The Moneychanger
Daily Commentary
Thursday, 21 January a.d. 2016 Browse the commentary archive

I see where Jamie Dimon, JPMorgan CEO, got a 35% pay raise in 2015, to $27 million from $20 million. Of course I risk being called a communist, although I am probably the only human being in North America who emphatically is not a communist or socialist, but given reality, I must question what sort of genius it would take to add $20 million, much less, $27 million, in value to an enterprise. After all, if JPM pays Jamie $27 million, business logic says they expect to leverage that $27 million into some larger income for JPM.

Maybe he could boost their income that much, maybe he is such a business genius or maybe he has so many Washington contacts that he's worth that.

But I doubt it, all the way from Tennessee. For some reason, the words "crony capitalism" keep popping to mind, and "well-positioned parasites." Don't bother writing me smoking emails about free markets & libertarianism, etc., because this has absolutely NOTHING to do with any of that. If you're that naïve, you ought to be investing in Perpetual Motion Machines, Ltd.

Today was a reaction day. Stocks rose a bit, but before the first hour's trading passed had gone nose underwater again. Buyers came in and drove the Dow to a high of 16,039 about noon. But the Dow must have et somethin' didn't agree with it, cause it started puking up points and never stopped till 2:45, when it stopped falling and eased upward. Ended gaining 115.94 (0.74%) to 15,882.68. S&P500 gained 9.66 (0.52%). Stocks may be ready for a leetle countertrend rally, as they are right oversold, but today didn't convince me of that. If they do rally, it will be brief. MUCH more plunging lies in the future. Think of yourself looking into a deep well, trying to see your face in the water hundreds of feet below. Now think of yourself toppling over the top of the well wall and plummeting down the well shaft. Something like that.

US dollar index blew up today. It rose to 99.95, a new high for the move, on sudden buying around the open. Must have looked around and wondered what it was doing that high up, because it fell sharply, then more, then more through the day to close down 11 basis points at 99.06. A break to a new high intraday with a lower close for the day is puking sick action, and the first half of a key reversal. Lower close next two days sinks the dollar.

Euro took a notion to fall today, even though the dollar index fell. Euro fell 0.9% to $1.0879 & the bottom boundary of that even sided triangle -- also below its 20 & 50 day moving averages. Next step is a breach of that boundary and further fall. Nor did the yen rise, no, it fell 0.65% to 84.96 cents per 100 yen. Looks like folks generally were fleeing fiat currencies today, but into what? Washing machines? Wasn't gold.

Gold fell $8.00 to a cosmetic Comex close at $1,099.10, below $1,100. Good shootin', Nice Government Men. In the aftermarket Gold eased back to yesterday's levels at $1,102.10. Silver lost 6.4¢ go 1408.3¢, above the 1400¢ mark at least.

Both silver and gold are poised and coiling for a great leap up. Gold's daily chart seems to say that it has begun that rally and today was only a usual correction of yesterday's big ($17.20) rise. Keep watching 1440¢ silver & $1,113 gold. When they break through that fence, they will run for the woods.

Here's a small request for y'all. On Tuesday, 26 January, my wife Susan will have eye surgery to remove the floaters in her vitreous humor. I would deeply appreciate your prayers on her behalf for a successful surgery, and I know she would, too.

On 21 January 1861 Senator Jefferson Davis of Mississippi and four other Southern senators resigned from the US Senate.

In 1789 Dr. Joseph Guillotine proposed a new, more human method of execution by a machine designed to cut of the condemned's head as painlessly as possible. This was to replace death by breaking on the wheel, which is so gruesome y'all don't want to hear about it. It didn't take long for the French Revolutionaries to put Madame Guillotine to work, and overtime during the Terror. On 21 January 1793 they guillotined their king, Louis XVI, for treason. Just trying to figure out how a king can commit treason will work your mind into a knot. Estimates of those executed in the Reign of Terror vary from 16,000 to 40,000.

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
21-Jan-16 Price Change % Change
Gold, $/oz 1,099.10 -8.00 -0.72%
Silver, $/oz 14.08 -0.06 -0.45%
Gold/Silver Ratio 78.044 -0.212 -0.27%
Silver/Gold Ratio 0.0128 0.0000 0.27%
Platinum 818.10 0.20 0.02%
Palladium 497.75 10.00 2.05%
S&P 500 1,868.99 9.66 0.52%
Dow 15,882.68 115.94 0.74%
Dow in GOLD $s 298.72 4.32 1.47%
Dow in GOLD oz 14.45 0.21 1.47%
Dow in SILVER oz 1,127.79 13.30 1.19%
US Dollar Index 99.06 -0.11 -0.11%
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: 1,102.10      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,131.86 1,147.29 1,147.29
1/2 AE 0.50 561.56 581.36 1,162.72
1/4 AE 0.25 283.53 296.19 1,184.76
1/10 AE 0.10 115.62 120.68 1,206.80
Aust. 100 corona 0.98 1,074.88 1,083.88 1,105.77
British sovereign 0.24 261.38 274.38 1,165.59
French 20 franc 0.19 207.31 211.31 1,131.79
Krugerrand 1.00 1,117.53 1,127.53 1,127.53
Maple Leaf 1.00 1,112.10 1,126.10 1,126.10
1/2 Maple Leaf 0.50 633.71 578.60 1,157.21
1/4 Maple Leaf 0.25 281.04 294.81 1,179.25
1/10 Maple Leaf 0.10 116.82 120.13 1,201.29
Mexican 50 peso 1.21 1,322.05 1,333.05 1,105.62
.9999 bar 1.00 1,105.96 1,114.10 1,114.10
SPOT SILVER: 14.10      
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 11,686.68 12,044.18 16.85
US 40% silver 1/2s 0.30 4,040.03 4,202.03 14.24
100 oz .999 bar 100.00 1,434.50 1,459.50 14.60
10 oz .999 bar 10.00 142.45 147.45 14.75
1 oz .999 round 1.00 14.20 14.66 14.66
Am Eagle, 200 oz Min 1.00 15.60 16.85 16.85
SPOT PLATINUM: 818.10      
Plat. Platypus 1.00 833.10 863.10 863.10
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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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