The Moneychanger
Weekly Commentary
Friday, 15 January a.d. 2016 Browse the commentary archive
Here's the weekly scorecard:
  8-Jan-16 15-Jan-16 Change % Change
Silver, cents/oz. 1,390.80 1,388.40 -2.40 -0.2
Gold, dollars/oz. 1,102.00 1,091.50 -10.50 -1.0
Gold/silver ratio 79.235 78.616 -0.619 -0.8
Silver/gold ratio 0.0126 0.0127 0.0001 0.8
Dow in Gold Dollars (DIG$) 306.63 302.80 -3.84 -1.3
Dow in gold ounces 14.83 14.65 -0.19 -1.3
Dow in Silver ounces 1,175.33 1,151.55 -23.78 -2.0
Dow Industrials 16,346.45 15,988.08 -358.37 -2.2
S&P500 1,922.03 1,880.29 -41.74 -2.2
US dollar index 98.60 99.00 0.40 0.4
Platinum 877.10 825.70 -51.40 -5.9
Palladium 493.60 486.95 -6.65 -1.3

Color me wrong yesterday for anticipating a relief rally in stocks: they busted today. Dow dove 2.2% for the week, most of that today after an up & down week. Other indices were even sicker. Dollar index remains weak and indifferently upward. Silver lost 2.4¢, rotten after last week's promise, and gold lost 1%, also rotten but getting less so. Panic fills the air. My friend CH remarked, "Fed raised interest rates a measly 1/4 percent and sent stock markets tumbling world-wide, vaporizing trillions in stock value since the year began." Bloomberg reported that global stock market capitalization has lost $15 trillion in seven months.

After stark, sharp market drops, one is inclined to look for a relief rally of some kind. Instead of rallying, stocks suffered their worst day of the New Year. Dow lost 2.4%, S&P500 2.2%, Nasdaq Comp 2.74, Nasdaq 100 -3.09, Russell 2000, down 1.75%. Can they rally from here, or are they locked in a powerful downwave not yet ready to open its jaws? I'm opting for the latter. Behold, the 7 month Dow chart! http://schrts.co/uWN6Pi

Dow lost 390.97 or 2.4% to close below 16,000 at 15,988.08, a sure morale-wrecker. S&P500 broke 1,900, losing 41.55 (2.16%) to 1,880.29. Scorecard for the year is brutal: Dow down 8.2%, S&P500 down 8%, Dow Transports - 10.9%, Russell 2000 -11.3%, Wilshire 5000 -8.7%, Nasdaq Comp -10.4%, N-100 - 9.8%.

All this shows yet more tellingly in the Dow in Gold & Dow in Silver. Since the year began the Dow in gold has cascaded 10.6% and the Dow in Silver 8.8%. Dow in gold has been twittering and shivering the last few days, but commenced tumbling again today, down 3.31% to 14.69 troy ounces of gold to buy the Dow. Dow in Silver plumped 2.98% to 1,149.39 troy ounces, almost below the 200 DMA (1,147.88) again & sure to drop there soon. The charts: http://schrts.co/zysfpm and http://schrts.co/UaCbdJ

Greatest teaser of my mind is the US dollar. On the big drop of 7 January & today the US Dollar dropped WITH stocks, down a huge 0.99% the day stocks dropped 2.32%. Although it's only one day, and one day doth not a spring make, it doesn't seem logical for stocks to fall sharply without the dollar rising at least some. Why? Because people rushing out of stocks get dollars, and they want to buy dollars, usually as US treasuries. So I can look at the 10 year treasury yield and see it gapped down today, which means bonds rose strongly. But why would the dollar fall, even a tiny 14 basis points (0.14%) to 99? Could so many foreigners be selling stocks and converting dollars to other currencies? That doesn't seem quite the answer. The dollar is not catching the safe haven bid, while the yen rose 0.94% to 85.47¢ per 100¢. Even the euro rose 0.47%, to 1.0907, breaking out ot the upside of its even-sided triangle. Right, and upside breakout for the permanently flagging euro.

Somethin' ain't right.

Speaking of somethin' ain't right, gold popped up $17.60 (1.6%) to $1,091.50 while silver jumped 15¢ (1.1%) to 1388.4¢.

