The Moneychanger
Weekly Commentary
Friday, 29 April a.d. 2016 Browse the commentary archive
Here's the weekly scorecard:
  22-Apr-16 29-Apr-16 Change % Change
Silver, cents/oz. 1,689.60 1,778.90 89.30 5.3
Gold, dollars/oz. 1,228.70 1,289.20 60.50 4.9
Gold/silver ratio 72.721 72.472 -0.250 -0.3
Silver/gold ratio 0.0138 0.0138 0.0000 0.3
Dow in Gold Dollars (DIG$) 302.90 284.99 -17.90 -5.9
Dow in gold ounces 14.65 13.79 -0.87 -5.9
Dow in Silver ounces 1,065.56 999.14 -66.43 -6.2
Dow Industrials 18,003.75 17,773.64 -230.11 -1.3
S&P500 2,091.58 2,065.30 -26.28 -1.3
US dollar index 95.08 93.03 -2.05 -2.2
Platinum 1,010.00 1,077.90 67.90 6.7
Palladium 607.15 627.90 20.75 3.4

Friday I had to leave early to take my dear wife Susan on a camping trip with one of our sons and his family, so I am sending this out Saturday, & 'twill be short & sweet.

This week came the last straw on the camels' backs. For stocks, it was down, the death of their rally, the proof of their bear market. For silver & gold, it was an upside breakout that will carry gold toward $1,400 and silver toward 1850¢. The dollar is puking sick. Lost 2.05% this week. Close below 92.50 sends it tumbling toward 80.

Take the US dollar index first, for backdrop.

Mid-April it broke out of a falling wedge, so should have rallied. Didn't. Went sideways instead, still trading near the bottom of its year long 100 - 92.50 range. Then Kuroda of the Bank of Japan announced this week they weren't taking interest rates further negative, which markets interpreted same as a rate rise. All that speculative hope that the Fed would raise rates just melted like nasty margarine on a July table. Dollar plunged through the bottom of its short term trading range, through the downtrend line from last May, which had supported it, & closed lower than the low of the falling wedge, negating that breakout utterly.

Dollar's credibility for the next few years hangs in the balance. Closed Friday at 93.03, down 70 basis points on top of 69 lost Thursday. Low Friday was 92.97. If the dollar index breaks 92.50, there is no coming back.

This turmoil has taken the yen sharply higher. I cannot naively believe that the Fed knew nothing of Japanese intentions, nay, I always assume all central bank criminals collude. This might mean (this is all guesswork on my part, no claim to inside information, messages from outer space, etc.) that the Japanese and Fed have struck a deal to let the dollar drop for a while.

After a rotten egg day Thursday pasting the Dow with a 211 point drop (1.17%), it dropped another 57.12 (0.32%) Friday to 17,773.64. Chart shows that however you want to slice it, Dow has broken down, confirming Thursday and Friday with solid consecutive closes below its 20 DMA. Dow lost 19.34 (0.92%) Thursday, and another 10.51 (0.51%) Friday leaving it at 2,065.30. Both indices have fractured, broken down. Transmission is lying on the asphalt. Can move, but only rolling downhill, and will gain momentum.

Dow in gold lost 2.38% Friday, closed at 13.73 oz. Fell through uptrend line from the 2011 low, again. Upward correction that began in February has ended, next large move is earthward & toward the earth's core.

Dow in silver closed just a gnat's whisker above the February 991.46 low, namely, 993.50 oz. Will plunge further as stocks drop & silver surges.

Friday gold pole-vaulted all resistance, up $23.70 (1.87%) to $1,289.20. Silver high jumped 23.6 (1.52%) to 1778.9¢, and I am now plumb out of field & track metaphors.

For the week Gold surged 4.9% and silver 5.3%. Best week in a long, long time.

Gold has now cleared clean every hurdle but 2015's high at $1,307.80. However, this surge promises much more, a run to $1,350 at least, maybe $1,400 before it pauses.

Please, y'all, go look at gold's chart:

Add up what gold has won: It stands above its 200 day moving average, and not merely above but has stayed above since February, which hasn't happened since 2012 & 2014, but with this difference: then it poked its head through the 200, peaked, and wore down. In 2016 it punched sharply, hugely up and continues to climb. Whoops, I forgot: gold also stands above the downtrend from the 2012 high. And it broke upward out of a bowl in January. All this proves that the December lows were THE lows for the post-2011 correction.

Friday it closed above the March intraday high ($1,287.80) and hit a new intraday high at $1,299.00 Next week it should conquer $1,307.80.

Gold has broken out upside -- but not yet conquered the post-2011 downtrend line -- on its weekly and monthly charts. 200 week MA is at $1,325.40. Gold will flash very bright omens when it closes above that. Bear in mind silver this week BROKE OUT HEAVENWARD on its monthly chart & stands above its 200 WMA. On the weekly, silver has broken through the post-2011 downtrend line, the Big One.

Y'all look at the silver chart, too,

Silver's chart, at first glance, doesn't argue for new highs like gold's. Maybe Friday's close above the upper range boundary was just a throwover. Look how overbought that RSI is! Not to Mention the MACD.

Yep, but volume is rising, and overbought can get overboughter. It appears that after silver tugging and pulling gold higher, gold will now return the favor and tug silver up toward 1850¢.

What would put the stick in their spokes? What will gainsay my expectation of higher highs? A price collapse on Monday. A severe decline, and I don't mean merely backing off $10 for gold, I mean closing below $1,287 AND dropping further. Sharp down move.

That is NOT what I expect to see. Gold has $1,308 in this move, and much more. And this rally should carry into June.

But then, what in the world do I know? Nothing. I ain't no more'n a nat'ral born durned fool from Tennessee who don't know that "stock broker" don't mean "you bought stocks so you are broker than I am -- You are STOCK BROKER!"

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
29-Apr-16 Price Change % Change
Gold, $/oz 1,289.20 23.70 1.9
Silver, $/oz 17.79 0.27 1.5
Gold/Silver Ratio 72.472 1.322 1.9
Silver/Gold Ratio 0.0138 0.0002 1.5
Platinum 1,077.90 29.00 2.8
Palladium 627.90 3.30 0.5
S&P 500 2,065.30 -10.51 -0.5
Dow 17,773.64 -57.12 -0.3
Dow in GOLD $s 284.99 -6.24 -2.1
Dow in GOLD oz 13.79 -0.30 -2.1
Dow in SILVER oz 999.14 -18.48 -1.8
US Dollar Index 93.03 -0.70 -0.7
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SPOT GOLD: 1,292.90      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,330.39 1,336.21 1,336.21
1/2 AE 0.50 658.87 682.00 1,364.01
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British sovereign 0.24 306.63 319.63 1,357.82
French 20 franc 0.19 243.19 247.19 1,324.02
Krugerrand 1.00 1,304.54 1,314.54 1,314.54
Maple Leaf 1.00 1,302.90 1,316.90 1,316.90
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Mexican 50 peso 1.21 1,547.81 1,558.81 1,292.87
.9999 bar 1.00 1,297.43 1,304.90 1,304.90
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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 13,295.43 13,580.43 18.99
US 40% silver 1/2s 0.30 5,146.28 5,308.28 17.99
100 oz .999 bar 100.00 1,809.50 1,834.50 18.35
10 oz .999 bar 10.00 179.95 184.95 18.50
1 oz .999 round 1.00 17.95 18.41 18.41
Am Eagle, 200 oz Min 1.00 19.35 20.60 20.60
SPOT PLATINUM: 1,077.90      
Platinum Platypus 1.00 1,092.90 1,122.90 1,122.90
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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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