The Moneychanger
Weekly Commentary
Friday, 22 April a.d. 2016 Browse the commentary archive
Here's the weekly scorecard:
  15-Apr-16 22-Apr-16 Change % Change
Silver, cents/oz. 1,630.90 1,689.60 58.70 3.6
Gold, dollars/oz. 1,233.10 1,228.70 -4.40 -0.4
Gold/silver ratio 75.609 72.721 -2.887 -3.8
Silver/gold ratio 0.0132 0.0138 0.0005 4.0
Dow in Gold Dollars (DIG$) 300.04 302.90 2.86 1.0
Dow in gold ounces 14.51 14.65 0.14 1.0
Dow in Silver ounces 1,097.40 1,065.56 -31.83 -2.9
Dow Industrials 17,897.46 18,003.75 106.29 0.6
S&P500 2,080.73 2,091.58 10.85 0.5
US dollar index 94.69 95.08 0.39 0.4
Platinum 988.50 1,010.00 21.50 2.2
Palladium 569.30 607.15 37.85 6.6

This week saw [probably] saw a short term peak in silver & gold. Wow. Even coming back off the peak silver gained 3.6%. Stocks limped and scraped higher. US dollar index turned around. Platinum is running, and palladium is boiling over.

US dollar index cleared the 20 day moving average (94.61) and jumped 51 basis points (0.54%) to 95.08. See the picture at

For the moment, the dollar index has pulled back from the brink of death, but 'twill need to keep climbing to prove its merit. Next ditch across the road is 95.20, then 96.42 (previous high). If the dollar makes it that far, it will face the 98.60 March high.

At stake here is the dollar's future. Can it get through 100 and keep rallying? Yes, of course, the dollar's move will affect gold & silver. However, I think we are approaching the stage where even a rising dollar can't depress metals.

Euro took the occasion of dollar strength to gap down and fall 0.54% to $1.1225. Whatever competition the dollar's going to get for King of the Fiat Currency Dung Heap, it won't be coming from the lame & limping euro. On rumors the Bank of Japan would take interest rates further into negative territory, paying banks to borrow, the yen dove 2.1% to 89.44, an enormous fall. Here's the chart,

Yen today fell down through the rising wedge's bottom boundary. Will probably take a trip all the way down to the 200 DMA (now 84.31).

Oil, taking WTIC as proxy, rose again today. Look at it, It broke out above the downtrend line, ran to the 200 DMA, pulled back to the line, then rose through the 200 DMA & remains there. However, credibility requires it close above 45. Meanwhile it has built a rising wedge that might promise another bloody tumble. Copper has poked its head through a downtrend that began in August 2014, and stands above its 200 DMA. It closed today at $2.27. Any close above $2.25 is hopeful, but still about 65¢ below its long term downtrend line.

Ponder monthly & weekly charts for precious metals. If the trend month over month & week over week is not rising, then the trend is down. Obvious, but easily overlooked.

Behold, gold's weekly chart, Gold broke jumped through the downtrend from the October 2012 high in February. It kept rising, then cleared the top channel boundary that has ruled it since September 2013. Above is the 200 week moving average at $1,327, and higher still, above $1,450, the downtrend from the August 2011 high. It's making progress.

Gold's monthly chart, Also shows a breakout through the downtrend from the October 2012 high, out of a falling wedge. Progress.

Look at silver's weekly, It has broken through the long term downtrend line. Ditto for the monthly,

Today silver fell 19¢ (1.1%) to 1689.6¢. Weaker gold backed down $20.30 (1.63%) to $1,228.70. The gold/silver ratio fell another 0.5% to 72.721. Since 6 April it has fallen 10.8%. Better enjoy it while you can, because it's silver, it's volatile. Here's the ratio chart,

After hitting an (end of day) high in February at 84.38, the ratio formed an even-sided triangle. It gapped down out of that triangle, targeting 72.50, then gapped again & hit 72.44 at the intraday low. First target reached. Next is below 65, but not until after a correction that will reach for 78, maybe only 76. Sure, a gold and silver correction has begun, but I expect it to be short and shallow. This forecast is a work in progress, so don't use it as a rope to swing over hell on.

