The Moneychanger
Weekly Commentary
Friday, 17 January a.d. 2014 Browse the commentary archive
Here's the weekly scorecard:
  10-Jan-14 17-Jan-14 Change % Change
Silver, cents/oz. 2,020.10 2,026.70 6.60 0.3
Gold, dollars/oz. 1,246.70 1,251.70 5.00 0.4
Gold/silver ratio 61.715 61.760 0.046 0.1
Silver/gold ratio 0.0162 0.0162 -0.0000 -0.1
Dow in Gold Dollars (DIG$) 272.55 271.81 -0.73 -0.3
Dow in gold ounces 13.18 13.15 -0.04 -0.3
Dow in Silver ounces 813.68 812.09 -1.59 -0.2
Dow Industrials 16,437.05 16,458.56 21.51 0.1
S&P500 1,842.37 1,838.69 -3.68 -0.2
US dollar index 80.75 81.37 0.62 0.8
Platinum 1,434.70 1,452.60 17.90 1.2
Palladium 745.15 747.65 2.50 0.3

Well, this IS interesting. This was a down week for the S&P500 but not for the Dow. It was the fourth UP week in a row for gold, and 3 out of 4 for silver. White metals rose this week, too, while the dollar finally made up its mind to climb.

Stocks remain bewildered & squabbling with each other. All indices but the Dow fell today (the "Invisible Hand" of the NGM, painting the tape with the most widely followed index? Real or Memorex?). Dow inched up 41.55 (0.25%) to 16,458.56 but the S&P500 said "No" and stumbled 7.2 (0.4%) to 1,838.69.

Maybe I'm prejudiced -- everybody is -- but this looks weak. Then add a falling Relative Strength Index and the MACD on a sell signal. Rate of change is below zero (negative) for both indices. All these witness that momentum -- the line of least resistance -- is down. Still, I will admit this remains somewhat equivocal. Stocks might jump Monday to new highs, nixing my interpretation. But both are poised to fall through their 20 DMAs, and with all those other negatives weighing them down, I expect Monday to be a rough day for stock bulls.

I watch the Dow in Gold and Dow in Silver because sometimes turns in these precede outright turns in gold or silver, or coincide and confirm. Both these indicators promise gloom for stock investors.

Dow in Gold has moved from the high side of its trading channel at 13.80 oz (G$285.27 gold dollars), below its 20 DMA, and to the low side of its trading channel. Today's 13.13 oz (G$271.42) close hangs close above the channel's bottom boundary and the 50 DMA at 12.99 oz (G$268.53). All indicators point toward the earth's magma core. See chart here, http://scharts.co/1mbBTXg

Dow in Silver presents a like picture. Dropped today 0.86% to 810.37 oz, hanging barely above the 50 DMA at 804.97. Chart's here, http://scharts.co/1axrZgw

The goofy, sorry US DOLLAR INDEX finally came out swinging today. It scampered up 36 basis points (0.44%) to end at 81.37, highest close since November. 200 DMA lieth near above at 81.58. When it punches through that, 'twill run for 83.

The perky dollar hit the euro like a cat-o-nine-tails, flogging it out of the trading channel & down below its 50 DMA ($1.3613. Closed down 0.57% at $1.3540. First target is about $1.3341, the 200 DMA.

Japanese yen kept its head timidly low today, rising 0.05% -- if that can be called a "rise" -- to 95.86 cents per 100 yen. It has been thoroughly rebuked and chastened for its audacious rise last week.

And LO! We come to my favorite part of the show, silver & gold! Silver today mounted 24.2 cents to end at 2026.7 cents. Gold flew up $11.70 to end at $1,251.70.

Ahh, the positives! Gold's fourth weekly higher close. Gold above the 50 DMA ($1,241.86). Gold at the neckline for what promises to be an upside down head and shoulders. Gold within shooting distance of the December $1,267.50 high. Gold, with a positive MACD in positive alignment, a positive RSI, positive full stochastics, and positive rate of change. All I could ask more is gold above $1,550 -- but wait. Be patient.

