The Moneychanger
Weekly Commentary
Friday, 7 April a.d. 2017 Browse the commentary archive
Here's the weekly scorecard:
  31-Mar-17 7-Apr-17 Change % Change
Silver, cents/oz. 1,823.50 1,813.00 -10.50 -0.6
Gold, dollars/oz. 1,247.30 1,254.30 7.00 0.6
Gold/silver ratio 68.401 69.184 0.782 1.1
Silver/gold ratio 0.0146 0.0145 -0.0002 -1.1
Dow in Gold Dollars (DIG$) 342.46 340.44 -2.02 -0.6
Dow in gold ounces 16.57 16.47 -0.10 -0.6
Dow in Silver ounces 1,133.16 1,139.35 6.19 0.5
Dow Industrials 20,663.22 20,656.50 -6.72 -0.0
S&P500 2,362.72 2,355.54 -7.18 -0.3
US dollar index 100.22 101.12 0.90 0.9
Platinum 948.20 959.00 10.80 1.1
Palladium 798.15 803.59 5.44 0.7

'Twas a laboring, toilsome week for silver & gold, with a weird, contradictory finish. Stocks eroded consistently through the week, while the dollar index at last today pushed through its 50 day moving average. Platinum & palladium gained modestly.

Before I charge ahead, how about some results for investment performance from 31 December 2016 thru 31 March 2017? Big winner was palladium, up 16.9%, followed by silver up 14.4%. Gold rose 8.5%, the S&P500 5.5%, Platinum 5.2%, and the Dow Industrials climbed 4.6%. US Dollar Index lost 2.0%.

Stocks tried but simply could not muster the moxie to stay above 20,700. Today the Dow Industrials lost 6.85 (0.03%) for a 20,656.50 close. S&P500 backed up 1.95 or 0.8% to 2,355.54. Here's the S&P500 chart,

Notice that the attempt to cross the barbed wire at the downtrend line was met by machine gun fire that drove the S&P500 ducking back below its 20 DMA. The 20 & 50 DMA are converging, as is the even-sided triangle, & will force stocks to pop out like a minnow squeezed out of both hands. Downtrend from 1 March remains in effect & that alone suggests when that squeezes it will squeeze earthward.

Dow in gold & Dow in silver both appear to have topped, but continue to thwart lower expectations by trading sideways. Charts are here, and here,

US Dollar index cleared 101 resistance and rose 55 basis points (0.54%) to stop at 101.12. I saw some commentators claiming that the dollar's surge through 101 sucked the air out of gold. Chart,

Sorry, I don't buy that. After highs at 1849¢ and $1,273.3 (new high for the move), about 2:30 massive selling hit both silver & gold, the sort of action no profit-maximizing investor would practice, so fingers point at others, even at NGM who might not want to see gold rising while the US bombs Syria, a country we have no business or stake in. But the collapse in silver & gold today doesn't match the dollar index's performance. Somebody sold the dickens out of it about 8:30, driving it to 100.5, but most of the day it simply climbed steadily. It crossed 101 about 12:45, long before gold or silver began falling.

So what's the explanation? Durned if I know, I'm jes a nat'ral born durned fool from Tennessee, & them high muckety-muck traders & Nice Government Men don't tell me nothin'.

After that new high for the move at $1,273.30, gold fell back to close at $1,254.30 on Comex, still up 0.3% or $4.00. And it did that in the teeth of a strong dollar. Hmmmmm. Comex silver reached 1849¢, then fell like a ball bearing off a 20 story building. It caught about the same place it has been catching, 1813¢, down 9.5¢ or 0.5%.

Oddest part of that is that silver has been stronger than gold lately, but today's closes pushed the gold/silver ratio up through the downtrend line & the 200 DMA, but it didn't stay out there. Chart's right here, March's false upside breakout inclines me to conclude that today was a fluke & not a reversal of the ratio's established downward direction.

I keep looking at the weekly & monthly to keep a grip on perspective. On silver's weekly it closed lower this week after three up weeks, but also closed above its 50 & 200 week moving averages. On the monthly chart silver just bumped into the 50 Month MA & perched there. Gold rose on the weekly fourth week in row, & now stands above its 200 week MA but not the 50 week MA. All these charts show upward progress & direction, but both metals are laboring to build momentum to leave these moving averages behind.

Here is gold's daily chart,

Was today's stab up through the 200 DMA the dying gasp of failing inability, or a challenge from a new rally? I say the rally, because gold is building off two higher lows and a higher high, that is, an uptrend already in force.

By the way, I place no stock at all in War Rumor/Unrest rises in gold. Such rumors may raise the price for a day or two, but they evaporate with the crisis, & sometimes in spite of the crisis. A one day jump on a bombing run is never a reason to buy gold. And just when I thought the yankee government couldn't get any stupider, they exceed my lowest expectations by whacking the Syrian hornet's nest. And y'all were expecting better things from Trump?

