The Moneychanger
Weekly Commentary
Friday, 1 April a.d. 2016 Browse the commentary archive
Here's the weekly scorecard:
  24-Mar-16 1-Apr-16 Change % Change
Silver, cents/oz. 1,519.10 1,504.20 -14.90 -1.0
Gold, dollars/oz. 1,221.60 1,222.20 0.60 0.0
Gold/silver ratio 80.416 81.252 0.836 1.0
Silver/gold ratio 0.0124 0.0123 -0.0001 -1.0
Dow in Gold Dollars (DIG$) 296.40 300.94 4.54 1.5
Dow in gold ounces 14.34 14.56 0.22 1.5
Dow in Silver ounces 1,153.03 1,182.87 29.84 2.6
Dow Industrials 17,515.73 17,792.75 277.02 1.6
S&P500 2,035.94 2,072.78 36.84 1.8
US dollar index 96.17 94.62 -1.55 -1.6
Platinum 952.40 953.60 1.20 0.1
Palladium 572.50 561.80 -10.70 -1.9

Before we talk about this week's results, let us ponder results for the First Quarter 2016. Gold rose 16.4%, it's greatest quarterly gain since 1986. Silver added 12.2%, Platinum 9.5%, & Palladium 0.4%. Dow Industrials soared 1.5%, S&P500 0.8%, Dow transports 5.8%, Wilshire 5000 0.3%. Losers were the Russell 2000, down 1.9%, the Nasdaq Composite, down 2.7%, and the Nasdaq 100, down 2.4%. Stock indices outside the US did much worse: Euro Stoxx600, down 7.7%, MSCI World, down 2.7%, Shanghai, down 15.1%, and the Nikkei 225 lower by 12%. Since 2016 opened the US dollar index has lost 4.1%.

THIS WEEK. Silver & gold took a mighty hit today, but finished the week not much changed. Stocks profited from Mother Janet Yellen's spell. Dow grabbed 1.6%, S&P500 1.8%, but the same spell knocked the US dollar index into a trance, down 1.6%. Say, that's coincidental: Dow rose 1.6%, same amount the US dollar index fell. I wonder if stocks are just discounting the dollar's loss. Say, y'all don't think Mother Yellen would do something like that, do you? I mean, pick the pockets of 350 million Americans merely to line the pockets on Wall Street. Naaah.

If I let myself dwell on the colossal corruption in this country, I'd have to lie down and die. Let's think about something else, or we'll let those rotten midgets keep us from all accomplishment & joy. They ain't that important.

TODAY stocks rallied. Dow reached the level of 16 December (roughly), rising 107.66 (.61%) to 17,792.75. S&P500 rose 13.04 (0.63%) to 2,072.78. The partiers at Mother Yellen's ball just ignored that clock striking twelve when Mother Yellen re-filled the punchbowl. With toadstool juice.

Be patient. Stocks have about one more week to run before they step into a manhole.

Here's a chart for the Dow in Gold, http://schrts.co/8Sv0tc and the Dow in Silver, http://schrts.co/ohwLZP

Dow in Gold acts right now as if it will at least reach the 50% correction of the December - February fall, namely, 14.71 oz. At most it might reach the 200 DMA at 15.07 oz.

Dow in Silver, always more volatile, has passed through it 200 DMA (1,150.68). It may reach a 75% correction of the foregoing fall, i.e., about 1,206.72 oz.

Whatever happens, it should happen in a week, perhaps two.

US dollar index stirred a measly 4 basis points today, up to 94.62, shameful for a currency that claims to be first world. Today it upbounced off the downtrend line from the March 2015 high. Penetrating that would be bad juju for the dollar index. Here's a picture, http://schrts.co/jjrq5s

Recall the big picture. Since March 2015 the dollar index has been rangebound between 100 and 92.50. If it breaks above 100, it will launch another rally. If it falls through 92.50, no rally, no future, except more shame and disgrace and sorrow for US dollar holders. Either way, the dollar's course will strongly bear on metals.

Euro rose 0.1% to $1.1393. It is also rangebound, $1.0550 to $1.1500. Current rally hasn't even been able to reach the top boundary yet. Yen jumped over its 20 DMA and rose 0.84% today to 89.58. Why anybody would buy Yen remains a deep mystery to me, since Japan will be declared one gigantic old folks' home in a few years, and the government has a 250% debt to GDP ratio.

Inflation markets have crumpled in the last seven days. Oil fell another 3.9% today to $36.63/bbl (WTIC). Copper has fallen from its $2.32 March high to $2.17 today. CRB commodity index gapped down today and closed 1.46% lower. 'Twill be informative to see how far they correct, that is, whether the bottoms in February will hold.

