The Moneychanger
Daily Commentary
Monday, 13 January a.d. 2014 Browse the commentary archive

I reckon every dog has his day, or every day has its dogs, or all dogs have fleas, or something. Anyway, it began happening today.

Correct me if I'm wrong, but I believe I've been warning y'all that the 31 December stock high marked a downtrend's beginning. Today starkly demonstrated that.

Dow unloaded 179.11 or 1.09% to 16,257.94. S&P500 chiseled off 23.17 (1.26%) to 1,819.20. It gets worse. Both closed below their 20 day moving averages (16,312 & 1,824), & both fractured their uptrend lines. Next target, next possible support, comes at the 50 DMA, 16,048.87 & 1,801. Well, the last highs at 16,174.51 & 1,813.55 might offer some support, but not much. More pain: MACD flashed a sell signal three days past, and the Rate of Change has turned negative. All that points like a flashing neon sign to lower prices.

Dollar index tumbled today, too, down 15 basis points or 0.19% to 80.60. Owch, that sneaked under the 50 dma (80.66) & 20 DMA. But here's a surprise, I have something good to say about the US dollar. Well, not really about the US dollar, I have nothing good to say about the World's Trashiest White Trash currency, but technically it broke out, rose, then has fallen back to the same downtrend line it broke on the way up. 20 & 50 DMAs happen to coincide about the same place. Other indicators aren't raging positive, but not really negative, either. Short of this is that I expect the dollar to continue the rally begun mid-December.

After hitting and breaking its uptrend line & 50 DMA five days ago, the Euro has rallied back to its 20 DMA, beginning to fill the gap left behind when it fell so badly as the year began. Might fill a bit more of that gap, but gravity's pull is taking over. Closed +0.02% at $1.3673.

Yen closed Friday above its 20 DMA and gapped up today, signaling some sort of rally. Whether it can beat the roadblock at the 50 DMA (97.93) remains to be seen. Yen is truly schizophrenic. Closed up 1.08% at 97.04 cents per Y100.

I have been holding back and savoring gold & silver's showing today. Silver remained above 2000c and gained another 16 cents to close Comex at 2036.1c. Gold gained $4.20 to $1,250.90.

Gold first. Today's close not only places gold above the $1,250 resistance, but also & more importantly throws gold's leg over the 50 DMA (1,247.54).

Something else I've been holding out on y'all, waiting to see it unfold. Gold has formed an upside down head & shoulders, but must stay above the shoulder line about $1,210. See chart here, look at the blue dashed line.

Today's close remains equivocal. The real goal is that last high at $1,267.50, but surmounting the 50 DMA is a mighty boost.

SILVER also closed above its 50 DMA (2017c) & has set its sights on resistance at 2100c. But first, there remain the December twin peaks at 2048c & 2044c. Silver might take those out tomorrow.

All other indicators point skyward. Best & biggest news cometh from the gold stock indices. GDX & HUI broke out above resistance. XAU closed plumb on resistance. Today all closed above their 50 DMAs.

Then there are the Dow in Gold and Dow in Silver. Oh, tumble, stumble, bumble! Dow in Gold dropped 1.3% to 12.99 oz (G$268.53 gold $s), inches away from the 50 DMA which is running along the bottom trading channel line. Break through 12.88 would be headline big news.

Dow in silver plunged 2.18% to 797.54, virtually on top of its 797.25 50 DMA. Bottom channel line is only inches below. For both the DiG & DiS, all indicators point DOWN, the way we want.

Silver & gold need only add one last confirmation by climbing past those December lows. This is the best outlook for silver & gold I've seen in a year.

On 13 January 1607 the Bank of Genoa failed after the Spanish government announced national bankruptcy. Odd, doesn't Spain have some solvency problems today, too? As the French say, the more this changes, the more it stays the same thing.

On 13 January 1893 US Marines landed in Honolulu to force the queen to accept the Bayonet Constitution. The more this changes . . .

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
13-Jan-14 Price Change % Change
Gold, $/oz 1,250.90 4.20 0.34%
Silver, $/oz 20.36 0.16 0.79%
Gold/Silver Ratio 61.436 -0.279 -0.45%
Silver/Gold Ratio 0.0163 0.0001 0.45%
Platinum 1,441.90 5.50 0.38%
Palladium 739.10 -1.80 -0.24%
S&P 500 1,819.20 -23.17 -1.26%
Dow 16,257.94 -179.11 -1.09%
Dow in GOLD $s 268.67 -3.87 -1.42%
Dow in GOLD oz 13.00 -0.19 -1.42%
Dow in SILVER oz 798.48 -15.19 -1.87%
US Dollar Index 80.75 -0.32 -0.39%
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: 1,252.20      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,289.14 1,296.03 1,296.03
1/2 AE 0.50 638.11 660.54 1,321.07
1/4 AE 0.25 333.13 336.53 1,346.12
1/10 AE 0.10 132.63 137.74 1,377.42
Aust. 100 corona 0.98 1,221.27 1,231.27 1,256.14
British sovereign 0.24 296.54 308.54 1,310.69
French 20 franc 0.19 235.54 238.59 1,277.91
Krugerrand 1.00 1,274.74 1,285.74 1,285.74
Maple Leaf 1.00 1,267.20 1,282.20 1,282.20
1/2 Maple Leaf 0.50 720.02 657.41 1,314.81
1/4 Maple Leaf 0.25 319.31 334.96 1,339.85
1/10 Maple Leaf 0.10 132.73 136.49 1,364.90
Mexican 50 peso 1.21 1,497.58 1,512.78 1,254.69
.9999 bar 1.00 1,256.58 1,268.20 1,268.20
SPOT SILVER: 20.38      
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 15,318.88 15,568.88 21.77
US 40% silver 1/2s 0.30 5,818.88 5,968.88 20.23
100 oz .999 bar 100.00 2,027.50 2,122.50 21.23
10 oz .999 bar 10.00 208.75 209.75 20.98
1 oz .999 round 1.00 20.48 20.98 20.98
Am Eagle, 200 oz Min 1.00 22.13 23.38 23.38
SPOT PLATINUM: 1,441.90      
Plat. Platypus 1.00 1,466.90 1,506.90 1,506.90
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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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