The Moneychanger
Weekly Commentary
Friday, 10 January a.d. 2014 Browse the commentary archive
Here's the weekly scorecard:
  3-Jan-14 10-Jan-14 Change % Change
Silver, cents/oz. 2,018.20 2,020.10 1.90 0.1
Gold, dollars/oz. 1,238.40 1,246.70 8.30 0.7
Gold/silver ratio 61.362 61.715 0.353 0.6
Silver/gold ratio 0.0163 0.0162 -0.0001 -0.6
Dow in Gold Dollars (DIG$) 274.92 272.55 -2.38 -0.9
Dow in gold ounces 13.30 13.18 -0.11 -0.9
Dow in Silver ounces 816.07 813.68 -2.40 -0.3
Dow Industrials 16,469.99 16,437.05 -32.94 -0.2
S&P500 1,831.37 1,842.37 11.00 0.6
US dollar index 81.04 80.75 -0.29 -0.4
Platinum 1,411.50 1,434.70 23.20 1.6
Palladium 730.30 745.15 14.85 2.0

For the third week in a row metals are stronger than stocks, & against a rising dollar too. Silver & gold came back growling this week, stocks are confused, white metals are up, and the US dollar index fainted again today.

Stock indices inauspiciously gainsaid one other today. Day started out with a very bad jobs report that drove stocks down. Oddly, investors discounted that & stocks ended higher. Normally when a market doesn't react to bad news, or moves up rather than falls, it signals great strength. But how does that explain the Dow, the senior, blue chip stock index, FALLING today when all the other indices rose? That disharmony augurs something not quite right underneath. Looking at the chart, the Dow remains in a downtrend begun on 31 December and is closing in on its 20 Dma (16,286) & its uptrend line. It lost 7.71 today (0.05%) to close 16,437.05. S&P500 added 4.24 (0.23%) to 1,842.37. Day's range cut into the uptrend line, but it closed above it. However, it still has painted a downtrend on the chart. 20 DMA stands below at 1,821.85.

Might as well tell y'all I expect great sorrow, weeping, and gnashing of teeth for stock investors this year. More I study charts, more I expect that.

Meanwhile the US dollar index, apparently in expectation of less "taper" (or is it "tapir") fell, as did the yield on the 10 year treasury note (bond prices rose). Let's see, stocks rose & bonds rose. I reckon I'm too country to cipher that out, but after a break out that's very weak performance.

However, a noteworthy difference shows in the Dow in Gold & Dow in Silver.

Both broke down through their 20 DMAS (825.85 oz & 13.36 oz), and through their short term uptrend lines. DiG lost 1.78% to 13.17 oz ($$275.25 gold dollars). DiS backed down 3.15% (whew!) to 815.33 oz. These indicators usually show the turn of metals against stocks very reliably, so we want them to lead or concur with silver & gold prices.

After being knocked back from the $1,250 level a few days ago, gold darted right back to the line today, rising $17.40(1.4%) to $1,246.70. From that position next week gold can challenge $1,250 and the most significant hurdle, $1,267.50, the December high. Gold closed mere dollars & cents from its 50 DMA at $1,249.

So take stock: gold has an established uptrend, is above its 20 DMA & knocking on its 50 DMA. Momentum indicators are all strong, & related markets (gold equity indices) are firming or showing double bottoms. The Dow in Gold is falling, pointing to gold strength. And the weekly chart has risen three weeks running. All good.

Listen, y'all, bull markets always climb a wall of worry -- can it get through the next level? And the next? It's too early to call the December lows a double bottom with June, other than as an operating assumption, but if gold can o'erleap $1,267.50, then $1,361.80, the bottom has been seen.

Silver far outshone gold today, rising 2.7% (53.8 cents) to 2020.1. Yea, how comforting to see gold above the 2000 cent line! And silver cut into but did not cross over its 50 DMA (2021c), and closed right on it.

Silver shows a double bottom in December, which also pairs with the June lows. Internal indicators are all positive. What else do you want?

Well, a close above the last high at 2044c, then a quick rise through 2100c resistance, followed by a speedy rise above the October 2309.5c high. Is that plain enough?

Unless silver closes below 1940 cents & gold below $1,195, I am working on the assumption that they have put a bottom unto the long 2011-2013 correction.

On 9 January 1861 Mississippi seceded from the Union. On 10 January Florida and on 11 January Alabama seceded. South Carolina had already seceded on 20 December, and Georgia & Louisiana would follow on 11 & 19 January. Texas left 1 February, Virginia 17 April, Arkansas 6 May, North Carolina 20 May, but Tennessee didn't leave until 8 June 1861. The states of the upper South were driven to secede by Lincoln's call for troops to invade the seceding states.

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
10-Jan-14 Price Change % Change
Gold, $/oz 1,246.70 17.40 1.4
Silver, $/oz 20.20 0.54 2.7
Gold/Silver Ratio 61.715 0.845 1.4
Silver/Gold Ratio 0.0162 0.0004 2.7
Platinum 1,434.50 17.00 1.2
Palladium 745.15 9.55 1.3
S&P 500 1,842.37 4.24 0.2
Dow 16,437.05 -7.71 -0.0
Dow in GOLD $s 272.55 -3.96 -1.4
Dow in GOLD oz 13.18 -0.19 -1.4
Dow in SILVER oz 813.68 -22.66 -2.7
US Dollar Index 80.75 -0.32 -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: 1,246.10      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,282.86 1,289.71 1,289.71
1/2 AE 0.50 635.00 657.32 1,314.64
1/4 AE 0.25 331.51 334.89 1,339.56
1/10 AE 0.10 131.98 137.07 1,370.71
Aust. 100 corona 0.98 1,215.32 1,225.32 1,250.07
British sovereign 0.24 295.09 307.09 1,304.55
French 20 franc 0.19 234.39 237.45 1,271.81
Krugerrand 1.00 1,268.53 1,279.53 1,279.53
Maple Leaf 1.00 1,261.10 1,276.10 1,276.10
1/2 Maple Leaf 0.50 716.51 654.20 1,308.41
1/4 Maple Leaf 0.25 317.76 333.33 1,333.33
1/10 Maple Leaf 0.10 132.09 135.82 1,358.25
Mexican 50 peso 1.21 1,490.28 1,505.42 1,248.59
.9999 bar 1.00 1,250.46 1,262.10 1,262.10
SPOT SILVER: 20.10      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 22.50 25.00 32.68
VG+ Peace dollar 0.77 19.50 22.00 28.76
90% silver coin bags 0.72 15,118.68 15,368.68 21.49
US 40% silver 1/2s 0.30 5,736.28 5,886.28 19.95
100 oz .999 bar 100.00 1,999.50 2,094.50 20.95
10 oz .999 bar 10.00 205.95 206.95 20.70
1 oz .999 round 1.00 20.20 20.70 20.70
Am Eagle, 200 oz Min 1.00 21.85 23.10 23.10
SPOT PLATINUM: 1,434.50      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Platinum Platypus 1.00 1,459.50 1,499.50 1,499.50
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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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