The Moneychanger
Weekly Commentary
Friday, 13 November a.d. 2015 Browse the commentary archive
Here's the weekly scorecard:
  6-Nov-15 13-Nov-15 Change % Change
Silver, cents/oz. 1,469.60 1,420.30 -49.30 -3.4
Gold, dollars/oz. 1,087.60 1,080.80 -6.80 -0.6
Gold/silver ratio 74.007 76.097 2.090 2.8
Silver/gold ratio 0.0135 0.0131 -0.0004 -2.7
Dow in Gold Dollars (DIG$) 340.42 329.84 -10.58 -3.1
Dow in gold ounces 16.47 15.96 -0.51 -3.1
Dow in Silver ounces 1,218.72 1,214.20 -4.52 -0.4
Dow Industrials 17,910.33 17,245.24 -665.09 -3.7
S&P500 2,099.20 2,023.04 -76.16 -3.6
US dollar index 99.26 99.01 -0.25 -0.3
Platinum 939.60 863.50 -76.10 -8.1
Palladium 612.75 539.05 -73.70 -12.0

Stocks knocked that 6-week winning streak in the head with a 3.6% down week. That, he chortled, reversed the Dow in Gold & Dow in Silver, leaving behind double tops. If it was not the week from hell for silver, it was the week from some place next doorl. Gold flatlined, even closed today unchanged. US dollar index failed to make good any earlier gains and has put in a top for a while. Will probably continue rising, though. Platinum & palladium were nuked this week. Palladium has lost nearly all its gains since the August low. Platinum/Gold spread now stands at its lowest since 1985 [sic].

After stock markets closed in the US today three gunfire attacks broke out in Paris, which threw futures markets further down the hill. I'm sure that didn't help the euro, either.

Dow Industrials lost more than 200 points for the second day, down 202.83 (1.15%) today to 17,245.24. (Yesterday the Industrials lost 245.15 or 1.4%). S&P500 tumbled 22.92 91.12%) for a close at 2,023.04. I present you with charts at http://schrts.co/4od8fn and http://schrts.co/PTvmTJ

On both charts you will see the upside-down bowl topping formation, and how stocks rallied through the 200 day moving average (DMA) to the bowl's bottom. Note that both charts show a collapse through the 200 & 20 DMAs now nearing the bowl's lip -- think of falling over a cliff.

Aww, shucks. Did I forget to mention to y'all that volume has been rising with the decline, reinforcing it and forecasting more of it? Also the MACD turned down this week & the RSI is below 50 & diving.

Now, the backdrop: Upside-down bowl top forming for a year with a breakdown this summer. Conclusion: Bull trend since 2009 has broken and will fall for several more years.

Confirming that outlook are the Dow in Gold and Dow in Silver, charts here http://schrts.co/Z4phR7 and http://schrts.co/2nzV9W. Dow in gold shows a double top July & this week (red arrows), coming off a severely overbought RSI, other indicators agreeing this is a top. Double top posted at 16.50 troy ounces and 16.45 troy ounces.

The Dow in Silver agreeth thereto. Double tops at 1,236.37 and 1,238.35 troy ounces.

Since I never met a conclusion I couldn't jump to, I will put the brakes of experience & reason on this by noting the DiG & DiS must continue falling to confirm the double tops. (But if it doesn't I'll be as surprised as I would be watching a hog lay a goose egg.)

I've been expecting that the dollar high we saw on 10 November marked the end of the advance begun 16 October & thus the start of a correction. The trend has been down since 10 November, although the dollar rose 30 basis points today to 99.01. A 50% correction would take the scurvy dollar index back to 96.70. Unless it seriously wounds that line and falls further, expect more dollar upside into next year.

Poor euro, poor yen. Euro lost 0.61% today to end at $1.0752. Never mind the Europeans are already committing economic & demographic suicide, now their currency is about the pay the price. It broke down out of a 4 month consolidation & in so far as the chart speaketh, it speaketh doom. Look for a WAY lower euro. May get a countertrend rally while the dollar corrects, but count not on it lasting.

Yen also broke down out of a trading range, & will probably move lower, but is managed so minutely by the Bank of Japan & the Japanese Nice Government Men that they will probably keep it from falling through lows from earlier this year at 79.5. Flatlined today and ended at 81.52.

Yield on the 10 year treasury note reached all the way to the downtrend line from 2007 [sic] but could not pierce the line and hold. Expectation of the Federal Reserve criminals & miscreants raising rates in December is pushing up the yield & the scurvy dollar. Is there a train wreck coming down the tracks?

Okay, finally got to silver & gold. Today gold posted a very rare unchanged price on an $8.00 range, ending at yesterday's $1,080.80. Silver scraped off 2.1 cents to 1420.3c.

The five day chart shows a spike yesterday to $1,073, slap at the July low at $1,072.30. Here's a chart that shows both bottoms, http://schrts.co/xOjr64 Also, glance at the RSI & look at how oversold gold is.

I'm crawling out on a limb a-swaying in the breeze, but gold is primed to turn up here. After 13 down days -- aw, maybe there was an upday in there someplace, but not to amount to a hill of beans -- it is ready to turn around. Interest in it is plumb dead. Trading is comatose. Ain't 13 days enough for all the croakers to sell out? I bet it is, so I would start buying gold.

What might stop you? All those folks talking gold down to $1,000 or even $750 & telling you to hold on to your Federal Reserve notes because the Fed always wins. Right, like it did in 1930.

