The Moneychanger
Daily Commentary
Monday, 4 January a.d. 2016 Browse the commentary archive

I reckon that what markets did on this opening day of 2016 gives us a taste of what we'll see all year: stocks hammered, dollar rising, gold & silver unfazed and pushing up.

Starting off the year was a 7% panic drop on the Shanghai exchange, which broadcast panic around the globe. German Dax dropped 4.28%, French CAC lost 2.47%, the FTSE tumbled 2.39%, Dow Jones World index fell 2.01%. Here's the SSEC, so y'all can see what a 7% drop looks like, Pay no attention to the geniuses who will discount this drop by claiming it was only spurred by bad economic data for December. That's just the point, all that "bad economic data" is ALREADY working in the Chinese economy and the US, and that stock market drop awaited only a catalyst.

Time the sun got round to New York, panic was already there. Dow dropped like an anvil pushed out of a 747 Jumbo Jet, straight down, and by 11:00 was off 476.4 points or 2.7%. "Friends" came in to buy toward the close to keep it from closing below 17,000 -- bad for morale. Dow closed 371.76 (2.13%) lower at 17,053.27. S&P500 kept up, paying back 41.81 or 2.05% for a 2,002.13 close If the Dow hadn't found "friends", it was heading for the worst first day of the year close since 1932. Great job, Nice Government Men! Looking sharp!

One more thing: today's drop took both indices down to the lip of that upside-down bowl topping formation, setting them up to slide hard tomorrow.

I, of course, never gloat, because gloating is bad for your skin & makes you liable to choke on your own pride. Wherefore, 'stead of gloating I merely note in passing that the Dow in Gold & Dow in Silver fulfilled my expectation and turned further down, confirming that the highs are behind us and that stocks have turned down against metals after a 4-1/2 year correction. Well, I might be a MITE previous, but here's what happened.

Dow in gold dropped 2.81% to close at 15.97, below both the 20 & 50 day moving averages, and right on the line that formerly bounded the top. It should fall pierce that line tomorrow, having left behind double tops (red arrows). Durn, I forgot to mention that it also closed beneath the uptrend line from August 2013. Y'all look,

Dow in silver rolleth also over earthward. Closed today below its 20 DMA, having also left behind double tops in August and December. Y'all don't take my word for it, look

Yen gapped up and ended 0.78% higher on the day at 83.77, profiting from a safe haven bid. There was lots of panicked money loose looking for a nest, too.

Euro did what it does best, sank. Dropped 0.25% out of its 7 month trading range, again, as it did in November, and closed at $1.0832.

Meanwhile the US dollar rose 17 basis points (0.18%) to 98.92. What most attracts my eyes and mind is that in spite of that and all that affrighted money seeking a safe home, the US dollar rose only 0.18% while gold rose 1.4%. Which currency won the safe haven bid?

That close is the scurvy US dollar index' second day close above the downtrend line and the intertwined 20/50 DMAs. Dollar thus will move higher, but remember that brick wall of resistance overhead at 100.70. Behold the chart,

On Comex today gold jumped up $14.80 or 1.4% to 1,075.10. Silver inched up 4.2¢ to 1381.7.

Have to view the 5-day charts to grasp what today means. Go to for gold, or for silver to

Gold simply gapped plumb straight up from $1,060+ to $1,080. Silver gapped from 1387¢ to 1405¢. Now as the day wore on gold gave back $5 - $7 of that gain, but still finished at $1,075.10. $1,080 has been formidable resistance for some time, although $1,088 will be tougher. Point is, gold jumped right up to toe the starting line. Another day of stock market arterial bleeding and gold will easily push through that, Nice Government Men notwithstanding.

Speaking of Nice Government Men, were I they I would hit the thinner precious metals mrkets -- silver, platinum, palladium -- where I could get more bang for my manipulating dollar. Whoops, platinum dropped 8.50 today and palladium 17.85. Ditto something big like a city bus hit silver, knocking it back from a 1419¢ high to a 1381.7¢ close. I don't like what that did to the ratio, pushing it up to 77.810, but the ratio remains in a downtrend from its December and August highs. No real damage done yet.

