
1/4 AE 0.25 305.40 319.01 1,276.03
1/10 AE 0.10 124.53 129.98 1,299.77
Aust. 100 corona 0.98 1,156.52 1,165.52 1,189.06
British sovereign 0.24 281.52 294.52 1,251.13
French 20 franc 0.19 223.27 227.27 1,217.33
Krugerrand 1.00 1,198.87 1,208.87 1,208.87
Maple Leaf 1.00 1,195.00 1,211.00 1,211.00
1/2 Maple Leaf 0.50 682.53 623.18 1,246.35
1/4 Maple Leaf 0.25 302.69 317.52 1,270.09
1/10 Maple Leaf 0.10 125.82 129.38 1,293.83
Mexican 50 peso 1.21 1,421.03 1,432.03 1,187.72
.9999 bar 1.00 1,191.15 1,199.00 1,199.00
SPOT SILVER: 16.67      
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 12,523.23 12,880.73 18.02
US 40% silver 1/2s 0.30 4,724.43 4,874.43 16.52
100 oz .999 bar 100.00 1,656.50 1,706.50 17.07
10 oz .999 bar 10.00 165.65 171.15 17.12
1 oz .999 round 1.00 16.77 17.27 17.27
Am Eagle, 200 oz Min 1.00 18.17 19.02 19.02
SPOT PLATINUM: 1,118.50      
Plat. Platypus 1.00 1,133.50 1,163.50 1,163.50
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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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