The Moneychanger
Daily Commentary
Tuesday, 19 April a.d. 2016 Browse the commentary archive

Stopped scratching my scalp about what silver & gold will do & just dropped my jaw all the way to the counter when I looked at markets this morning early: Silver over 1700¢. I put down my phone and grabbed something out of the icebox. Durn! I thought, that looked like 1704¢. That can't be right.

Oh, yes, it was right, and gold was up over $22.

As of today, silver has climbed 23.2% since 2016 began, and gold has risen 18.2%. Now I'm just a durned ol nat'ral born fool from Tennessee, but when I look at the Dow up 3.6% for the year, and the S&P500 up 2.8%, & the Nasdaq Comp down 1.3%, why, it almost looks to me like silver & gold have been a better investment than stocks. Y'all have pity on a fool: tell me what I'm missing.

Before I leave this topic, look at what the gold stock indices have done since 31 Dec 2015: GDX, + 69.5%; GDXJ, + 82.3%; XAU, + 83.2%; HUI, + 86.4%.

D'y'all ever see those silent movies where the villain ties the heroine to the railroad tracks while the train is jes' a-barreling down on her? Well, that pretty well pictures the US dollar index. It is that close to being run over, and it ain't getting up.

Closed today at 94.03, down another 43 basis points or 46%. Folks is getting' mighty nervous about that 94 level. Last low was 93.62, & 92.50 ought to show some support, but below that it's a clear elevator shaft to 80.

Rub is, the Dollar index broke out of that falling wedge, but bailed & failed at the 20 day moving average. Look,

A day or so of backing up after a breakout is tolerable, but three days, and sinking back below the breakout? Well, it just looks tacky. Betrays a want of breeding, white-trash shamelessness, not to mention puniness abounding.

Euro rose 0.46% to $1.1364. Just proves that the world contains a whole PASSEL of bigger fools than me. Yen dropped 0.34% to 91.60.

Stocks continue to levitate. Dow traced out a graph that looked like the Valley of Fatigue in that old mattress commercial, but never mind: friends stepped into a drowning market around noon and threw it a life preserver. Dow gained 49.44 (0.27% to 18,053.60. S&P500 added 6.46 (0.3%) to 2,100.80.

Dow in Silver hath fallen off the cliff, bounced on the ledge, & fallen again. Today lost 45.6 oz (4.11%) to close at 1,063.73 oz. Behaving like greasy bathtub water when you pull the plug.

Dow in Gold is tamer, down only 1.35% today to 14.39 oz. Just be patient.

At today's Comex close silver was 71.9¢ [sic] or 4.4% higher. No, that ain't a bug on your phone screen, that a 7. Ended at 1696.8¢. Gold popped $19.40 or 1.6% for a $1,253.00 close.

Don't y'all know, if this was clear and easy, everybody would do it, & we'd all be living on the French Riviera, sipping fine wine & smoking $40 seegars. But 'tain't never that clear.

Take gold, for instance.

Today's rise earns respect, and busted through that $1,245 resistance like it was eggshells. However, it hath not exceeded the last ($1,264.70) high, let alone the March $1,287.80 high. With silver gone berserker today, well, gold looks a mite lazy. Slothful. Juberous ("dubious" to you northerners.) Its fundamental as keeping motor oil in a car engine that silver & gold ought not gainsay each other. Okay for a few days, but not long, hence gold must move.

Listen to my words: silver has cleared its downtrend line from the April 2011 high. Broken out. Jumped 4.4% in one day so y'all couldn't miss it. Looky here,

Whoa! Don't miss that surging volume. Can this go on? It ought to reach 1764¢ at least, and before it's all done, 1875¢. I feel crazy saying it, crazier still looking at that overbought MACD, Stochastic, RSI. But when anything breaks out of a channel upward, you can pretty well flip the channel over for a target. In other words, if the channel is 140¢ high, you can add that to the breakout point, and 1625¢ + 140¢ = 1765¢. But all that overbought-ness means y'all have to keep looking around for a quick, sharp correction. I feel like an economist now, cause I am about to say, "On the other hand." OTOH, overbought can get overboughter, and in bull markets surprises come to the Upside.

