The Moneychanger
Weekly Commentary
Friday, 8 January a.d. 2016 Browse the commentary archive
Here's the weekly scorecard:
  31-Dec-15 8-Jan-16 Change % Change
Silver, cents/oz. 1,377.50 1,390.80 13.30 1.0
Gold, dollars/oz. 1,060.30 1,102.00 41.70 3.9
Gold/silver ratio 76.973 79.235 2.262 2.9
Silver/gold ratio 0.0130 0.0126 -0.0004 -2.9
Dow in Gold Dollars (DIG$) 339.72 306.63 -33.09 -9.7
Dow in gold ounces 16.43 14.83 -1.60 -9.7
Dow in Silver ounces 1,264.97 1,175.33 -89.65 -7.1
Dow Industrials 17,425.03 16,346.45 -1,078.58 -6.2
S&P500 2,043.94 1,922.03 -121.91 -6.0
US dollar index 98.70 98.60 -0.10 -0.1
Platinum 891.70 877.10 -14.60 -1.6
Palladium 560.80 493.60 -67.20 -12.0

The brutal scoreboard never lies, never flatters. Dow Industrials dove a massive 1,078.58 (6.2%) & the S&P500 plummeted 121.91 (6.0%). US dollar index was up and down, but ended only ten basis points lower. Silver & gold made ground, but gave some of it back today. White metals were playing Whack-A-Mole with a pile-driver, & got pile-driven. Get braced for a year that looks like this, with silver & gold advancing while stocks crumble -- mostly gradually, but with bursts of activity like this week. Dollar remains confused.

US dollar index yesterday lost 98 basis points (0.99%), a huge move, and ended at 98.32. Today its range regained most of that territory, but at the close its fingers slipped and it closed only 33 basis points (0.33%) higher. Not inspiring trading, but confusing. Earlier in the week the dollar index appeared to break out toward 100.70 and the top of the range. That could signal a big dollar rally, driven by world wide fear and decomposing stock markets. However, the dollar keeps taking one day, and giving back the other. Lots of indecision & hesitation for a market determined ot rise. Jury's still out on dollar's longer term intentions.

Stocks had their most wretched first week of the year ever. Both the Dow Industrials & S&P500 have stepped through the manhole at the lip of that upside-down bowl -- same manhole that in August took the Dow to 15,370 & S&P to 1,867.

Concatenate, beloved! Atop that August fall out of an upside down bowl, pile a very old 6-1/2 year bull market, stock market & economic weakness around the globe, internal market weaknesses of all sorts, puking-sick small cap stocks, failure on the rally from the August lows to pierce the bowl's bottom, and now another plunge through the bowl's lip. The links add up to a chain falling out of the cargo plane's open bay door. You have three or four years of this in front of you. Meanwhile volatility will increase, and the Nice Government Men of the Plunge Protection Team will jump in to try to slow the inevitable, but the problem with the inevitable is, well, it's inevitable.

Today stocks plunged and bucked but fell steadily throughout the day. Dow Industrials lost 167.65 (1.02%) to 16,346.45. S&P500 peeled off 21.06 (1.08%) to 1,922.03, and they have NOT reached any stopping point.

Did anybody ever tell y'all that markets drop much faster than they rise? Well, they do. Lots.

Now I have to deal with the embarrassment of making a mistake about the Dow in Gold & Dow in Silver yesterday. Somehow I didn't update my chart late in the day -- forgive me! -- but in fact both indicators had fallen much further than I realized. So I was right, but with only half a reason.

Never mind.

Dow in gold is over half an ounce below its 200 DMA, about all the confirmation you needed that the action from November through December really was a double top with July. DiG today closed 14.81 oz, far below its 15.38 oz 200 DMA, not to mention the 16.853 November high. Look, http://schrts.co/HLvwYb

Dow in silver ended at 1,173.89 oz, near its 200 DMA at 1,154.43 oz. Hath also rolled over. http://schrts.co/ohwLZP

Try to bear in mind why I watch these so closely: they tell us which investments will outperform, gold & silver or stocks. Once their trend is set, we ride it for a long, long time. Investing aims to do one thing: preserve & increase purchasing power. These two indicators show us how.

