The Moneychanger
Daily Commentary
Thursday, 23 January a.d. 2014 Browse the commentary archive

Lots of surprises today. Whether bad or good depends on what you own.

Stocks finally made good on the Dow's nagging refusal to confirm the other indices. Dow fell like your car keys sinking down a well when you bent over to look at your reflection & they slipped out of your shirt pocket. Sliced into its 50 DMA (16,153) but ended down only 175.99 (1.07%) at 16,197.35. All other indices tumbled, too. S&P500 lost 16.4 (0.89%) to 1,828.46. That took the S&P500 way below its 20 DMA at 1,838, & turns momentum gravityward for stocks.

I'm not one to say "I told y'all so" unless severely provoked, and today one does the job. I believe I told y'all back on the 10th that the Dow's MACD had flashed a sell signal. With those lower tops that warned "Trouble coming!"

Today's stock dive sent the Dow in Metals down, down. & gave the breakdown I've been looking for. Dow in Gold ended at 12.81 oz (G$264.81 gold dollars), down 3.24%, below the 13.05 oz 50 DMA and punching through the lower channel line. Chart is here,

Silver was lazier than gold today, so the Dow in Silver, although it lost 2.14% to 809.67 oz, only barely broke its 50 DMA (810.73) and didn't quite fall out of the channel. Tomorrow. See chart here,

Big surprise (for me) today was the rotten performance of the loathsome US dollar index. Lost 78 basis points (0.96%) to 80.51, undoing two week's work and closing below its 20 & 50 DMA. Tripped by good European economic statistics. Triggered an MACD sell signal. Euro gapped up 1.1% to $1.3694, closing back within the channel it had fallen out of and above its 50 & 20 DMAs. Go figure. Yen jumped too, up to the 50 DMA by a long step. Uptrend now established.

Gold closed Comex $23.6 (1.9%) higher at $1,262.60. This is slightly higher than where it faded ($1,262) day before yesterday. Today's move gainsays and negates the key reversal of the last two days, and ALMOST takes gold above its December $1,267.50 high. It also carries it to the top of its Bollinger Band, so it needs to hit the gas here or fall back. Today's show suggests it will hit the gas & accelerate its rally.

Silver had a weird day. It hit 2031 cents at the high, but settled Comex at only 1998.1, up 0.8% or 17.2 cents. Makes little sense with gold so strong. However, it places silver back above its 20 (1993c) and 50 (1994c) DMAs, turns momentum up, and leaves me generally felling warm & fuzzy.

Nevertheless, silver must cross 2050c or it's all just warm fuzzies amounting to nothing but . . . warm fuzzies. Them you can't take to the bank.

To prove a rally, ideally gold will close well above $1,267 tomorrow and silver above 2050c. Not so ideally, to maintain its rally gold needs to close above $1,262. Any close above $1,251.70 gives it five higher weeks in a row.

There's more, but I don't want to overload y'all. In the face of a stock market puking it its wastebasket the gold stock indices rose smartly. XAU up 2.48%, GDX up 2.73%, HUI up 2.7%. Breakout for the HUI above its downtrend line from August.

Very encouraging day for silver & gold. Not so hot for stocks & the loathsome dollar.

On 24 January a.d. 41, shortly after declaring himself a God, the roman emperor Caligula is assassinated by two Praetorian tribunes. Whoops. That didn't work.

On 24 January 1848 James Wilson Marshall discovered gold at his partner Johann August Sutter's sawmill on the South Fork of the American River near Coloma, California. It was yet another gold discovery that cheapened gold against silver and snet the international gold/silver ratio further down.

On Tuesday 28 January at 6:00 p.m. at the Emporium Café in Hohenwald, Tennessee I'll be speaking about Supporting Your Local Economy. Light dinner will be available. For more information, you can call Jackie at (931) 729-3694.

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
23-Jan-14 Price Change % Change
Gold, $/oz 1,262.60 23.60 1.90%
Silver, $/oz 19.98 0.17 0.87%
Gold/Silver Ratio 63.190 0.643 1.03%
Silver/Gold Ratio 0.0158 -0.0002 -1.02%
Platinum 1,461.70 0.80 0.05%
Palladium 745.00 -2.95 -0.39%
S&P 500 1,844.86 1.06 0.06%
Dow 16,197.35 -175.99 -1.07%
Dow in GOLD $s 265.19 -7.99 -2.92%
Dow in GOLD oz 12.83 -0.39 -2.92%
Dow in SILVER oz 810.64 -15.92 -1.93%
US Dollar Index 80.50 -0.78 -0.96%
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: 1,264.40      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,296.01 1,308.65 1,308.65
1/2 AE 0.50 644.33 666.97 1,333.94
1/4 AE 0.25 336.38 339.81 1,359.23
1/10 AE 0.10 133.92 139.08 1,390.84
Aust. 100 corona 0.98 1,233.17 1,242.17 1,267.26
British sovereign 0.24 299.43 311.43 1,322.96
French 20 franc 0.19 237.83 240.86 1,290.11
Krugerrand 1.00 1,283.37 1,293.37 1,293.37
Maple Leaf 1.00 1,279.40 1,294.40 1,294.40
1/2 Maple Leaf 0.50 727.03 663.81 1,327.62
1/4 Maple Leaf 0.25 322.42 338.23 1,352.91
1/10 Maple Leaf 0.10 134.03 137.82 1,378.20
Mexican 50 peso 1.21 1,512.17 1,523.17 1,263.30
.9999 bar 1.00 1,268.83 1,280.40 1,280.40
SPOT SILVER: 20.08      
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 15,072.20 15,322.20 21.43
US 40% silver 1/2s 0.30 5,731.85 5,881.85 19.94
100 oz .999 bar 100.00 1,998.00 2,093.00 20.93
10 oz .999 bar 10.00 205.80 206.80 20.68
1 oz .999 round 1.00 20.18 20.68 20.68
Am Eagle, 200 oz Min 1.00 21.83 23.08 23.08
SPOT PLATINUM: 1,461.70      
Plat. Platypus 1.00 1,486.70 1,526.70 1,526.70
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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.

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