Silver & gold cleared up my confusion from yesterday -- or did they?

Silver tanked 41.8¢ (2.7%) to close Comex at 1504.2¢. Gold tumbled $12.00 (1%) to $1,222.20.

Clear as air, right? Nope, not clear. Look at the silver chart, http://schrts.co/zsmR7J

Silver broke that green uptrend line I've been talking about the last few days, punched through the 200 DMA (1491¢) like General Forrest punching through yankee cavalry, but then it turned right around and climbed above that 200 DMA. Fell as far as 1478¢, right close to my 1460c target, and already a 50% correction. I'm looking over my shoulder at the calendar now, because this correction shouldn't last longer than a week, maybe two.

Has silver fallen far enough? I don't know, but I do know that any price lower than 1500¢ attracts buyers like free baloney sandwiches attract hoboes. That argues silver won't fall much further.

Here's more smoke over the picture: gold fell off a cliff, from $1,236.20 to $1,209.90, then picked itself up & clawed its way back above $1,220. This is the last in a string of successful defenses of $1,220. Here's the chart,http://schrts.co/mmO0be

Today's fall also appears to have occurred on very low volume. And it never broke the uptrend line from the January low. Coincidentally, that uptrend line is following the 50 DMA (now $1,208.73), a frequent target for bull market corrections.

So 'tain't clear atall. Silver broke but gold didn't, & silver scrambled back over 1500¢. It's getting to where I'm more nervous about waiting to buy than I am fearful of bigger falls.

Almost everybody who calls asks me about Susan's eye, and I deeply appreciate y'all's concern. She tells me it is almost completely healed and only occasionally pains her. I thank y'all again for your prayers.

On 1 April 1572 the Sea Beggars (Water Geuzen) under Guillaume de la Mark landed in Holland & captured Briel. For Dutch patriots fighting to expel the Spanish (world's most powerful empire then), their victory provided the first foothold on land. Eventually they won their independence and founded a Republic, but they had to fight from 1568 until 1648, although by 1609 they had largely won. Still fighting the Spanish at land and sea until 1648, the Republic built one of the world's great commercial empires. Dutch heroism in the first stage of the war, 1566-1609, almost defies belief. They counted their lives as nothing for the freedom of their land. Even the women climbed up on city walls and fought the Spanish hand to hand. Their bravery was matched only by the cruelty of the Spanish, who buried whole villages alive, while the villagers sang psalms.

The Dutch War for Independence makes the American Revolution look almost easy.

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
1-Apr-16 Price Change % Change
Gold, $/oz 1,222.20 -12.00 -1.0
Silver, $/oz 15.04 -0.42 -2.7
Gold/Silver Ratio 81.252 -0.775 -0.9
Silver/Gold Ratio 0.0123 -0.0003 -2.7
Platinum 953.60 -23.00 -2.4
Palladium 561.80 -1.25 -0.2
S&P 500 2,072.78 13.04 0.6
Dow 17,792.75 107.66 0.6
Dow in GOLD $s 300.94 4.76 1.6
Dow in GOLD oz 14.56 0.23 1.6
Dow in SILVER oz 1,182.87 38.95 3.4
US Dollar Index 94.62 0.04 0.0
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: 1,222.50      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,251.84 1,263.45 1,263.45
1/2 AE 0.50 622.97 644.87 1,289.74
1/4 AE 0.25 314.54 328.55 1,314.19
1/10 AE 0.10 128.26 133.86 1,338.64
Aust. 100 corona 0.98 1,191.10 1,200.10 1,224.35
British sovereign 0.24 289.93 302.93 1,286.89
French 20 franc 0.19 229.95 233.95 1,253.09
Krugerrand 1.00 1,233.50 1,243.50 1,243.50
Maple Leaf 1.00 1,232.50 1,246.50 1,246.50
1/2 Maple Leaf 0.50 702.94 641.81 1,283.63
1/4 Maple Leaf 0.25 311.74 327.02 1,308.08
1/10 Maple Leaf 0.10 129.59 133.25 1,332.53
Mexican 50 peso 1.21 1,463.53 1,474.53 1,222.97
.9999 bar 1.00 1,226.78 1,234.50 1,234.50
SPOT SILVER: 15.04      
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 11,611.60 11,971.60 16.74
US 40% silver 1/2s 0.30 4,318.80 4,480.80 15.19
100 oz .999 bar 100.00 1,529.00 1,554.00 15.54
10 oz .999 bar 10.00 151.90 156.90 15.69
1 oz .999 round 1.00 15.14 15.60 15.60
Am Eagle, 200 oz Min 1.00 16.54 17.79 17.79
SPOT PLATINUM: 953.60      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Platinum Platypus 1.00 968.60 998.60 998.60
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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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