The Moneychanger
Weekly Commentary
Friday, 29 May a.d. 2015 Browse the commentary archive
Here's the weekly scorecard:
  22-May-15 29-May-15 Change % Change
Silver, cents/oz. 1,703.00 1,668.40 -34.60 -2.0
Gold, dollars/oz. 1,204.00 1,189.40 -14.60 -1.2
Gold/silver ratio 70.699 71.290 0.591 0.8
Silver/gold ratio 0.0141 0.0140 -0.0001 -0.8
Dow in Gold Dollars (DIG$) 313.03 313.03 0.00 -0.0
Dow in gold ounces 15.14 15.14 0.00 -0.0
Dow in Silver ounces 1,070.58 1,079.52 8.94 0.8
Dow Industrials 18,232.02 18,010.68 -221.34 -1.2
S&P500 2,126.06 2,107.39 -18.67 -0.9
US dollar index 96.11 96.97 0.86 0.9
Platinum 1,147.90 1,111.00 -36.90 -3.2
Palladium 784.00 776.75 -7.25 -0.9

Today marks both week-end & month-end. I'll talk about the month below, but the week was also interesting. Contrary to the expectations of many, silver & gold did not collapse in a heap, but lost chump change. Dow lost as much as gold. Dollar index had a surge, but that may have been no more than a correction to its foregoing fall. Greek ghost continues to hang over everything. I wish they'd go ahead & default, as they must in the end anyway, & get it over with. Bear always in mind & never forget that this Greek crisis is a crisis only because they owe money to the big banks. If they owed it to you or me, they'd just stiff us & none of the euro-muckety-mucks would say boo.

Let's focus first on the US dollar index, as all fiat moneys are a never failing fountain of overflowing woe. The dollar index shot up Tuesday & Wednesday to make a perfect 61.8% correction of the fall from 100.27 on 13 April to 93.15 on 17 May. It hit 97.88, closed 97.48. Since then it has backed off and not quite fallen below 96.50 support.

Two interpretations are possible. No. 1, the dollar's correction from April through May was only a correction in a larger uptrend, which the dollar is now resuming on its way to 109. No. 2, the dollar's uptrend from July 2014 to April 2015 was driven by speculative, trend following money. Because a high exchange rate kills US competitiveness in the export market, industry will rebel at a high dollar & the Fed, heroic & courageous as usual, will cave and let the dollar sink again. Therefore, the dollar's upward move ended in April.

The market will tell us only when the dollar index either exceeds this recent high or falls through 96.50 support. Today it lost 8 basis points to end at 96.97.

Who in his right mind will buy euros now with the Greek crisis unresolved? Nobody much. However, the pattern on the euro chart with a gap down, a little trading sideways, then another gap down looks like a completed downmove. Euro rose today 0.23% to $1.0988.

The yen crumbled this week, breaking down with a mighty GAP! Out of its 6 month trading range. Floor had been 82.25, but the yen fell as low as 80.35, and ended down another 0.16% today to 80.58. Japanese Nice Government Men are managing the yen's exchange rate down to the earth's molten core, depreciating as fast as they can to steal a march on American exports.

The rally in US interest rates that began mid-April played out this week. Ten year treasury note closed below its 200 DMA 3 days running. Today it lost another 1.64% & close at 2.095%. Confirming that fall the 30 year bond yield fell this week below its 20 DMA and today closed at its 200 DMA at 2.847%. Looks like the party's over till next time.

What snide things can I say about stocks? Say, Moneychanger, what have you got

Say, Moneychanger, what have you got against stocks? Aren't you a capitalist?

Well, I'd have nothing against stocks if there were a real market in stocks, but the present market 'tis no more than a puff job by the Federal Reserve. Its rise has nothing to do with the underlying economy, which is sick as a plague victim with the flu. Hence, my snideness, yea, seasoned with snark.

Stocks managed to rise this month only because they had such a terrible month in April. Yes, the Dow & S&P 500 made new highs this month, but by millimeters & the gains were so slick they couldn't hold on to them. Dow Transports broke six month support at 8500 and sank to a new low today at 8,299.75, cascading like Niagara Falls. Yesterday the Shanghai Exchange, which has been in a frenzy since last July, lost 4.6%, and today fell again. German Dax has been creamed since its April high, and any close below today (11,413.82) will break the uptrend line from October 2014. London's FTSE is rolling over like the US markets.

Today the Dow lost 115.44 (0.64%) and closed at 18,010.68. After all the festivities, all the up days and down days, the Dow lost 221.34 this week. S&P lost 13.4 (0.63%) today and ended 2,107.39, 18.67 lower than last Friday.

For stocks, the wad's been shot, the die's been cast, the jug has been corked. Remember the proverb, "Sell in May and go away." Summer is not a happy time for stocks, and in their strong season they have proven unable to make a credible continuation of their six year bull run. Whoa! What's that up roosting up in them trees? Izzat buzzards?

