The Moneychanger
Daily Commentary
Thursday, 14 April a.d. 2016 Browse the commentary archive

With all the fury & fervor of an enraged snail, the US dollar index charged ahead today, raking in a massive 15 basis points (0.15%) for a 94.91 close. Not in much of a hurry to pass the 50 DMA, but did close right at the 20 DMA. What happens at 92.55?

Picture now is a falling wedge resolved by breaking out upside, forecasting a move higher. Y'all look for yourselves,

Euro has the same outlook as a June bug turned loose in a roomful of ravenous hens. Fell today 0.12% to $1.1247. Wore out, beat, going lower. Yen has formed a rising wedge, portending a downward move -- already begun. Closed at 91.36, down 0.13%.

Now here's why Franklin doesn't buy stocks. I will just bare my shame. I'm just that much a fool.

Today JPMorgan, Bank of America (same initials as the snake that crushes sheep & then swallows them), & Wells Fargo Bank announced 1 Quarter 2016 revenue & earnings, as well as increases in loan loss reserves for oil patch loans expected to flop four-hooves-skyward before too long. Here are their reports for 1Q2016, versus a year ago.

JPMorgan's revenue sank 13%, earnings sank 7%, and loan loss reserves increased $591 million. BoA's revenue tumbled 7%, earnings dove 13%, and it added $525 million to LLR, bringing them to $1billion. Wells Fargo's revenue rose 4%, but profits fell 5% and it already has $1.7 billion set aside for anticipated losses. PLUS analysts are predicting a rough year for banks.

So what happened? They hit the skids, right? JPM rose 1.29%, BoA rose 2.54%, and the one with the smallest loss, Wells Fargo, sank 0.49%. Wait? Did I fail to mention that the Fed & FDIC issued a report yesterday that these three banks and two others out of the biggest 8 FAILED the so-called living will (liquidation in bankruptcy) test? Shoot, there's another sure reason they ought to rise.

So the bank stocks index ($BKX) did rise though that resistance, and may shoot for the 200 DMA, and the Gold/$BKX spread gapped down today to a new low for the move. Yeah, sure, makes sense to me. Them is mighty fine duds the King's wearing, but ain't they a little skin-colored?

I'm such a nat'ral born durn fool hick from Tennessee that if I had money in any of them there hot banks, too big to fail or not, I'd pull it out so fast it'd leave green stains on the teller's fangers.

Stocks lost enthusiasm today, stretching to stay in the game. Hit their highs about 1:00, but couldn't hold on even to meager advances. Dow ended up 18.15 (0.1%) at 17,926.43; S&P500 rose -- Susan, hand me the magnifying glass! -- there 'tis, 0.36 (0.02%) to 2,082.78.

Stocks are riding on hot air. When it cools all of a sudden, they will sink like Icarus when he flew too close to the sun with them waxed wangs.

Gold lost 1.75% or $21.80 to close Comex at $1,225.00. Silver lost 0.94% or 15.4¢ to 1616.9¢

Now y'all are goin' to think I'm just being stubborn, but I'm not. Gold & silver are testing the mettle & strength of their uptrend. Gold is lagging, but still closed above that $1,225 that so long held it down and spit in its eye. Silver has not even broken below 1600¢, although it fell overnight to 1593¢, but within an hour it had already climbed over 16. Gentle trend of the rest of the day was upward.

Think about that. More people -- lots more people -- want to BUY silver below 1600¢ than want to sell it.

Gold faded most of the day after a 7:00 a.m. Eastern peak at $1,245.90. It was NOT a rout, and around $1,225 sellers vamoosed & buyers took the reins. Gold could close at $1,210 and remain within its channel lines, although it did close below its 20 day ($1,237) moving average and its 50 DMA ($1,231).

Y'all just cool down and be patient. Remember surprises in bull moves come to the UPside.

Me, I'd be buying this dip, not selling it and not freezing my liver with fear.

Adam Hamilton is a skilled and careful analyst. He writes Zeal Intelligence newsletter. Here's a link to his 1 April article, "Silver is Coiled Spring." It presents a very valuable and useful look at silver's personality, why it acts the way it does. While you are there, check out a subscription to Zeal Intelligence.

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
14-Apr-16 Price Change % Change
Gold, $/oz 1,225.00 -21.80 -1.75%
Silver, $/oz 16.17 -0.15 -0.94%
Gold/Silver Ratio 75.762 -0.621 -0.81%
Silver/Gold Ratio 0.0132 0.0001 0.82%
Platinum 992.10 -10.10 -1.01%
Palladium 543.70 18.25 3.47%
S&P 500 2,082.78 0.36 0.02%
Dow 17,926.43 18.15 0.10%
Dow in GOLD $s 302.51 5.59 1.88%
Dow in GOLD oz 14.63 0.27 1.88%
Dow in SILVER oz 1,108.69 11.57 1.05%
US Dollar Index 94.91 0.15 0.16%
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SPOT GOLD: 1,226.50      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,259.62 1,267.59 1,267.59
1/2 AE 0.50 625.01 646.98 1,293.96
1/4 AE 0.25 315.57 329.62 1,318.49
1/10 AE 0.10 128.68 134.30 1,343.02
Aust. 100 corona 0.98 1,196.20 1,205.20 1,229.55
British sovereign 0.24 290.88 303.88 1,290.92
French 20 franc 0.19 230.70 234.70 1,257.12
Krugerrand 1.00 1,235.09 1,245.09 1,245.09
Maple Leaf 1.00 1,236.50 1,250.50 1,250.50
1/2 Maple Leaf 0.50 705.24 643.91 1,287.83
1/4 Maple Leaf 0.25 312.76 328.09 1,312.36
1/10 Maple Leaf 0.10 130.01 133.69 1,336.89
Mexican 50 peso 1.21 1,468.32 1,479.32 1,226.94
.9999 bar 1.00 1,230.79 1,238.50 1,238.50
SPOT SILVER: 16.18      
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 12,212.20 12,532.20 17.53
US 40% silver 1/2s 0.30 4,655.10 4,817.10 16.33
100 oz .999 bar 100.00 1,643.00 1,668.00 16.68
10 oz .999 bar 10.00 163.30 168.30 16.83
1 oz .999 round 1.00 16.28 16.74 16.74
Am Eagle, 200 oz Min 1.00 17.68 18.93 18.93
SPOT PLATINUM: 992.10      
Plat. Platypus 1.00 1,007.10 1,037.10 1,037.10
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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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