Silver and gold keep lurching from top to bottom of this range. Odd behavior in nature, so maybe it's artificial. Me, if I were those Nice Government Men, last thing on earth I'd want to see is stocks tanking while gold rockets, so I'd have to take measures to forestall that, like selling lots of silver futures to drive it down and whack gold with a rabbit punch in the neck. Why, come to think of it, I'd sell them platinum futures, too, for good measure.

But only a conspiracy nut who believes that governments manipulate markets would say such a thing, and we all know I'm a gennelmun. A nat'ral born durned fool from Tennessee, but a gennelmun all the same.

But let us pretend we live in an honest world. Gold's five day chart shows a V-bottom yesterday with a recovery today. Said recovery will confirm said V-bottom as a bottom when it climbs through $1,095. Clearly, it may not linger there but must continue to advance smartly through the last high at $1,113.

Silver's five day chart looks like one of them ladies' fashion colours that never occurred in nature. It's got that mesa, up on Wednesday down on Thursday, with another spike today to 1414¢ which "sellers" immediately slapped down.

However, this week was positive for one reason: no matter how many times they are slapped down, silver & gold get back to their feet, toe the line, and start slugging. This is the stuff that founds rallies.

Another little teaser: the Gold/Silver Ratio (end of day) this week hit 80.08 and since has plunged. That's health to a gold and silver rally.

Shucks, let me add another little fillip: the Gold/Bank Stock index chart. http://schrts.co/1GXI7M I remind y'all, when the herd trusts the financial system, they buy big bank stocks & sell gold. When the system panics them, they sell big banks and buy gold. The chart is a fraction, so when the number grows larger, it means the numerator (gold) is growing faster than the denominator (bank stock index). Which way is it going?

On 15 January 588 B.C. Nebuchadnezzar II of Babylon laid siege to Jerusalem, ruled by King Zedekiah. The siege lasted until 23 July 586 B.C. when Jerusalem fell.

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
15-Jan-16 Price Change % Change
Gold, $/oz 1,091.50 17.60 1.6
Silver, $/oz 13.88 0.15 1.1
Gold/Silver Ratio 78.616 1.259 1.6
Silver/Gold Ratio 0.0127 0.0001 1.1
Platinum 825.70 -8.30 -1.0
Palladium 486.95 -4.20 -0.9
S&P 500 1,880.29 -41.55 -2.2
Dow 15,988.08 390.97 2.5
Dow in GOLD $s 302.80 2.59 0.9
Dow in GOLD oz 14.65 0.13 0.9
Dow in SILVER oz 1,151.55 15.89 1.4
US Dollar Index 99.00 -0.14 -0.1
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: 1,090.00      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,122.70 1,134.69 1,134.69
1/2 AE 0.50 555.39 574.98 1,149.95
1/4 AE 0.25 280.42 292.94 1,171.75
1/10 AE 0.10 114.35 119.36 1,193.55
Aust. 100 corona 0.98 1,063.08 1,072.08 1,093.73
British sovereign 0.24 258.51 271.51 1,153.40
French 20 franc 0.19 205.03 209.03 1,119.60
Krugerrand 1.00 1,105.26 1,115.26 1,115.26
Maple Leaf 1.00 1,100.00 1,114.00 1,114.00
1/2 Maple Leaf 0.50 626.75 572.25 1,144.50
1/4 Maple Leaf 0.25 277.95 291.58 1,166.30
1/10 Maple Leaf 0.10 115.54 118.81 1,188.10
Mexican 50 peso 1.21 1,303.59 1,314.59 1,090.31
.9999 bar 1.00 1,093.82 1,102.00 1,102.00
SPOT SILVER: 1,390.00      
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 0.72 995,387.25 995,744.75 1,392.65
US 40% silver 1/2s 0.30 409,932.00 410,094.00 1,390.15
100 oz .999 bar 100.00 139,025.00 139,050.00 1,390.50
10 oz .999 bar 10.00 13,901.50 13,906.50 1,390.65
1 oz .999 round 1.00 1,390.10 1,390.56 1,390.56
Am Eagle, 200 oz Min 1.00 1,391.50 1,392.75 1,392.75
SPOT PLATINUM: 825.70      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Platinum Platypus 1.00 840.70 870.70 870.70
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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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