Anyhow, some kind of gold bounce is way overdue. If it was a lady, it would be an 10 month pregnancy. Chart's at http://schrts.co/xOjr64

As I have been whining for days, silver's 5 day chart shows no pattern, just sawing back & forth lower. Today it reached a new low for the move at 1414c with a 21 cent range. Silver's as washed out as gold is, & washed out means, "Where will more sellers come from?" Maybe it will surprise me & waterfall past the August 1391c low, but not till after a rally.

What'd I say? 1391c August low? Why, that almost makes today a double bottom with that August low, don't it? Look at the chart, http://schrts.co/s97xDv

I ain't near about finished yet, so just hold on.

Gold/Silver Ratio has acted right positive. This last week it made a new high at 76.50, but if silver & gold were about to fall to the earth's core, as some would have us believe, why hasn't that ratio already busted up through 78? Why has it put in successively lower highs? This points to a weakening of the metals' weakness. Durn, what'd I say? I reckon that means they're growing stronger. Been listening to central bankers and Nice Government Men so long I'm beginning to talk like 'em -- have mercy!

I ain't thru yet, so hang on.

The Philadelphia Bank Stock Index mirrors confidence in the banking system, the opposite of what drives silver & gold demand. BKX goes up, gold goes down, & vice versa. Therefore when the BKX is rising, gold's future darkens. Look at this chart, http://schrts.co/iof4Ar gold divided by the BKX. Remember, when gold is stronger the chart will rise, when BKX is stronger the chart will fall.

I forbear to cover that action in August again, 'tis so bogus. Just move on over to recent price action, where you will notice a right smart gap down on 6 November. Looks like an exhaustion gap signalling the move's end, but needs to rise from 14.70 now to above the 20 DMA (15.37) to confirm.

Confirming that the spread's down move has ended is the BKX itself, which crashed through its 200 DMA & 20 DMA today. More, the $BKX has been losing ground against the S&P500 since July. During this November surge banks briefly found favor & broke through the downtrend line, but are now poised to crash through that floor.

I'm nearly thru. Bottom line: I believe that silver & gold have posted a double bottom between the summer & November lows that marks the last bottom in the post -2011 correction. The Fed's recent noises about raising interest rates in December have set itself & markets up for extreme disappointment. For all their bear market rally volatility, the stock market bull was shot graveyard dead in that summer break, & ain't coming back. Disappointment in the monetary "authorities" & stocks will boost demand for silver & gold. Watch -- the low for silver & gold lies in November.

On 13 November 1002 King Aethelread the Unready launched the St. Brice's Day Massacre on Danes who had invaded his kingdom. Aethelred's "Unready" doesn't really convey the Anglo-Saxon pun on his name. Aethel-raed means "noble counsel" while "Unraed" means "Uncounselled" or "ill-advised." He was ready, he just got bad advice.

On 13 November 1474 in the Swiss-Burgundian Wars, Swiss infantry shattered Charles the Bold's army at Hericourt. I have read that medieval Swiss infantry had an unbeatable tactic in those days of very long (10-12 feet) pikes. One or two Swiss would run out in front of the formation and take all the enemies' pikes into their own bodies, opening holes in the enemies' lines for their comrades to rush through to victory. Maybe that story's apocryphal, but if anybody would do it, it's the Swiss. Or Tennesseans. Maybe somebody from Texas.

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
13-Nov-15 Price Change % Change
Gold, $/oz 1,080.80 0.00 0.0
Silver, $/oz 14.20 -0.02 -0.1
Gold/Silver Ratio 76.097 0.001 0.0
Silver/Gold Ratio 0.0131 -0.0000 -0.1
Platinum 863.50 -12.30 -1.4
Palladium 539.05 -19.45 -3.5
S&P 500 2,023.04 -22.93 -1.1
Dow 17,245.24 -202.83 -1.2
Dow in GOLD $s 329.84 -3.85 -1.2
Dow in GOLD oz 15.96 -0.19 -1.2
Dow in SILVER oz 1,214.20 -12.47 -1.0
US Dollar Index 99.01 0.30 0.3
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SPOT GOLD: 1,081.10      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,110.29 1,118.94 1,118.94
1/2 AE 0.50 550.85 570.28 1,140.56
1/4 AE 0.25 278.13 290.55 1,162.18
1/10 AE 0.10 113.41 118.38 1,183.80
Aust. 100 corona 0.98 1,052.28 1,061.28 1,082.71
British sovereign 0.24 256.40 269.40 1,144.43
French 20 franc 0.19 203.36 207.36 1,110.63
Krugerrand 1.00 1,095.15 1,105.15 1,105.15
Maple Leaf 1.00 1,091.10 1,105.10 1,105.10
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Mexican 50 peso 1.21 1,295.55 1,306.55 1,083.65
.9999 bar 1.00 1,084.88 1,093.10 1,093.10
SPOT SILVER: 14.19      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 25.00 27.00 35.29
VG+ Peace dollar 0.77 20.00 22.00 28.76
90% silver coin bags 0.72 11,647.35 12,077.35 16.89
US 40% silver 1/2s 0.30 3,994.30 4,144.30 14.05
100 oz .999 bar 100.00 1,444.00 1,469.00 14.69
10 oz .999 bar 10.00 143.40 148.40 14.84
1 oz .999 round 1.00 14.29 14.75 14.75
Am Eagle, 200 oz Min 1.00 15.69 16.94 16.94
SPOT PLATINUM: 863.50      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Platinum Platypus 1.00 878.50 908.50 908.50
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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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