That Gold/Silver ratio chart bumfuzzles me, too. Look,

First of all, the ratio was trading in an uptrending channel (green lines). It had already walked through its uptrend from the April 2011 low back last August. Even if you adjust that uptrend line, the ratio has still broken down.

Next it formed an even-sided triangle, and collapsed. With gaps, that now look like runaway gaps (but that could be slowing down after that second gap). Target from that triangle measures 72.50, give or take a hundredth. I can measure it another way -- I'm sorry, y'all forgive me, I just have to tell y'all even though I know y'all will laugh at me for a fool -- and get a 65.40 target.

I'll be durned if it don't look like silver is running hotter than gold this year. Did anybody see that coming? Anybody swap gold for silver back when the ratio was 83 instead of today's 73.845? Naw, I ain't never heard sech a thang.

Y'all, it's time to get down off that fence and BUY silver & gold. Not later, NOW.

My brain must have taken a trip to the next county. Ty Bollinger is showing the 9 episodes of his documentary, "Cancer, the Quest for the Cure." Tonight Episode 8 shows at this link at 9:00 p.m. Eastern time. I meant to tell y'all.

Everybody ought to watch this -- everybody. I watched all nine episodes by myself, but Susan and my son Zachariah & his wife literally spent an entire Saturday watching it, and when I got home at 6:30 were just opening episode 9.

Every single one of you ought to watch this, and buy the whole series like Susan and I did.

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
19-Apr-16 Price Change % Change
Gold, $/oz 1,253.00 19.40 1.57%
Silver, $/oz 16.97 0.72 4.42%
Gold/Silver Ratio 73.845 -2.074 -2.73%
Silver/Gold Ratio 0.0135 0.0004 2.81%
Platinum 1,014.00 37.60 3.85%
Palladium 583.20 14.15 2.49%
S&P 500 2,100.80 6.46 0.31%
Dow 18,053.60 49.44 0.27%
Dow in GOLD $s 297.85 -3.86 -1.28%
Dow in GOLD oz 14.41 -0.19 -1.28%
Dow in SILVER oz 1,063.98 -44.04 -3.97%
US Dollar Index 94.03 -0.43 -0.46%
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: 1,250.30      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,286.56 1,292.19 1,292.19
1/2 AE 0.50 637.14 659.53 1,319.07
1/4 AE 0.25 321.69 336.02 1,344.07
1/10 AE 0.10 131.18 136.91 1,369.08
Aust. 100 corona 0.98 1,219.42 1,228.42 1,253.23
British sovereign 0.24 296.53 309.53 1,314.90
French 20 franc 0.19 235.18 239.18 1,281.10
Krugerrand 1.00 1,261.55 1,271.55 1,271.55
Maple Leaf 1.00 1,260.30 1,274.30 1,274.30
1/2 Maple Leaf 0.50 718.92 656.41 1,312.82
1/4 Maple Leaf 0.25 318.83 334.46 1,337.82
1/10 Maple Leaf 0.10 132.53 136.28 1,362.83
Mexican 50 peso 1.21 1,496.81 1,507.81 1,250.57
.9999 bar 1.00 1,254.68 1,262.30 1,262.30
SPOT SILVER: 16.95      
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 12,651.93 12,971.93 18.14
US 40% silver 1/2s 0.30 4,880.78 5,042.78 17.09
100 oz .999 bar 100.00 1,719.50 1,744.50 17.45
10 oz .999 bar 10.00 170.95 175.95 17.60
1 oz .999 round 1.00 17.05 17.51 17.51
Am Eagle, 200 oz Min 1.00 18.45 19.70 19.70
SPOT PLATINUM: 1,014.00      
Plat. Platypus 1.00 1,029.00 1,059.00 1,059.00
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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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