The Moneychanger
Daily Commentary
Tuesday, 12 January a.d. 2016 Browse the commentary archive

In a note to clients dated 8 January, the Royal bank of Scotland suggested that investors sell their stock and move money into high quality bonds. RBS says the world economic situation look like 2008 & pointed to China as the next catalyst of trouble.

Ever wonder why banks & stockbrokers have "clients" while the rest of us have "customers"? The word "client" originally described a Roman plebian (Roman white trash) who lived under the patronage of a patrician (high class, i.e., rich, Romans). Clients used to cluster around their patron's door and . . . Wait. Had to because clients were DEPENDENT on their patrons.

And that's the difference between a client and a customer. The client's a dependent.

Stocks tanked today after the open, and by 2:45 had lost 76 points to 16,322. Suddenly a buying panic seized -- somebody -- and by the close buyers had driven stocks up 117.65 (0.72%) to 16,516.22. The S&P500 also climbed a bit, up 15.01 (0.78%) to 1,938.68. Miss not this: it followed the same pattern.

Sorry, I see no joy in Mudville, only a little bounce off the rocks during a longer cascade. Winners in stocks this year will be rarer than Hereford hogs with fine table manners. Look at the chart for the scope of what's happening, It's a topping market breaking down, not one recovering.

All this unfolds slowly because stocks are such a big market, so don't get anxious. 'Twill come. Watch for it.

US Dollar index slowed its rise and gained only 8 basis points today (0.9)0. It is above its 50 & 20 day moving averages, and has risen three days running. however, you can't say it's trending up until it closes above 99.75. Dollar index is blowing hot and cold out of both sides of its mouth.

Yen continues to push up. Rose 0.12% today to 84.99, up 1.5% for the year. That can't make the devaluing maniacs at the Bank of Japan happy. How long can they stand it.

ECB, on the other hand, has no trouble keeping its currency low. It rose a token 0.35 today to $1,0860, but is contained in a triangle & shows no inclination to break free.

Makes me feel nasty all over just to have ot talk about fiat currencies.

Oil dropped another 1.77% to $30.58 (WTIC). I reckon it is putting in its final bottom, which should happen some time this quarter, but it giveth no sign of reaching that yet. Copper is fainting too, down 0.86% to $1.96. 2016 should be the year that commodities turn up, probably helped by generous central bank money creation -- but not yet.

Gold closed Comex $10.90 (1%) lower at $1,085.60. Silver fell 0.9% or 11.5¢ to 1374¢.

Why does this feel like déjà vu? Because we've been here so many times before. Gold's performance in closing below $1,088 today can only be described as "sorry as gully dirt." It's not necessarily fatal, since it remains above its 50 and 20 DMA's, but after it took gold so long to punch through that wall, it looks weak & thin as orphanage oatmeal to fall back below it. Chart still shows an upside-down head and shoulders-y pattern, but gold must turn up from here to preserve that.

Silver is not as healthy as gold, languishing beneath its 50 & 20 DMAs. I have to say the same about silver: it must turn up from here, or drop much further.

Of course today may be the product only of schizophrenic traders bounding from market to market. All the same, silver & gold aren't immune form the rules of charting. When important support is broken, it's weakness, not strength.

On the other hand, I might be dumb as a post and missing the greatest opportunity ever to buy silver & gold on a low. I've just been burned so often in the last four years I'm hungry for proof.

In keeping with Southern cultural leadership, on 12 January 1773 the first public museum in America was established in Charleston, South Carolina.

On 12 January 1879 the British empire invaded Zululand, beginning the British-Zulu war. It was a bad idea, as the Zulus shortly wiped out the British at Isandlwana.

On 12 January 1943 the US government Office of Price administration announced that standard frankfurters/hot dogs/wieners would be replaced by "Victory Sausages." I have no proof, but have every confidence that the recipe for "Victory Sausages" replaced meat with oatmeal or cotton lint. How do I know? That's just the nature of every government "improvement," especially during wartime, Comrades!

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
12-Jan-16 Price Change % Change
Gold, $/oz 1,096.50 -10.90 -0.98%
Silver, $/oz 13.86 -0.12 -0.82%
Gold/Silver Ratio 79.141 -0.129 -0.16%
Silver/Gold Ratio 0.0126 0.0000 0.16%
Platinum 837.50 -7.50 -0.89%
Palladium 469.90 -4.40 -0.93%
S&P 500 1,938.68 15.01 0.78%
Dow 16,516.22 117.65 0.72%
Dow in GOLD $s 311.37 5.26 1.72%
Dow in GOLD oz 15.06 0.25 1.72%
Dow in SILVER oz 1,192.08 18.23 1.55%
US Dollar Index 99.01 0.08 0.08%
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: 1,086.80      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,117.23 1,131.36 1,131.36
1/2 AE 0.50 553.76 573.29 1,146.57
1/4 AE 0.25 279.59 292.08 1,168.31
1/10 AE 0.10 114.01 119.00 1,190.05
Aust. 100 corona 0.98 1,058.89 1,067.89 1,089.46
British sovereign 0.24 257.75 270.75 1,150.18
French 20 franc 0.19 204.43 208.43 1,116.38
Krugerrand 1.00 1,102.02 1,112.02 1,112.02
Maple Leaf 1.00 1,096.80 1,110.80 1,110.80
1/2 Maple Leaf 0.50 624.91 570.57 1,141.14
1/4 Maple Leaf 0.25 277.13 290.72 1,162.88
1/10 Maple Leaf 0.10 115.20 118.46 1,184.61
Mexican 50 peso 1.21 1,299.76 1,310.76 1,087.14
.9999 bar 1.00 1,090.60 1,098.80 1,098.80
SPOT SILVER: 13.76      
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 11,229.08 11,586.58 16.21
US 40% silver 1/2s 0.30 3,939.73 4,101.73 13.90
100 oz .999 bar 100.00 1,400.50 1,425.50 14.26
10 oz .999 bar 10.00 139.05 144.05 14.41
1 oz .999 round 1.00 13.86 14.32 14.32
Am Eagle, 200 oz Min 1.00 15.26 16.51 16.51
SPOT PLATINUM: 837.50      
Plat. Platypus 1.00 852.50 882.50 882.50
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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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