The Moneychanger
Weekly Commentary
Friday, 8 April a.d. 2016 Browse the commentary archive
Here's the weekly scorecard:
  1-Apr-16 8-Apr-16 Change % Change
Silver, cents/oz. 1,504.20 1,538.20 34.00 2.3
Gold, dollars/oz. 1,222.20 1,242.50 20.30 1.7
Gold/silver ratio 81.252 80.776 -0.476 -0.6
Silver/gold ratio 0.0123 0.0124 0.0001 0.6
Dow in Gold Dollars (DIG$) 300.94 292.43 -8.51 -2.8
Dow in gold ounces 14.56 14.15 -0.41 -2.8
Dow in Silver ounces 1,182.87 1,142.70 -40.17 -3.4
Dow Industrials 17,792.75 17,576.96 -215.79 -1.2
S&P500 2,072.78 2,047.60 -25.18 -1.2
US dollar index 94.62 94.22 -0.40 -0.4
Platinum 953.60 967.50 13.90 1.5
Palladium 561.80 540.15 -21.65 -3.9

Bad week for stocks, good week for metals, rotten week for the US dollar index. I have now reached the point where I am no longer certain that silver & gold will make any deeper correction.

Stocks have rolled over & are within a gnat's eyelash or falling through the 20 day moving average (17,543). Dow somehow clawed in 35 points (0.2%) to close at 17,576.96, but only after falling steadily all the day long until finally it fell under unchanged. In the last 24 minutes of trading, the Dow climbed out of loss-land to end the day and week "Up", useless as it was to anything but putting lipstick on a pig. S&P500 added 5.69 (0.28%) to 2,047.60. Here are the charts, and

"Why do I suspect thee? Let me count the ways." First the chart went into a rising wedge, walked out of the wedge, then rolled over in lower highs and lower lows. MACD indicator has turned down, RSI points down, and the Volatility Index ($VIX) has bottomed and begun to rise, leaving behind its 20 DMA. Chart's at

The volatility index, I remind y'all, measures the investor Fear Factor from Smug to Terror-stricken. Low readings are smug, high readings are Terror-stricken. Vix made its low (Smug maximized) on 1 April. Once Smug hits the lower boundary, the VIX tends to rocket toward Terror-stricken in 2-3 weeks, maybe a little longer. But don't pay me no mind. I ain't nothing but a nat'ral born durned fool from Tennessee living on a gravel road in the woods.

A moving average takes the last price of a number of days and averages them. Next day it drops the oldest price and picks up the next day's price, so it smooths out the fluctuations of daily trading. The 20 day moving average is the first tripwire of a change of direction It sounds the alarm that the market may be turning around.

Today the Dow in Gold crossed below its 20 DMA, and the Dow in Silver at 1,142.55 oz stands only 2 oz about its 20 DMA at 1,140.28.

What does that mean? That the DiG & DiS are confirming a downturn in stocks.

I'm starting to worry about the poor old scrofulous, scurvy US dollar index. Looks puking sick, sick as a dog eating pizened meat. Look for yourself,

We've been watching the downtrend line from the March 2015 high, and today the Dollar Index finally closed below that line, after sliding down it for six days. Now this does not break it's back ("is not dispositive", as the lawyers would say), but it shore do look bad. Critical breakpoint here is 92.50. Below that the dollar index will sink like your wife's engagement ring down the garbage disposal while it's running.

Silver rose a percent and a half today (22.6¢) to 1538.2¢ at Comex close while gold added half a percent ($6.30) to $1,242.50.

Despite the gains, daily charts look directionless, or at least, not impulsively upward. Gold today closed right at resistance, call it $1,240 - $1,245. Thing about resistance is, it's like that other thing that you either are or you're not. No "partially breaking through resistance," you either punch through or you fail. Gold failed. That doesn't promise it won't come back Monday & succeed, but it didn't today.

Still holding gold up is the uptrend line from the January low, now running with the 50 DMA. So gold persistently refuses to break lower, but at the same breath refuses to clear $1,245. When the stalemate breaks, it's liable to shoot a long ways, either direction.

I keep telling y'all time is running out for lower gold and silver, since I expect the correction mood will leave them by 15 April. May have already.

Gold silver ratio fell one percent from its high for the move yesterday at 81.565 to 80.776 today. Says something, but don't say it very loud. Would be more encouraging to see it fall through the 20 DMA at 80.37.

Silver chart is here,

Unlike gold, silver did not hold that uptrend line from the January low, but it also didn't break down. Low so far has been 1478¢, enough to satisfy me. Silver must polevault over 1600¢ before it proves anything. Before that it must hurdle 1550¢.

I am no longer persuaded that silver & gold will move lower. With every day that likelihood dwindles. If the US dollar falls through the open manhole at 92.50, silver & gold will soar.

On this day in 1873 Alfred Paraf patented the first successful oleomargarine. He had shortened his name from "Paraffin," but for marketing reasons did not name the product after himself.

Anybody who believes that oleomargarine is a substitute for butter deserves hardening of the arteries.

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
8-Apr-16 Price Change % Change
Gold, $/oz 1,242.50 6.30 0.5
Silver, $/oz 15.38 0.23 1.5
Gold/Silver Ratio 80.776 0.398 0.5
Silver/Gold Ratio 0.0124 0.0002 1.5
Platinum 967.50 13.70 1.4
Palladium 540.15 4.85 0.9
S&P 500 2,047.60 5.69 0.3
Dow 17,576.96 35.00 0.2
Dow in GOLD $s 292.43 -0.87 -0.3
Dow in GOLD oz 14.15 -0.04 -0.3
Dow in SILVER oz 1,142.70 -14.73 -1.3
US Dollar Index 94.22 -0.28 -0.3
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SPOT GOLD: 1,242.50      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,276.05 1,284.12 1,284.12
1/2 AE 0.50 633.17 655.42 1,310.84
1/4 AE 0.25 319.69 333.92 1,335.69
1/10 AE 0.10 130.36 136.05 1,360.54
Aust. 100 corona 0.98 1,211.81 1,220.81 1,245.47
British sovereign 0.24 294.68 307.68 1,307.04
French 20 franc 0.19 233.71 237.71 1,273.24
Krugerrand 1.00 1,252.44 1,262.44 1,262.44
Maple Leaf 1.00 1,252.50 1,266.50 1,266.50
1/2 Maple Leaf 0.50 714.44 652.31 1,304.63
1/4 Maple Leaf 0.25 316.84 332.37 1,329.48
1/10 Maple Leaf 0.10 131.71 135.43 1,354.33
Mexican 50 peso 1.21 1,487.47 1,498.47 1,242.82
.9999 bar 1.00 1,246.85 1,254.50 1,254.50
SPOT SILVER: 15.36      
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 11,804.65 12,164.65 17.01
US 40% silver 1/2s 0.30 4,413.20 4,575.20 15.51
100 oz .999 bar 100.00 1,561.00 1,586.00 15.86
10 oz .999 bar 10.00 155.10 160.10 16.01
1 oz .999 round 1.00 15.46 15.92 15.92
Am Eagle, 200 oz Min 1.00 16.86 18.11 18.11
SPOT PLATINUM: 967.50      
Platinum Platypus 1.00 982.50 1,012.50 1,012.50
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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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