Yen is on a tear, up another 0.31% today to 85.29, and way overbought on the RSI. Take a gander, http://schrts.co/UuqBFa

Euro lost 0.06% to $1.0925, can't break out of that triangle. http://schrts.co/O4b1l4

Gold peeled off $9.90 (0.9%) to $1,102.00 on Comex. Silver was attacked by a pack of wild dogs and hyenas, losing 42.7¢ (2.9%) to 1390.8¢

Catastrophe? Disaster? Irremediable failure? Nawww, just profit-takers at the end of the week getting out of profitable gold positions. Gold fell as low as $1,091.80, but closed over $10 higher, neatly defending the level where it broke out. Nothing ever rises straight up (until a parabolic rise at the end of the market, when everybody wants to buy), so today is no surprise. And in spite of a sharply higher lying US jobs report, stocks couldn't rise and gold wasn't broken, and the Fed's sucking air like a leaky bilge pump.

Silver's miserable day sent the Gold/Silver Ratio to a new high at 79.235. That's the most depressing piece of news the day brought, but 'tain't by any means fatal. With stocks tanking, gold can rise while stocks pull silver down. It does, after all, tend to follow stocks. However, as stocks swirled around the drain in spring 2009 after the 2008 panic, the ratio dropped steadily as both silver & gold rose, rose, rose.

Ideal next week would be gold conquering $1,125 and running to $1,150. A close below $1,091 would doom gold to months more humiliation & base building. Still looking for silver to rise above 1440¢ to confirm a precious metals rally.

Exercise patience, friends. 2016 is the year we've been waiting on.

On 8 January 1835 the United States government debt hit zero for the first and only time. Tennessean Andrew Jackson was president

On 8 January 1815 Tennessee volunteers (and a few from Kentucky) under Gen'l Andrew Jackson defeated the British at the Battle of New Orleans and saved y'all's yankee bacon. If Jackson hadn't won, they'd be eating bangers and mash in New Orleans today instead of Po' Boys and Red Beans & Rice, not to mention drinking tea without ice and warm beer.

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
8-Jan-16 Price Change % Change
Gold, $/oz 1,102.00 -9.90 -0.9
Silver, $/oz 13.91 -0.43 -3.0
Gold/Silver Ratio 79.235 -0.687 -0.9
Silver/Gold Ratio 0.0126 -0.0004 -3.0
Platinum 877.10 0.70 0.1
Palladium 493.60 0.60 0.1
S&P 500 1,922.03 -21.06 -1.1
Dow 16,346.45 -167.68 -1.0
Dow in GOLD $s 306.63 -0.36 -0.1
Dow in GOLD oz 14.83 -0.02 -0.1
Dow in SILVER oz 1,175.33 23.31 2.0
US Dollar Index 98.60 0.33 0.3
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: 1,104.40      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,132.01 1,149.68 1,149.68
1/2 AE 0.50 562.73 582.57 1,165.14
1/4 AE 0.25 284.13 296.81 1,187.23
1/10 AE 0.10 115.86 120.93 1,209.32
Aust. 100 corona 0.98 1,074.96 1,083.96 1,105.85
British sovereign 0.24 261.93 274.93 1,167.91
French 20 franc 0.19 207.74 211.74 1,134.11
Krugerrand 1.00 1,119.31 1,129.31 1,129.31
Maple Leaf 1.00 1,114.40 1,128.40 1,128.40
1/2 Maple Leaf 0.50 635.03 579.81 1,159.62
1/4 Maple Leaf 0.25 281.62 295.43 1,181.71
1/10 Maple Leaf 0.10 117.07 120.38 1,203.80
Mexican 50 peso 1.21 1,320.81 1,331.81 1,104.60
.9999 bar 1.00 1,108.27 1,116.40 1,116.40
SPOT SILVER: 13.97      
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 11,275.55 11,633.05 16.27
US 40% silver 1/2s 0.30 4,003.15 4,165.15 14.12
100 oz .999 bar 100.00 1,422.00 1,447.00 14.47
10 oz .999 bar 10.00 141.20 146.20 14.62
1 oz .999 round 1.00 14.07 14.53 14.53
Am Eagle, 200 oz Min 1.00 15.47 16.72 16.72
SPOT PLATINUM: 877.10      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Platinum Platypus 1.00 892.10 922.10 922.10
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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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