Glance at the silver chart,

Silver made a new high for the move, then closed lower. That's half No. 1 of a key reversal. However, notice that silver managed to close above its200 DA, just barely. Momentum indicators are looking peaked.

We are left waiting for the same rally proof we have been waiting for: a gold close over $1,265 & a silver close above 1850¢.

When we went to Germany for me to study on a scholarship at the Free University of Berlin in 1972, Susan sporadically kept a diary -- not much, but it was fun transcribing it & remembering this morning. Talk about the innocents abroad, we were green as the hills of Tennessee. When we left for Germany Susan spoke a single word of German: Zwiebel (Onion). You can't have long conversations about onions.

But she went to Berlitz language school & picked German up amazingly fast, with a wonderful, soft Southern accent. Her English was actually plus for the job she found as cashier at American Express in an office overlooking West Berlin's Gedaechtnisplatz. It was the heart of downtown West Berlin & Susan didn't let a minute of shopping go to waste.

Here's another example of governments fouling up the economy. West Berlin had rent controls, so it was almost impossible to find an apartment. Old people & speculators rented all the apartments at the controlled price, then re-let them at substantially higher prices. Our first apartment was only one room & a bathroom & a hotplate & miniature icebox. We always suspected the occupation of the last occupant could be guessed from the choice of paint (red) & the abundance of mirrors around the room. We scooted as soon as we could find a better venue.

Here's another example of communists fouling up everything for everybody. About a month after we arrived leftist students called a strike against the University because they objected to the school-leaving tests -- too much work, I reckon, and socialists are allergic to work. It was violent: one professor jumped out a second story window fleeing a mob. My Spanish teacher sent me postcards twice a week announcing where our next class would meet, I being the only person left attending, shameless strikebreaker that I was. What was most unutterably stupid about this? Right next door in East Germany, with the highest standard of living in the East Bloc, all the failures of communism were spread out to undeniability. Economy was rotten, & they installed electric-eye operated machine guns on the Berlin Wall because the guards couldn't be counted on to shoot every time. If you asked one of these Marxists about that failure, they responded, "Oh, that's not communism! Now in China they have real communism." Right, conveniently half way around the globe where you can't see it. It became plain to me that Marxism/communism/socialism isn't a philosophy, it's a religion.

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
7-Apr-17 Price Change % Change
Gold, $/oz 1,254.30 4.00 0.3
Silver, $/oz 18.13 -0.10 -0.5
Gold/Silver Ratio 69.184 0.224 0.3
Silver/Gold Ratio 0.0145 -0.0001 -0.5
Platinum 959.00 3.30 0.3
Palladium 803.55 -0.40 -0.0
S&P 500 2,355.54 -1.95 -0.1
Dow 20,656.50 -6.85 -0.0
Dow in GOLD $s 340.43 -1.17 -0.3
Dow in GOLD oz 16.47 -0.06 -0.3
Dow in SILVER oz 1,139.35 5.56 0.5
US Dollar Index 101.12 0.55 0.5
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SPOT GOLD: 1,254.20      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,280.54 1,294.96 1,294.96
1/2 AE 0.50 639.13 661.59 1,323.18
1/4 AE 0.25 322.70 336.44 1,345.76
1/10 AE 0.10 129.08 137.08 1,370.84
Aust. 100 corona 0.98 1,220.15 1,229.15 1,253.98
British sovereign 0.24 297.45 310.45 1,318.83
French 20 franc 0.19 234.16 240.16 1,286.34
Krugerrand 1.00 1,265.49 1,275.49 1,275.49
Maple Leaf 1.00 1,264.20 1,277.20 1,277.20
1/2 Maple Leaf 0.50 721.17 658.46 1,316.91
1/4 Maple Leaf 0.25 319.82 335.50 1,341.99
1/10 Maple Leaf 0.10 132.95 136.71 1,367.08
Mexican 50 peso 1.21 1,500.72 1,511.72 1,253.81
.9999 bar 1.00 1,254.20 1,266.20 1,266.20
SPOT SILVER: 18.04      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 22.50 25.25 33.01
VG+ Peace dollar 0.77 15.50 18.00 23.53
90% silver coin bags 0.72 12,541.10 12,898.60 18.04
US 40% silver 1/2s 0.30 5,130.05 5,280.05 17.90
100 oz .999 bar 100.00 1,794.00 1,819.00 18.19
10 oz .999 bar 10.00 181.90 186.90 18.69
1 oz .999 round 1.00 18.29 18.59 18.59
Am Eagle, 200 oz Min 1.00 19.54 20.19 20.19
SPOT PLATINUM: 959.00      
Platinum Platypus 1.00 954.00 999.00 999.00
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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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