The Moneychanger
Weekly Commentary
Friday, 3 January a.d. 2014 Browse the commentary archive
Here's the weekly scorecard:
  27-Dec-13 3-Jan-14 Change % Change
Silver, cents/oz. 2,001.30 2,018.20 16.90 0.8
Gold, dollars/oz. 1,216.10 1,238.40 22.30 1.8
Gold/silver ratio 60.766 61.362 0.596 1.0
Silver/gold ratio 0.0165 0.0163 -0.0002 -1.0
Dow in Gold Dollars (DIG$) 280.11 274.92 -5.18 -1.9
Dow in gold ounces 13.55 13.30 -0.25 -1.9
Dow in Silver ounces 823.39 816.07 -7.31 -0.9
Dow Industrials 16,478.41 16,469.99 -8.42 -0.1
S&P500 1,841.40 1,831.37 -10.03 -0.5
US dollar index 80.50 81.04 0.54 0.7
Platinum 1,376.00 1,411.50 35.50 2.6
Palladium 711.05 730.30 19.25 2.7

For the second week in a row metals are stronger than stocks, & against a rising dollar too. The numbers don't show quite how badly stocks tumbled from their thin market highs before New Year. Dollar this week finally managed to climb & pierce its downtrend line.

Ponder stocks. After a new high on 30 December they've been rolling downhill & gaining momentum. Most indices closed down today slightly, although after a 135 point drop yesterday the Dow dead-cat-bounced up 28.64 (0.17%) to close at 14,469.99. Hard to argue with the scoreboard: that's lower for the week. Likewise the S&P500 lost ground this week, and lost 0.61% today (after losing 16.38 yesterday) to end at 1,831.37.

'Twas a portentous day for the Dow in Silver. Closing at 816.56 oz, it sneaked beneath the 818.86 oz 20 day moving average, dropping 0.67% for the day.

Dow in Gold hovereth yet above its 20 DMA. Closed today 13.31 oz against a 13.23 oz 20 DMA. Both DiG & DiS are flashing reversals by technical indicators. Four days isn't enough to use as a rope for a swing over hell, but it appears that stocks have turned down against metals. Taken together with other indicators, silver & gold are beginning to shine again.

Yesterday the US DOLLAR INDEX only pecked through the wall of its prison below the downtrend line, but today it made good its escape. MACD flashed a buy signal. Dollar might rally to 83 or 83.5.

Today's rally hit euro holders in the incisors with a pipe wrench. Euro gapped down yesterday below its uptrend line, and today closed wretchedly at the bottom of today's range, and below the 20 and 50 DMAs. Trapdoor is open for a fall to the 200 DMA, now $1.3300. Somebody stick a mirror under the yen's nose to see if its still breathing! Fell 0.08% to 95.36 today. Got to its downtrend line and fainted like a 14 year old boy asking his girlfriend to dance. No sunshine there.

Meanwhile good things for gold and silver are popping up all over.

In spite of stocks declines, gold & silver mining stock indices are climbing. XAU climbed over its downtrend line and hit its 50 DMA today after a double bottom in December. GDX pierced its downtrend last week, touched back to kiss goodbye, gapped up yesterday, and backed off a little today. HUI still needs to close above 207, but ended today at 203.49, and has followed the same pattern as the others. These all need but one little jump to confirm a turnaround skyward.

Platinum and palladium are pitching in their fair share, too. Both have shot straight up off mid-December lows to close above 20 & 50 day moving averages. Palladium even stands above its 200 DMA! Generally what's good for the white metals is good for silver & gold, too.

GOLD/SILVER RATIO began trending down 2 December and has fallen ever since. Yesterday it fell sharply through its 50 DMA AND 200 DMA. Bear in mind that because silver & gold move together and silver usually moves faster than gold, the ratio DROPS in rallies. Thus a falling ratio promises very good things for gold & silver. Stochastics, Rate of Change, MACD, RSI all point to a lower ratio.

Silver today gained 8.4 cents to 2018.2. Gold added $13.40 to end at $1,238.40.

