The Moneychanger
Weekly Commentary
Thursday, 28 January a.d. 2016 Browse the commentary archive
Here's the weekly scorecard:
  22-Jan-16 28-Jan-16 Change % Change
Silver, cents/oz. 1,404.30 1,421.60 17.30 1.2
Gold, dollars/oz. 1,097.20 1,115.60 18.40 1.7
Gold/silver ratio 78.131 78.475 0.344 0.4
Silver/gold ratio 0.0128 0.0127 -0.0001 -0.4
Dow in Gold Dollars (DIG$) 303.13 297.87 -5.26 -1.7
Dow in gold ounces 14.66 14.41 -0.25 -1.7
Dow in Silver ounces 1,145.71 1,130.78 -14.93 -1.3
Dow Industrials 16,089.23 16,075.19 -14.04 -0.1
S&P500 1,906.89 1,896.27 -10.62 -0.6
US dollar index 99.65 99.62 -0.03 -0.0
Platinum 829.70 865.90 36.20 4.4
Palladium 498.40 491.00 -7.40 -1.5

Here are some news items I want to bring to y'all's attention:

GERMANY is speeding up its Bring-Home-The-Gold program which since 2013 has repatriated about 366 tonnes. This year the Bundesbank moved 210 metric tons of Gold back to its Frankfurt vaults, 100 tonnes from Paris and about 100 tonnes from the New York Federal Reserve.

LONDON SILVER FIX was resurrected a year ago August when most of the former price-fixers, under pressure from ongoing corruption investigations, bowed out. CME, which gobbled up all the commodity exchanges in the US, & Thomson Reuters got the contract from the London Bullion Market Association (LBMA) to work the fix. The price is set daily by HSBC, JPMorgan Chase, Mitsui, Bank of Nova Scotia, Toronto Dominion Bank, and UBS -- the Usual Suspects.

On 28 January 2016 the fix was set at $13.58, 84¢ (6%) BELOW market at that time ($14.42 in London and $14.415 on CME). One commodity strategist said this could be the end of the fix, thanks to the huge discrepancy. Par for unresponsive government and bloated corporations, the CME makes no apology or comment, but it is reported the matter is being "investigated internally." Stay tuned for further bogus explanation.

This is screaming, unashamed highway robbery. The market NEVER traded down to $13.58; today's low was $14.07. These crooks just set the price 6% below market. Anybody who uses that silver fix ever again is crazy as a betsy bug. [Other expletives deleted]

COMEX GOLD STOCKS are stored in Comex approved warehouse as "eligible," i.e., in the depository but not available for delivery against a futures contract, or "registered" i.e., "available for delivery to settle a futures contract." In a Zero Hedge article at http://bit.ly/1nB84HU we are told that on 25 January 201,345 oz of Registered gold was shifted by its owners request into Eligible, reducing Registered gold stocks from 275k to 74k oz.

That makes the "coverage ratio" -- total gold claims divided by available stocks -- shoot up. 40 million oz of gold open interest is "backed" by a record low 74,000 oz of Registered gold, 542 oz paper claims to every physical oz.

Sorry, but it ain't a problem till it's a problem. The vast majority of futures contracts are settled by buying the opposing paper contract, not taking physical delivery. That's what a futures market is for, hedging. Transitory changes like this may OR MAY NOT signify a physical shortage. If a shortage exists, futures will speedily show it in a "backwardation" -- the price of gold for immediate delivery (spot month) will rise above the normally higher priced future contracts. Preliminary last prices on Comex today show a very slight backwardation not with the spot months but from April at $1,113.50 to June at $1,112.9. August is trading normally at $1,120.60.

So y'all don't panic just yet. Wait till Wednesday.

I am taking a two day vacation with my surgery-recovering wife, Susan, to friends in deepest North Tennessee. Hence I won't be sending a commentary tomorrow. However, the scoreboard today pretty well tells the tale. Stocks, although they've traded much higher with triple digit days, couldn't keep any of those gains (sorry, Nice Government Men, y'all tried) as their bull transmogrifies into bear. US dollar index is weak & watered as Bourbon Street whiskey, about to fall, while silver & gold, accompanied by platinum & palladium, are working up through resistance.

