The Moneychanger
Weekly Commentary
Friday, 17 July a.d. 2015 Browse the commentary archive
Here's the weekly scorecard:
  10-Jul-15 17-Jul-15 Change % Change
Silver, cents/oz. 1,546.80 1,482.00 -64.80 -4.2
Gold, dollars/oz. 1,157.70 1,131.80 -25.90 -2.2
Gold/silver ratio 74.845 76.370 1.525 2.0
Silver/gold ratio 0.0134 0.0131 -0.0003 -2.0
Dow in Gold Dollars (DIG$) 317.13 330.34 13.21 4.2
Dow in gold ounces 15.34 15.98 0.64 4.2
Dow in Silver ounces 1,148.20 1,220.41 72.20 6.3
Dow Industrials 17,760.41 18,086.45 326.04 1.8
S&P500 2,076.62 2,126.64 50.02 2.4
US dollar index 96.17 97.81 1.64 1.7
Platinum 1,032.30 1,001.00 -31.30 -3.0
Palladium 649.35 618.00 -31.35 -4.8

Rough week for silver & gold, down 4.2% & 2.2%, but a good week for stocks, up about two percent. Last hurrah, I reckon. US dollar index removed all doubt about which way it would break: UP. Platinum and palladium are sinking out of sight, & the world is abuzz with a deflation scare. Well, that's only a boogeyman, but an effective one.

Why a boogeyman? Because "inflation" is "an increase in the money supply" while "deflation" is a decrease in the money supply, & you can search the wide world over & you won't find any country whose money supply is decreasing. Every central bank in the world has responded to the chronic economic crisis since 2008 by creating money in amounts vaster than history knows. What ought to deflate is all the bad debt & bad investment in the world, but that is precisely what the central banks are preventing Rest assured, tuck this into your heart, swing across the vastest chasm safely using this for a rope: if real deflation threatens central banks will create new money until the electrons pop out of their eyeballs. It won't "jump start" the economy, but it will melt the monetary & financial jumper cables.

What the world needs is a debt jubilee, a simple write-off & walk away from all the unpayable debt, & the destruction of the machine that made it possible, central banks & government deficit spending.

Whoo! That feels better. Now, let's look at markets.

That nasty, scrofulous, scabby fiat US dollar, that is, the US dollar index, went back & forth this week & finally made up its mind to tip its hand & rise. This week it broke out of an even sided triangle in a move that could carry it to 104. Closed today at 97.81, up 53 basis points (0.54%). Higher dollar will blow a headwind against commodities and gold and silver, but don't be fatalistic. A risin' dollar ain't the only thing happenin' in town. http://schrts.co/b8Iosz

But a risin' dollar's sure pizen to the euro, as if it took much pizen to kill anything that sick. Today the euro lost 0.31% to $1.0846. This Greece mess makes it plain that the swoll up bureaucrats runnin' Europe have finally lost their minds. They think they're about to gobble Greece whole, but they are likely to choke on a bone no Heimlich will dislodge.

Japanese ain't about to choke on a bone, cause they chop everything up & eat it raw. Yen gained 0.5% to 80.60, while its chefs in Tokyo just keep chopping it up into little bitty sushi.

Stocks were confused today. The adrenalin from the Greek-relief rally seems to be wearing off. Dow lost 33.8 (0.19%) but the S&P500 gained 2.35 (0.11%). Both the Dow & S&P are positioned above their 20 & 50 day moving averages, ready to rise further next week. (It's still a broadening top.)

