The Moneychanger
Weekly Commentary
Friday, 18 March a.d. 2016 Browse the commentary archive
Here's the weekly scorecard:
  11-Mar-16 18-Mar-16 Change % Change
Silver, cents/oz. 1,560.70 1,580.60 19.90 1.3
Gold, dollars/oz. 1,258.70 1,253.80 -4.90 -0.4
Gold/silver ratio 80.650 79.324 -1.325 -1.6
Silver/gold ratio 0.0124 0.0126 0.0002 1.7
Dow in Gold Dollars (DIG$) 282.70 290.22 7.52 2.7
Dow in gold ounces 13.68 14.04 0.36 2.7
Dow in Silver ounces 1,102.92 1,113.65 10.72 1.0
Dow Industrials 17,213.31 17,602.30 388.99 2.3
S&P500 2,022.19 2,049.58 27.39 1.4
US dollar index 96.23 95.12 -1.11 -1.2
Platinum 969.20 970.00 0.80 0.1
Palladium 580.45 589.60 9.15 1.6

No matter how fiercely the socialist public believes there is such a thing as a free lunch, there isn't. Markets don't work that way, either. Everybody can't win ALL the time. In the last week commodities have won, stocks have won, & gold and silver have won. Ain't gonna last. Only the US dollar index lost big this week, thanks to the Fed "stabilizing" the economy. Jes' like me "stabilizing" your chickenhouse with dynamite.

The US dollar added yet another waterfall & failure to its chart this week. Last week the ECB's announcement pounded the buck, this week the Fed's. What's a scrofulous currency to do?

After cascades in December, February, and two in the last fortnight, dollar index is looking like high quality merchandise from the Soviet Union. It broke 95.30 support, but caught today at an internal downtrend line reaching back to the March 2015 top. Look here,

Should the dollar break that trendline's support, next stop will be 92.50. That is the make-or-break dollar support. Fracture that & it freefalls to 81. However, it hasn't broken that level yet.

Dollar bounced today 32 basis points (0.34%) to 95.12, &still looks firehose-pukin' sick. I take it as a measure of central banks' rapidly shrinking credibility, worldwide.

Euro fell in a mirror image of the dollar's rise, down 0.39% to $1.1271. Is it rallying? Shucks, CAN the euro rally? Yen lost 0.15% to 89.64. Pushing on the ceiling. Can it break through to the attic?

Lookit, lookit. Stocks have actually risen into positive territory for the year. Dow is up 177.27 (1%) over the 31 Dec 2015 close and the S&P500 is a massive 5.64 (0.3%) higher. My land a' Goshen! Anybody CAN become president!

Today the Dow climbed 120.81 (0.69) to 17,602.30 & the S&P500 clambered up behind it 8.99 (0.44%) to 2,049.58.

Let us now ponder the Volatility Index ($VIX). This measures complacency (low readings) & terror (high readings) in the stock market. Here's a chart, When investors waxed fat, dumb, & happy back in April - August 2015, the VIX was bumping along around 11.70. Observe, though, how it shot up WAAY over 30 (high side of the range) to 53.29 back in August when stocks hit the skids. Line it up with the plot of the S&P500 in the bottom window. Then stocks rallied & investors again forgot that stocks go both up AND down. First of November VIX hit 12.80, & thereafter began the S&P500 to slide. Smugness reached another extreme toward end-December, right as stocks began a terrible six week dive.

BEHOLD! Complacency hath returned. VIX hit 14.02 today, lower than December's low. Yes, the VIX can drop more, but experience saith stocks' rally draweth soon to a close.

Also, the Dow in Gold & Dow in Silver may have finished their upward corrections, which also points to stocks' rise ending. By the way, for the year the Dow in Gold has lost 14.6% and the Dow in Silver 12%, so take those new stock highs for the year with a shaker of salt. Stocks are NOT at new yearly highs againt metals.

Recall that last fall I mentioned that sometime during 2016, probably first half, commodities would begin turning up after eight years' of falling. Something like that turn-up is unfolding, but may stumble before it finds permanent footing. West Texas Intermediate Crude has been climbing along with stocks since the February low at $26.05. Today it backed off a little but still closed 41.13, up 58% off the low. Copper has rallied from $1.937 to $2.286, up 18%. CRB commodity index gapped up this week, but that might be an exhaustion gap. Oil & Copper are both about to hit their 200 day moving average, a fit location for a fall & correction.

Silver today lost 1.35% or 21.6¢ to close Comex at 1580.6¢. Gold backed down $10.70 (0.85%) ending at $1,253.80. Silver made a new intraday high for the move at 1617¢, but held not on. Never a good sign.