Where are we left? Gold closed above its 20 DMA and is trudging toward that $1,088 resistance, where now also the 50 DMA lieth in wait. Our signal to buy is any breakout over $1,088. Silver labored mightily, but brought forth a mouse. Nothing happens until it closes over 1440¢.

Now I say I am convinced the lows are behind us, but I know that takes me out on a limb. Well, hand me the saw 'cause here I am. I was waiting for the do-nothin', say-nothin' thin market holiday weeks to pass so we'd get some idea what metals & stocks intended. Today they showed all the cards in their hands. Most spectacularly portentous is gold rising 1.4% on a safe haven bid while the US dollar rose only 0.18%.

Appears 2016 will be the year of gold & silver. If I were y'all, I'd be selling them stocks like the Russians were on Main Street. But what do I know, durned ol' nat'ral born fool from Tennessee? Why, I don't even own a Beemer or a Mercedes, just a danged ol' 1994 Isuzu trooper with the paint job going gray. Course, I don't owe nothin' on it, either.

On 4 January 1884 was founded in London the Fabian Society, a group of high-toney socialists arrogant enough to decide they must impose socialism on the world. They chose as their coat of arms a wolf in sheep's clothing. We ignorant hoi-polloi always need our betters to impose on us what's good for us, and sometimes they can only do it by lying to us. Shucks, sounds like most everybody in Washington today, don't it?

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
4-Jan-16 Price Change % Change
Gold, $/oz 1,075.10 14.80 1.40%
Silver, $/oz 13.82 0.04 0.30%
Gold/Silver Ratio 77.810 0.837 1.09%
Silver/Gold Ratio 0.0129 -0.0001 -1.08%
Platinum 883.20 -8.50 -0.95%
Palladium 542.95 -17.85 -3.18%
S&P 500 2,002.13 -41.81 -2.05%
Dow 17,053.25 -371.76 -2.13%
Dow in GOLD $s 327.90 -11.82 -3.48%
Dow in GOLD oz 15.86 -0.57 -3.48%
Dow in SILVER oz 1,234.22 -30.75 -2.43%
US Dollar Index 98.92 0.17 0.17%
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SPOT GOLD: 1,073.80      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,102.79 1,117.83 1,117.83
1/2 AE 0.50 547.13 566.43 1,132.86
1/4 AE 0.25 276.25 288.58 1,154.34
1/10 AE 0.10 112.64 117.58 1,175.81
Aust. 100 corona 0.98 1,045.17 1,054.17 1,075.47
British sovereign 0.24 254.67 267.67 1,137.08
French 20 franc 0.19 201.98 205.98 1,103.28
Krugerrand 1.00 1,086.69 1,096.69 1,096.69
Maple Leaf 1.00 1,083.80 1,097.80 1,097.80
1/2 Maple Leaf 0.50 617.44 563.75 1,127.49
1/4 Maple Leaf 0.25 273.82 287.24 1,148.97
1/10 Maple Leaf 0.10 113.82 117.04 1,170.44
Mexican 50 peso 1.21 1,284.22 1,295.22 1,074.24
.9999 bar 1.00 1,077.56 1,085.80 1,085.80
SPOT SILVER: 13.82      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 22.50 26.00 33.99
VG+ Peace dollar 0.77 17.50 20.00 26.14
90% silver coin bags 0.72 11,096.80 11,454.30 16.02
US 40% silver 1/2s 0.30 3,958.90 4,120.90 13.97
100 oz .999 bar 100.00 1,407.00 1,432.00 14.32
10 oz .999 bar 10.00 139.70 144.70 14.47
1 oz .999 round 1.00 13.92 14.38 14.38
Am Eagle, 200 oz Min 1.00 15.32 16.57 16.57
SPOT PLATINUM: 883.20      
Plat. Platypus 1.00 898.20 928.20 928.20
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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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