Y'all look at silver's chart,

Silver hit my short term target, 1765¢, yesterday, breaking into new high ground but closing lower. On the Comex chart silver completed the second half of a key reversal today by closing lower than yesterday. A lower close Monday clinches that beyond all quibble. Silver should find abundant fans and buyers around 1625¢, but might terrorize all of us by falling to 1600¢ - 1585¢, about where it will strike that long term downtrend line.

I speak clearly: silver has only barely begun to rise. Much more time & power is left in this rally. What began today is only a brief intermission to work off a badly overbought state.

Take a look at this gold chart,

Gold has been hugging that uptrend line from the January low, and today put its foot clean through the floor. Also fell through the 20 & 50 day moving averages.

Gold was slung up out of a bowl, marched ahead strongly, then mired down in mud up to the axle. Needs to work off this pessimism by scaring all the natives. A close around $1,200 ought to do that, and about the time they're all shriekin' & scurryin', gold will turn 'round. Don't get rattled, it's okay. Markets correct, especially after strong advances. Again, I expect this correction will not hang around long, so you bargain hunters get ready to run down into the basement and buy, buy, buy. Whatever low this correction shows, that will be the last trading at that price, and then gold will scoot for the moon.

In June 1991, nearly 25 years ago, I interviewed John Exter, one time central banker & one of the greatest gold bugs of the 20th century. Re-reading that interview today, I was struck by his amazing prescience. You can find the article, "Simplex Munditiis," at Note carefully what he has to say about a debt collapse.

Never judge by appearances, or by newspapers. On 22 April 1861 Gen'l. Robert E Lee was named commander of Virginia Forces. He was defeated at the Battle of Cheat Mountain & took the blame for everything that went wrong. Newspapers called him "Granny Lee." He had long served as an engineer in the US Army, so was sent to build costal defenses in the Carolinas and Georgia. When he was transferred back to Richmond, newspapers scorned him as the "King of Spades" for building so many trenches. He did not assume command of the Army of Northern Virginia until 1 June 1862 when Gen'l Johnston was wounded at Seven Pines. After he wrecked Union General McClellan's nerves in the Seven Days Battle, they never called him Granny Lee again.

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
22-Apr-16 Price Change % Change
Gold, $/oz 1,228.70 -20.30 -1.6
Silver, $/oz 16.90 -0.19 -1.1
Gold/Silver Ratio 72.721 -1.193 -1.6
Silver/Gold Ratio 0.0138 -0.0002 -1.1
Platinum 1,010.00 -20.60 -2.0
Palladium 607.15 -3.85 -0.6
S&P 500 2,091.58 0.01 0.0
Dow 18,003.75 21.23 0.1
Dow in GOLD $s 302.90 5.31 1.8
Dow in GOLD oz 14.65 0.26 1.8
Dow in SILVER oz 1,065.56 13.09 1.2
US Dollar Index 95.08 0.51 0.5
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SPOT GOLD: 1,233.30      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,269.07 1,274.62 1,274.62
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French 20 franc 0.19 231.98 235.98 1,263.97
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Maple Leaf 1.00 1,243.30 1,257.30 1,257.30
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SILVER Fine Tr.Oz. BID ASK $/oz
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VG+ Peace dollar 0.77 17.50 20.00 26.14
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US 40% silver 1/2s 0.30 4,888.15 5,050.15 17.12
100 oz .999 bar 100.00 1,722.00 1,747.00 17.47
10 oz .999 bar 10.00 171.20 176.20 17.62
1 oz .999 round 1.00 17.07 17.53 17.53
Am Eagle, 200 oz Min 1.00 18.47 19.72 19.72
SPOT PLATINUM: 1,010.00      
Platinum Platypus 1.00 1,025.00 1,055.00 1,055.00
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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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