Stocks added 130.73, 0.82%, to 16,075.19, same place they've stopped before trying to catch a ride higher -- and failed. S&P gained 13.32 (0.71%) to 1,896.27. Stocks are staging the most lethargic rally possible. Yes, they will probably move a little higher, maybe to 16,600 & 1,950. Their day has passed. Y'all need to sell off stocks before you get caught in the generalized slaughter.

But, thunderation! Don't pay me no mind, I'm no more'n a nat'ral born durned fool from Tennessee no way. Y'all keep on lissenin' to them Wall Street smarties. They'll keep talking to you, long as you got money left.

US dollar got hold of some bad, bad chili and is sick as the proverbial dog. Slid more today than yesterday, and plunged beneath the 20 & 50 day moving averages (98.99 & 98.88). Down 33 basis points (0.33%) to 98.62. Has fallen out of that rising wedge. No prophet needed to see 'twill fall further. Look for yourself, http://schrts.co/OkJ5UT

Euro -- brace yourself -- has actually broken out upward. Rose 0.44% to $1.0940, if it can keep it up. Yen fell 0.12% to 84.17.

Silver lost 22.4 ¢ to 1421.6¢ on Comex. Gold backed up 50¢ to $1,115.60.

Both silver & gold are undergoing a correction of that last leg up that took silver from 1373¢ to 1459¢ and gold from $1071.1 to $1,138. This is routine action. Gold proved that with a test today of that old-high resistant at $1,113. Made a low at $1,110.20 & came right back. Possible to get a test back to $1,100, but I don't think so. If so, 'twill come tomorrow. Next week should be an upweek, or I'm all wrong about gold, a genuine possibility always.

Suspicious side of me wonders how much the Nice Government Men had to do with the London fix glitch today, but it matters not. In spit of everything silver still touched its 50 DMA at 1408¢ & bounded to life, proving it sinew. Silver and gold are putting finishing touches on big rounding bottoms. Look here, http://schrts.co/Ygg5wD and here, http://schrts.co/yyO8z5

2016 is shaping up a great year for silver & gold.

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
28-Jan-16 Price Change % Change
Gold, $/oz 1,115.60 -0.50 -0.0
Silver, $/oz 14.22 -0.22 -1.6
Gold/Silver Ratio 78.475 -0.023 -0.0
Silver/Gold Ratio 0.0127 -0.0002 -1.6
Platinum 865.90 -14.50 -1.6
Palladium 491.00 -9.55 -1.9
S&P 500 1,896.27 13.32 0.7
Dow 16,075.19 130.73 0.8
Dow in GOLD $s 297.87 2.59 0.9
Dow in GOLD oz 14.41 0.13 0.9
Dow in SILVER oz 1,130.78 26.59 2.4
US Dollar Index 98.62 -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: 1,115.10      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,146.32 1,160.82 1,160.82
1/2 AE 0.50 568.19 588.22 1,176.43
1/4 AE 0.25 286.88 299.68 1,198.73
1/10 AE 0.10 116.98 122.10 1,221.03
Aust. 100 corona 0.98 1,084.28 1,093.28 1,115.36
British sovereign 0.24 264.46 277.46 1,178.69
French 20 franc 0.19 209.75 213.75 1,144.89
Krugerrand 1.00 1,129.60 1,139.60 1,139.60
Maple Leaf 1.00 1,125.10 1,139.10 1,139.10
1/2 Maple Leaf 0.50 641.18 585.43 1,170.86
1/4 Maple Leaf 0.25 284.35 298.29 1,193.16
1/10 Maple Leaf 0.10 118.20 121.55 1,215.46
Mexican 50 peso 1.21 1,336.30 1,347.30 1,117.44
.9999 bar 1.00 1,119.00 1,127.10 1,127.10
SPOT SILVER: 14.22      
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 11,597.30 11,954.80 16.72
US 40% silver 1/2s 0.30 4,076.90 4,238.90 14.37
100 oz .999 bar 100.00 1,447.00 1,472.00 14.72
10 oz .999 bar 10.00 143.70 148.70 14.87
1 oz .999 round 1.00 14.32 14.78 14.78
Am Eagle, 200 oz Min 1.00 15.72 16.97 16.97
SPOT PLATINUM: 865.90      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Platinum Platypus 1.00 880.90 910.90 910.90
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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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