Blast! Did I forget to mention that even the yankee government's lying numbers had to be revised today to reduce previously reported puny growth of 0.2% to a 0.7% shrinking.

Dow in gold rose up to touch the top gator Jaw this week, but today fell back to its 20 DMA. Ended the week at G$312.97 gold dollars (15.14 troy oz). http://schrts.co/O6jmzb

Dow in Silver also turned down today, again below its 50 & 20 day moving averages. Closed at S$1,393.57 silver dollars (1,077.84 oz). Both indices are rolling over in a broadening top, megaphone, or gator jaws, but the Dow in Silver has fallen further. http://schrts.co/ohwLZP

Y'all probably laugh at me for clinging to those gator jaws, but I'm telling y'all, "The jaws of the gator grind slow, but they grind exceeding fine."

West Texas Intermediate Crude walked through its uptrend line on 7 May but against the normal expectation of a plunge, has traded sideways around its 20 DMA. Today it closed above that 20 DMA again. Big question here is whether the double bottom earlier this year followed by a rally marked the long decline's end, or only a pause in the plunge. Another inflation market, Copper, has long since negated its earlier late-April early May rally, and may have broken the uptrend line from January today. Oil and copper tumbling don't do silver & gold any good.

Every market seems frozen this week. Markets break, but then won't follow through. Both silver & gold broke big on Tuesday, but dropped only to the same old support.

Today silver climbed 3.1 cents to 1668.4c while gold added $1.30 to $1,189.40. For the month, both silver & gold closed higher.

While the seasonal outlook for metals calls for lower prices into June's end, "seasonals" average 30 years, and remember, the Average Height of a 7'11' giant and a 3'5" midget is 5'8". However, both gold and silver have drawn out six-month even-sided triangles, surged up out of the triangles, traded through their 200 day moving averages, and traded back only to kiss the triangle's upper boundary where they broke out. Relatively flat markets have left the 20 & 50 day moving averages snarled up, and gold's below and silver is between them. Charts at http://schrts.co/7LMovP & http://schrts.co/dX5JSX

If the even-sided triangle is the pattern ruling silver & gold, they will not break that upper triangle boundary, and will turn around when they hit it. On Monday that's 1650c for silver and $1,170 for gold, so those are good buy targets. If these were any markets but silver & gold, mired in pessimism after a 4 year correction, everybody would be jumping at them.

If I'm wrong, they can (1) sink to the triangle's bottom boundary (on Monday $1,145 & 1615c) or (2) sink much further. A guess says to November lows at $1,130 & 1500c.

On 29 May 1453 Constantinople fell to Ottoman Sultan Mehmed II, bringing to its death the eleven century old Byzantine Empire. For most of its history, the Empire's strength was its never depreciated gold coin, the Bezant.

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
29-May-15 Price Change % Change
Gold, $/oz 1,189.40 1.30 0.1
Silver, $/oz 16.68 0.03 0.2
Gold/Silver Ratio 71.290 0.077 0.1
Silver/Gold Ratio 0.0140 0.0000 0.2
Platinum 1,111.00 -4.80 -0.4
Palladium 776.75 -8.05 -1.0
S&P 500 2,107.39 -13.40 -0.6
Dow 18,010.68 -115.40 -0.6
Dow in GOLD $s 313.03 -2.32 -0.7
Dow in GOLD oz 15.14 -0.11 -0.7
Dow in SILVER oz 1,079.52 -8.94 -0.8
US Dollar Index 96.97 -0.08 -0.1
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: 1,190.10      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,217.47 1,231.75 1,231.75
1/2 AE 0.50 606.44 627.78 1,255.56
1/4 AE 0.25 306.19 319.84 1,279.36
1/10 AE 0.10 124.86 130.32 1,303.16
Aust. 100 corona 0.98 1,157.20 1,166.20 1,189.76
British sovereign 0.24 282.25 295.25 1,254.25
French 20 franc 0.19 223.86 227.86 1,220.45
Krugerrand 1.00 1,202.00 1,212.00 1,212.00
Maple Leaf 1.00 1,198.10 1,214.10 1,214.10
1/2 Maple Leaf 0.50 684.31 624.80 1,249.61
1/4 Maple Leaf 0.25 303.48 318.35 1,273.41
1/10 Maple Leaf 0.10 126.15 129.72 1,297.21
Mexican 50 peso 1.21 1,424.74 1,435.74 1,190.79
.9999 bar 1.00 1,194.27 1,202.10 1,202.10
SPOT SILVER: 16.69      
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 12,541.10 12,898.60 18.04
US 40% silver 1/2s 0.30 4,731.80 4,881.80 16.55
100 oz .999 bar 100.00 1,659.00 1,709.00 17.09
10 oz .999 bar 10.00 165.90 171.40 17.14
1 oz .999 round 1.00 16.79 17.29 17.29
Am Eagle, 200 oz Min 1.00 18.19 19.04 19.04
SPOT PLATINUM: 1,111.00      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Platinum Platypus 1.00 1,126.00 1,156.00 1,156.00
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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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