Meanwhile the Gold/Silver ratio, which falls during gold & silver rallies, has been inching downward since Mid December. Today it closed below its 50 DMA and right at the 20 & 200 DMAs, trying to fall out of bed.

Wait, wait, wait! Did I neglect to mention that all three gold stock indices today burst their bonds and soared skyward? Yea, the HUI, GDX, & XAU in tandem.

Now silver. Silver, up three of the last four weeks. On the weekly chart dancing with its downtrend line from 2011 [sic]. On the daily chart in an uptrend from the December low at 1872c. Next barrier is 2050 cents to break out of this congestion that has reigned below that number since mid-November. Then silver must o'erleap 2100c. Yet what progress already! It stands above its 20 & 50 DMAs (1985c & 2004dc). I don't want to bore y'all like some proud papa with pictures of a new baby, so I won't list all the positive indicators. There are lots of 'em.

Gold & silver picture continues to improve steadily. And all this unashamed progress today came in the teeth of a boldly stronger dollar. I have been buying little by little since the lows, and will buy more when silver crosses 2100c and gold crosses $1,267.50.

Only fly in this ointment is physical gold coin premiums, which are barely flabby. Not bad, just a mite soft. Silver premiums are holding up well.

All this is the very best set-up we have seen in a year, but must be confirmed by higher prices and continued upward progress.

On 17 January 1893 Hawaii's Queen Liliuokalani was overthrown by a group of American sugar planters led by Sanford Dole. The more this changes, the more it stays the same thing.

I seldom ask y'all for favors, but occasionally I am moved to it. A friend and member of our church, Mark Hinkle, watched his house burn down yesterday. In the past few years Mark has lost almost everything, and this was the rest. He has insurance, but after the mortgage and everything else is paid, he won't have much to rebuild with. As he said yesterday, "I can't replace everything. I'm 50 years old and I've been stashing stuff in there for years." He looked at me and said plaintively, "I just want to go home."

Here's my favor. Maybe you could give up just one fast-food meal out with your family to help Mark rebuild his house. You go through Wendy's or McDonald's and never think about dropping $25 - $35, or going to a nicer restaurant for a lot more. Could you give up one meal out to help Mark? If so, send a check made out to "Christ Our Hope Church" to P.O. Box 178, Westpoint, Tennessee. Be sure to put "For Mark Hinkle" on the check, and I'll make sure it all goes to re-build Mark's house. And thanks, if you can help.

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
17-Jan-14 Price Change % Change
Gold, $/oz 1,251.70 11.70 0.9
Silver, $/oz 20.27 0.24 1.2
Gold/Silver Ratio 61.760 0.570 0.9
Silver/Gold Ratio 0.0162 0.0002 1.2
Platinum 1,452.60 22.60 1.6
Palladium 747.65 4.65 0.6
S&P 500 1,838.69 -7.20 -0.4
Dow 16,458.56 41.55 0.3
Dow in GOLD $s 271.81 -1.84 -0.7
Dow in GOLD oz 13.15 -0.09 -0.7
Dow in SILVER oz 812.09 -7.74 -0.9
US Dollar Index 81.37 0.36 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: 1,252.20      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,283.51 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 1,230.27 1,255.12
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 1,272.24 1,282.24 1,282.24
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 1,508.58 1,251.20
.9999 bar 1.00 1,256.58 1,268.20 1,268.20
SPOT SILVER: 20.28      
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 15,143.70 15,393.70 21.53
US 40% silver 1/2s 0.30 5,790.85 5,940.85 20.14
100 oz .999 bar 100.00 2,018.00 2,113.00 21.13
10 oz .999 bar 10.00 207.80 208.80 20.88
1 oz .999 round 1.00 20.38 20.88 20.88
Am Eagle, 200 oz Min 1.00 22.03 23.28 23.28
SPOT PLATINUM: 1,452.60      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Platinum Platypus 1.00 1,477.60 1,517.60 1,517.60
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© 2015 Little Mountain Corporation, d.b.a. The Moneychanger. All rights reserved. May not be republished in any form, including electronically, without our express permission.

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.

Other Important Information

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