The Moneychanger
Weekly Commentary
Friday, 22 January a.d. 2016 Browse the commentary archive
Here's the weekly scorecard:
  15-Jan-16 22-Jan-16 Change % Change
Silver, cents/oz. 1,388.40 1,404.30 15.90 1.1
Gold, dollars/oz. 1,091.50 1,097.20 5.70 0.5
Gold/silver ratio 78.616 78.131 -0.484 -0.6
Silver/gold ratio 0.0127 0.0128 0.0001 0.6
Dow in Gold Dollars (DIG$) 302.80 303.13 0.33 0.1
Dow in gold ounces 14.65 14.66 0.02 0.1
Dow in Silver ounces 1,151.55 1,145.71 -5.84 -0.5
Dow Industrials 15,988.08 16,089.23 101.15 0.6
S&P500 1,880.29 1,906.89 26.60 1.4
US dollar index 99.00 99.65 0.65 0.7
Platinum 825.70 829.70 4.00 0.5
Palladium 486.95 498.40 11.45 2.4

'Twas an up week for metals -- not much of an up week, but up still. Stocks barely managed to close the week up by rising today. US dollar index is swaying from side to side like a dog watching a tennis match. What! Platinum & Palladium rose!

Stocks continue the pattern of driving higher during the day, but slipping grip on most of the gain by day's end. Today the Dow lost about 40 points from the high, not counting the 40 points slipped in at the very close.

Dow gained 206.55 (1.3%) to barely throw a leg over 16,000 at 16,089.23. S&P500 jumped up 37.90 (2.03) to 1,906.89. Reaction rallies could carry as high at 16,600 and 1,950, but heed not the sirens who sing that stocks are coming back. They won't be, not in any time material to you and me.

As one scarred old bull who has been through several bull/bear cycles, let me remind y'all how the herd mentality works. People made money as stock rose, so in their minds sticks the belief they will ALWAYS make money buying stocks. As stocks decline, they listen ot the sirens saying, Buy more and double down. This continues until they run out of money & morale. The market slides further and further, until at last they sell. Precisely THERE will be the bottom. Thus passeth the life of an old bull.

After yesterday's humiliation, the US dollar index missed its chance to post a key reversal today. Instead, it rose 52 basis points to 99.65. That does not really atone for yesterday's sins. Yesterday the dollar index tried to enter new high territory and failed. Today it rose, but not nearly as high. None of this bears witness to underlying strength. Rather, it warns of spotty support and the possibility of large gaps down.

How do those people in Europe stand it? Their currency, I mean (y'all thought I meant something else.) Euro dropped 0.72% today to $1.0796. Below its 20 & 50 DMAs, its resting on the bottom boundary of an even-sided triangle where it can get an easy push off into the abyss. Sorry as gully dirt.

Yen dropped 0.89% to 84.15, back below its 20 DMA. Sorry, but not as sorry as the euro, and trying to rally, fueled by scared money in Asia.

Gold lost $1.90 to $1,097.20 and silver backed off 4¢ to 1404.3¢. Sigh.

Silver keeps on pushing higher every day, today to 1436¢, slugging toward that 1440¢ hurdle. Something strange happened at High Noon: silver dropped in 5 minutes from 1416¢ to 1408¢. Demoralized it for the rest of the day. It's all right. Stage is set for more progress next week.

Gold made its peak on Wednesday and has since backed off in a normal correction -- so saith the five day chart. Remains above $1,090 support, but still must conquer $1,113. Gold and silver continue to throw themselves against overhead barriers, are slapped down, but snap right back. One of these days they will bust through the ceiling, and not too long.

I have a favor to ask of y'all. My bionic wife, Susan, is scheduled for minor eye surgery on Tuesday, 26 January 2016. I would appreciate your prayers for her and for a successful surgery. She is, after all, the apple of my eye. Thank you.

On 22 January 1575 Queen Elizabeth granted Thomas Tallis & William Byrd a music press monopoly. If you've ever heard Tallis' music, you understand why.

On 22 January 1689 England's "Glorious (also called Bloodless) Revolution" climaxed when parliament invited William of Orange and Mary to become joint sovereigns. The Revolution established parliamentary supremacy in the British constitution.

On 22 January 1879 at Rorke's Drift (ford, we'd say), South Africa, a British garrison numbering 150 held off 3 - 4,000 Zulu warriors. This came on the heels of the Zulu's annihilation of a British contingent of 1,350 at Isandlwana, the British army's worst defeat at the hands of a native army.

On 22 January 1905 in St. Petersburg a larger workers' demonstration marched to the Winter Palace with a petition for the Tsar. Troops fired on protestors in what became known as Bloody Sunday.

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
22-Jan-16 Price Change % Change
Gold, $/oz 1,097.20 -1.90 -0.2
Silver, $/oz 14.04 -0.04 -0.3
Gold/Silver Ratio 78.131 -0.133 -0.2
Silver/Gold Ratio 0.0128 -0.0000 -0.3
Platinum 829.70 11.60 1.4
Palladium 498.40 0.65 0.1
S&P 500 1,906.89 37.90 2.0
Dow 16,089.23 206.55 1.3
Dow in GOLD $s 303.13 4.44 1.5
Dow in GOLD oz 14.66 0.21 1.5
Dow in SILVER oz 1,145.71 17.92 1.6
US Dollar Index 99.65 0.52 0.5
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: 1,197.20      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,233.12 1,246.29 1,246.29
1/2 AE 0.50 610.06 631.52 1,263.05
1/4 AE 0.25 308.02 321.75 1,286.99
1/10 AE 0.10 125.60 131.09 1,310.93
Aust. 100 corona 0.98 1,167.63 1,176.63 1,200.40
British sovereign 0.24 283.93 296.93 1,261.40
French 20 franc 0.19 225.19 229.19 1,227.60
Krugerrand 1.00 1,213.96 1,223.96 1,223.96
Maple Leaf 1.00 1,207.20 1,221.20 1,221.20
1/2 Maple Leaf 0.50 688.39 628.53 1,257.06
1/4 Maple Leaf 0.25 305.29 320.25 1,281.00
1/10 Maple Leaf 0.10 126.90 130.49 1,304.95
Mexican 50 peso 1.21 1,436.13 1,447.13 1,200.24
.9999 bar 1.00 1,201.39 1,209.20 1,209.20
SPOT SILVER: 14.04      
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 11,608.03 11,965.53 16.74
US 40% silver 1/2s 0.30 4,022.33 4,184.33 14.18
100 oz .999 bar 100.00 1,428.50 1,453.50 14.54
10 oz .999 bar 10.00 141.85 146.85 14.69
1 oz .999 round 1.00 14.14 14.60 14.60
Am Eagle, 200 oz Min 1.00 15.54 16.79 16.79
SPOT PLATINUM: 829.70      
Platinum Platypus 1.00 844.70 874.70 874.70
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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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