Dow in gold is testing the outer limit of how wrong I can be. Closed today at G$330.13 gold dollars (15.97 troy ounces), 2.5% above the March high. Chart is here, http://schrts.co/LXmbNq

Dow in silver closed the week at S$1,578.96 silver dollars (1,221.23 troy oz). Does that wreck the pattern and foretell stocks rising against silver (& gold) forever? Well, wait a little. This is just about when silver & gold ought to be making lows, & nothing's happened to make the US economy or stock market any more attractive than it looked six weeks ago. Just wait till next week & see. Dow in Silver chart's at http://schrts.co/MmJdm5

Against -- heaven knows I'm tired of that word -- silver & gold dropped. On Comex silver lost 14.4 cents (1%) to close 1482c while gold lost $12 (1%)

Ain't nothing for it but to say they have to stop soon or drop much further. Gold's low today at $1,129.6 revisits the November 2014 low. Turnaround time. Gold chart's here, http://schrts.co/8YhIfz

Nothing points to a turnaround in silver except its nearness to the recent low at 1462 cents and last December's low at 1416.5c.

I reckon I may get my head handed to me on a platter, but I have to stick with it: we're seeing a seasonal low that will mark the bottom of the long bear phase. We'll know next week.

After a four year bear phase has beaten up silver & gold investors & left stock investors preening themselves & sticking out their tongues at us, it might be helpful to recall a bit of history. Gold's 1982-1999 bear market against stocks topped on 25 August 1999 with gold at $266. Silver's 1982-2001 bear market topped 7 June 2001with silver at 432.3 cents. How have they done since then, as of 16 July 2015? Here are the numbers:

Results for Gold against stocks from 25 August 1999:

- Nasdaq 100, up 87%

- Nasdaq Composite, up 80.5%

- S&P500 up 54%

- Wilshire 5000, up 75.6%

- Dow Industrials, up 60%

- Gold, up 330%

Results for Silver against stocks from 7 June 2001:

- Nasdaq 100, up 82%

- Nasdaq Composite, up 85%

- S&P500 up 44%

- Wilshire 5000, up 65%

- Dow Industrials, up 40%

- Silver, up 347%

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
17-Jul-15 Price Change % Change
Gold, $/oz 1,131.80 -12.00 -1.0
Silver, $/oz 14.82 -0.14 -1.0
Gold/Silver Ratio 76.370 -0.802 -1.0
Silver/Gold Ratio 0.0131 -0.0001 -1.0
Platinum 1,001.00 -11.10 -1.1
Palladium 618.00 -12.95 -2.1
S&P 500 2,126.64 2.35 0.1
Dow 18,086.45 -33.80 -0.2
Dow in GOLD $s 330.34 2.89 0.9
Dow in GOLD oz 15.98 0.14 0.9
Dow in SILVER oz 1,220.41 9.49 0.8
US Dollar Index 97.81 0.53 0.5
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: 1,134.80      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,169.98 1,174.52 1,174.52
1/2 AE 0.50 578.24 598.61 1,197.21
1/4 AE 0.25 291.95 304.98 1,219.91
1/10 AE 0.10 119.05 124.26 1,242.61
Aust. 100 corona 0.98 1,104.54 1,113.54 1,136.04
British sovereign 0.24 269.14 282.14 1,198.54
French 20 franc 0.19 213.46 217.46 1,164.74
Krugerrand 1.00 1,155.23 1,165.23 1,165.23
Maple Leaf 1.00 1,142.80 1,158.80 1,158.80
1/2 Maple Leaf 0.50 652.51 595.77 1,191.54
1/4 Maple Leaf 0.25 289.37 303.56 1,214.24
1/10 Maple Leaf 0.10 120.29 123.69 1,236.93
Mexican 50 peso 1.21 1,361.27 1,372.27 1,138.16
.9999 bar 1.00 1,138.77 1,146.80 1,146.80
SPOT SILVER: 14.89      
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 12,648.35 13,148.85 18.39
US 40% silver 1/2s 0.30 4,200.80 4,350.80 14.75
100 oz .999 bar 100.00 1,479.00 1,529.00 15.29
10 oz .999 bar 10.00 147.90 153.40 15.34
1 oz .999 round 1.00 14.99 15.49 15.49
Am Eagle, 200 oz Min 1.00 16.39 17.24 17.24
SPOT PLATINUM: 1,001.00      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Platinum Platypus 1.00 1,016.00 1,046.00 1,046.00
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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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