This is solid trading, with steady gains every day jumping from resistance to higher resistance. Gold tested the floor at $1,221.30 today, just below yesterday's close, and jumped to the ceiling at $1,239.60, knocking on that $1,240 resistance. Hang on -- this is pretty but won't prove anything until gold climbs above the December $1,267.50 high & 50 DMA ($1,260.56).

Last two days have painted a breakout from a bullish falling wedge with a target of $1,295, where gold shamed itself with failure in November and where another resistance barrier lies. While the possibility of a further slide below June's $1,179.40 low, December lows at $1,186 and $1,181.40 argue for a double bottom with June and a truncation of this downleg. That bounce off the June lows speaks loudest of better things to come.

All indicators have fingers pointing toward the clouds, but first let's see that close through $1,240.

Pause to reflect that the last two days' strength for silver & gold came in the teeth of a strongly rising US dollar (y'all know, the green one with pictures of dead Americans that used to look like money but now looks like Monopoly money).

Silver closed barely above the downtrend on its weekly chart. First time since October. Silver let its toes drop to 1999c today, but reached up for 2033c. Silver is trying to close above its December intraday high at 2029c. Yesterday the high was 2044c, but silver needs to close above there. Resistance always lurks at 2100c, then looms the October high at 2309c.

Friends, indicators and cross markets have not lined up like this for silver and gold for a long, weary while. Too early to call this the turnaround, but only a few confirmations will take us there.

I bought quite a bit a few days ago, but then, I'm a plunger & a natural born fool.

On 3 January 1847 Samuel Colt, the man who did more to promote good manners than any other American inventor, sold his first revolver to the US government.

And just to prove that every invention is not progress & every inventor not benign, on 3 January 1871 Henry W. Bradley patented oleomargarine, thus hardening more arteries than old age and committing a gastronomic crime of heinous proportions. Anyone who thinks that margarine is a replacement for butter either (1) has never tasted butter or (2) has no taste buds.

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
3-Jan-14 Price Change % Change
Gold, $/oz 1,238.40 13.40 1.1
Silver, $/oz 20.18 0.08 0.4
Gold/Silver Ratio 61.362 0.661 1.1
Silver/Gold Ratio 0.0163 0.0001 0.4
Platinum 1,411.50 9.60 0.7
Palladium 730.30 0.95 0.1
S&P 500 1,831.37 -0.61 -0.0
Dow 16,469.99 28.64 0.2
Dow in GOLD $s 274.92 -2.50 -0.9
Dow in GOLD oz 13.30 -0.12 -0.9
Dow in SILVER oz 816.07 -1.99 -0.2
US Dollar Index 81.04 0.33 0.4
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: 1,236.60      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,272.46 1,279.88 1,279.88
1/2 AE 0.50 630.16 652.31 1,304.61
1/4 AE 0.25 328.98 332.34 1,329.35
1/10 AE 0.10 130.97 136.03 1,360.26
Aust. 100 corona 0.98 1,206.05 1,216.05 1,240.62
British sovereign 0.24 292.84 304.84 1,295.00
French 20 franc 0.19 232.60 235.67 1,262.31
Krugerrand 1.00 1,258.86 1,269.86 1,269.86
Maple Leaf 1.00 1,251.60 1,266.60 1,266.60
1/2 Maple Leaf 0.50 711.05 649.22 1,298.43
1/4 Maple Leaf 0.25 315.33 330.79 1,323.16
1/10 Maple Leaf 0.10 131.08 134.79 1,347.89
Mexican 50 peso 1.21 1,480.41 1,493.97 1,239.09
.9999 bar 1.00 1,240.93 1,252.60 1,252.60
SPOT SILVER: 20.11      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 25.00 26.50 34.64
VG+ Peace dollar 0.77 22.00 24.25 31.70
90% silver coin bags 0.72 15,018.58 15,268.58 21.35
US 40% silver 1/2s 0.30 5,739.23 5,889.23 19.96
100 oz .999 bar 100.00 2,000.50 2,060.50 20.61
10 oz .999 bar 10.00 206.05 207.05 20.71
1 oz .999 round 1.00 20.21 20.71 20.71
Am Eagle, 200 oz Min 1.00 21.86 23.11 23.11
SPOT PLATINUM: 1,411.50      
Platinum Platypus 1.00 1,436.50 1,476.50 1,476.50
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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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