Pause to ponder the gold/silver ratio. Silver often finds its juice toward the end of a rally. This week it has traded down toward the bottom boundary of its uptrending channel. Look here, The falling ratio (silver outperforming gold) is consistent with the latter stages of a rally.

I feel goofy fighting a silver & gold rally, but can't help myself. From a longer term perspective I remain confident that both metals completed their post-2011 correction in December. Gold has broken out to the upside on both weekly & monthly charts. Silver has broken out on the weekly chart and is challenging the long term downtrend line on the monthly & daily. I don't question both have turned up for the next phase of their bull markets that began in 1999 and 2001.

But right now they have reached levels where they need a rest. Gold has traced out a bear flag, Volume is declining, RSI is falling, Rate of change is shrinking. In other words, its painting a picture of your car coughing & sputtering & bucking as it runs out of gas.

Silver looks strong as a horseradish martini, but the 10 month chart is BEGGING for a right shoulder. Nonetheless, silver is knocking at the door of 1600¢ resistance, and its downtrend line from April 2011. Should it break down that gate, it will run, run, run.

No, I am not blowing hot and cold out of both sides of my mouth, like the fellow who threw himself on the mercy of the court after he killed his parents -- because he was an orphan. I expect a correction to materialize soon in silver & gold. Y'all will know I'm wrong as a woman wearing white shoes after Labor Day IF gold closes above $1,287 and silver above 1624¢ -- together.

I wonder if any of you Canadian readers would be kind enough to recommend a reliable silver & gold dealer in Canada? I am often asked, but know no one in particular I can trust.

Seventeen years ago in July my family moved out here into rural -- very rural -- Tennessee. Part of what motivated us was building a Christian community around a church. Mercy, don't think cult. Don't think "retreat" or "giving up," think "renewal" & "preservation" in the midst of an unraveling world, plus all the delights of agrarian life. Some came, some stayed, some left. It's a big change from city living.

We're still here, & so is our little Anglican church. If you think this might be an undertaking for you, email me and I'll send you information about the area. No Wreckers need apply, please.

Once again, thanks for your prayers on my wife Susan's behalf. When I ask her now how her eye is faring, she shoots back, "Fabulous!"

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
18-Mar-16 Price Change % Change
Gold, $/oz 1,253.80 -10.70 -0.8
Silver, $/oz 15.81 -0.22 -1.3
Gold/Silver Ratio 79.324 -0.666 -0.8
Silver/Gold Ratio 0.0126 -0.0002 -1.3
Platinum 970.00 -18.60 -1.9
Palladium 589.60 -7.75 -1.3
S&P 500 2,049.50 8.99 0.4
Dow 17,602.30 120.81 0.7
Dow in GOLD $s 290.21 4.46 1.6
Dow in GOLD oz 14.04 0.22 1.6
Dow in SILVER oz 1,113.65 22.55 2.1
US Dollar Index 95.12 0.32 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: 1,255.20      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,285.32 1,297.25 1,297.25
1/2 AE 0.50 639.64 662.12 1,324.24
1/4 AE 0.25 322.96 337.34 1,349.34
1/10 AE 0.10 131.69 137.44 1,374.44
Aust. 100 corona 0.98 1,222.96 1,231.96 1,256.85
British sovereign 0.24 297.69 310.69 1,319.84
French 20 franc 0.19 236.10 240.10 1,286.04
Krugerrand 1.00 1,266.50 1,276.50 1,276.50
Maple Leaf 1.00 1,265.20 1,279.20 1,279.20
1/2 Maple Leaf 0.50 721.74 658.98 1,317.96
1/4 Maple Leaf 0.25 320.08 335.77 1,343.06
1/10 Maple Leaf 0.10 133.05 136.82 1,368.17
Mexican 50 peso 1.21 1,504.19 1,515.19 1,256.69
.9999 bar 1.00 1,259.59 1,267.20 1,267.20
SPOT SILVER: 15.84      
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 12,541.10 12,827.10 17.94
US 40% silver 1/2s 0.30 4,554.80 4,716.80 15.99
100 oz .999 bar 100.00 1,609.00 1,634.00 16.34
10 oz .999 bar 10.00 159.90 164.90 16.49
1 oz .999 round 1.00 15.94 16.40 16.40
Am Eagle, 200 oz Min 1.00 17.34 18.59 18.59
SPOT PLATINUM: 970.00      
Platinum Platypus 1.00 985.00 1,015.00 1,015.00
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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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