The Moneychanger
Daily Commentary
Thursday, 17 March a.d. 2016 Browse the commentary archive

I find myself in the lunatic position of fighting a silver & gold rally. I think I've slipped through the looking glass or down the rabbit hole. It's nutty.

Prime mover today was the US dollar index that fell over a cliff: down 112 basis points or 1.17% -- 2.05% in the last two days. I offer the chart in evidence,

I have marked with blue arrows the cascades since December. 2 - 3 December, -2.4%; 29 January- 3 Feb, -3.2%; 9-10 March, -1.07%, and now, 16-17 March, - 2.05%. Of course, currencies are always treacherous because central banks manipulate currencies for political reasons you can't see, and they often co-ordinate their manipulations. Wherefore, looking at a currency chart is, well, only worth what it's worth.

That said, the dollar is painting a picture of weakness. It peaked in March 2015, corrected after an 8 month rally, then in October 2015 broke out of the downtrend. Great, but it reached the March high (100.02) & fainted -- first cascade. Caught & got enough traction for another little rise, but failed again near 100 -- second cascade. Third cascade was the ECB debacle last week, then the Fed's bumbling this week brought the fourth.

Dollar has now sunk below 95.30 support, and if it falls lower will pierce that internal support from the old triangle (blue line). That will make the dollar look even weaker. If it breaks support at 92.50, the dollar will be through rallying for a long, long time and steering back to 81 where it broke out in July 2014.

Y'all have already figured out that the euro, which is 57% of the US dollar index, jumped way higher today, up 0.84% to $1.1315. Yen leapt even more, +1.23% to 89.79¢/¥100.

Don't miss this: dollar is the bottom part of a fraction of which the top part is all commodities & stocks. Wherefore it is a mathematical certainty that when the dollar shrinks, commodities & stocks bloat, & that includes silver & gold. We know we are watching might in metals when they gain against a RISING dollar. When they gain against a falling dollar, it may be metals strength but is more likely dollar puniness. Not the same thing atall.

Dow Industrials bumped up 155.73 (0.9%) to 17,481.49. S&P500 lifted 13.37 (0.66%) to 2040.59. Thanks to aftermarket gold weakness, Dow in gold rose 1.26% to 13.89 oz. Thanks to wild silver strength today (up 5.3%), Dow in Silver fell 11.09 oz (1%) to 1,097.05 oz.

Metals went wild as a razorback hog today. Comex gold bounded $35.20 (2.9%) to $1,264.50. Silver pole-vaulted 80.8¢ (5.3%) to 1602.2¢. Platinum gained $20.15 (3.1%) to $988.60, and palladium sprang $20.15 (3.5%) to $597.35.

Gold/Silver ratio -- look at this, now -- has dropped below 80 to 78.923. And it's treading water underneath the 20 (81.24) and 50 (79.45) day moving averages. In other words, doing just what it ought to do in a gold-silver rally, dropping. Probably time still to swap gold for silver, but you won't realize quite as many silver ounces as you would have a few days ago.

So far in this rally that began in December, gold's high close struck $1,273.10. Today's Comex close reached only to $1,264.50, then aftermarket gold fell $7.40 to $1,257.10. Yes, yes, it is thrilling when gold runs wild, gains $35.20, but on a chart it just don't look that impressive, and it ain't a breakout.

However, that retreat on 14, 15, & 16 March is beginning to look like a false breakdown. My mind's wondering, How will gold finish the week tomorrow? Will it hold on up here, or fall back? On the End of Day chart, MACD & RSI still point down, and Commitments of Traders reports remain grisly bearish.

Nevertheless, the proverbs say, "Bull markets always climb a wall of worry," and "In bull markets, surprises come to the Upside."

Yes, silver poked through 1600¢ today, but barely. Only reached 1608¢. Close, but this ain't hand grenades. One more day of higher closes and I will break & throw in the correction towel, but till silver SUBSTANTIALLY beats 1600¢, I'm standing back. I'm taking a whipping with a weedeater on my bare back, but I'm standing back.

On this day in 432 a.d. Patrick was captured by Irish pirates in a raid on his home in Great Britain and taken to Ireland & sold as a slave.

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
17-Mar-16 Price Change % Change
Gold, $/oz 1,264.50 35.20 2.86%
Silver, $/oz 16.02 0.81 5.31%
Gold/Silver Ratio 78.923 -1.878 -2.32%
Silver/Gold Ratio 0.0127 0.0003 2.38%
Platinum 988.60 30.40 3.17%
Palladium 597.35 20.15 3.49%
S&P 500 2,040.59 13.37 0.66%
Dow 17,471.49 155.73 0.90%
Dow in GOLD $s 285.62 -5.56 -1.91%
Dow in GOLD oz 13.82 -0.27 -1.91%
Dow in SILVER oz 1,090.47 -47.68 -4.19%
US Dollar Index 94.68 -1.12 -1.17%
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: 1,257.10      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,287.27 1,299.21 1,299.21
1/2 AE 0.50 640.61 663.12 1,326.24
1/4 AE 0.25 323.45 337.85 1,351.38
1/10 AE 0.10 131.89 137.65 1,376.52
Aust. 100 corona 0.98 1,224.82 1,233.82 1,258.74
British sovereign 0.24 298.14 311.14 1,321.75
French 20 franc 0.19 236.46 240.46 1,287.95
Krugerrand 1.00 1,269.67 1,279.67 1,279.67
Maple Leaf 1.00 1,267.10 1,281.10 1,281.10
1/2 Maple Leaf 0.50 722.83 659.98 1,319.96
1/4 Maple Leaf 0.25 320.56 336.27 1,345.10
1/10 Maple Leaf 0.10 133.25 137.02 1,370.24
Mexican 50 peso 1.21 1,506.47 1,517.47 1,258.58
.9999 bar 1.00 1,261.50 1,269.10 1,269.10
SPOT SILVER: 15.92      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 25.00 27.00 35.29
VG+ Peace dollar 0.77 20.00 22.00 28.76
90% silver coin bags 0.72 12,598.30 12,883.30 18.02
US 40% silver 1/2s 0.30 4,504.65 4,654.65 15.78
100 oz .999 bar 100.00 1,617.00 1,642.00 16.42
10 oz .999 bar 10.00 160.70 165.70 16.57
1 oz .999 round 1.00 16.02 16.48 16.48
Am Eagle, 200 oz Min 1.00 17.42 18.92 18.92
SPOT PLATINUM: 988.60      
Plat. Platypus 1.00 1,003.60 1,033.60 1,033.60
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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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