The Moneychanger
Weekly Commentary
Friday, 24 January a.d. 2014 Browse the commentary archive
Here's the weekly scorecard:
  17-Jan-14 24-Jan-14 Change % Change
Silver, cents/oz. 2,026.70 1,947.30 -79.40 -3.9
Gold, dollars/oz. 1,251.70 1,264.50 12.80 1.0
Gold/silver ratio 61.760 64.936 3.176 5.1
Silver/gold ratio 0.0162 0.0154 -0.0008 -4.9
Dow in Gold Dollars (DIG$) 271.81 260.29 -11.52 -4.2
Dow in gold ounces 13.15 12.59 -0.56 -4.2
Dow in Silver ounces 812.09 817.66 5.57 0.7
Dow Industrials 16,458.56 15,922.27 -536.29 -3.3
S&P500 1,838.69 1,794.23 -44.46 -2.4
US dollar index 81.37 80.46 -0.92 -1.1
Platinum 1,452.60 1,427.10 -25.50 -1.8
Palladium 747.65 733.90 -13.75 -1.8

I must leave early today, so bear in mind these are 3:30 Eastern time prices, not closes for stocks or the dollar index, but final settlement prices for metals.

Today was tossed by bewildering cross currents. Stocks suffered a bloody defeat, the dollar at least didn't fall onto its face, gold stands right at the line of confirming a breakout, but silver, platinum, and palladium all refused to confirm that strength. What gives?

'Twould be tough to overstate today's disaster in stocks. S&P & Dow both sliced clean through their 50 DMA (1,813 and 16,156) like a sharp knife through cold lard, and the Dow ended (as of 3:30 eastern) right at the channel line it broke above in November. Both indices show a two day waterfall, clearly panic selling. This will drop further & last longer.

US Dollar index went flat, losing only 5.5 basis points after yesterday's plunge. Being a fiat currency and having no value in itself but the Hot Potato value of passing it along to another victim, it could just as well break down thoroughly here as rally. It's already below its 50 DMA. Needs to stay above 79.50 to survive.

What confusion in silver and gold! Gold rose $1.90 to $1,264.50, pennies away from a breakout above the December high at $1,267.70. This makes the fifth week gold has closed higher, longest winning streak in a long time. Great, great, but what about silver, platinum, and palladium? Silver dropped 24.3 cents today to close Comex at 1947.3c. Gold/Silver ratio rose to 64.048. Platinum dropped $34.6 and palladium $11.10. Why are they gainsaying gold?

All this leaves the market unsettled. Gold is leading a charge, and it's all alone. Not impossible, but unusual. Picture will clear next week. I know that's unsatisfactory, but can I say more than the charts say? My instinct says that silver & gold will keep rising, and that silver, platinum, and palladium were pulled down by stocks today (historically silver's performance against gold is correlated closely to stocks).

What is clear? Gold is tugging at the leash to run upward, stocks have found the trapdoor in the market and fallen through. It is possible that we have seen the ultimate high for stocks, but more likely is an extended correction then one more wild rise to the ultimate high that marks the top of a 300 year cycle.

More the Moneychanger sayeth not.

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
24-Jan-14 Price Change % Change
Gold, $/oz 1,264.50 1.90 0.2
Silver, $/oz 19.74 -0.24 -1.2
Gold/Silver Ratio 64.048 0.104 0.2
Silver/Gold Ratio 0.0156 -0.0002 -1.2
Platinum 1,427.10 -34.60 -2.4
Palladium 733.90 -11.10 -1.5
S&P 500 1,794.23 -34.23 -1.9
Dow 15,922.27 -275.08 -1.7
Dow in GOLD $s 260.29 -4.87 -1.8
Dow in GOLD oz 12.59 -0.24 -1.8
Dow in SILVER oz 806.48 -3.96 -0.5
US Dollar Index 80.46 -0.06 -0.1
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: 1,268.60      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,300.32 1,313.00 1,313.00
1/2 AE 0.50 646.48 669.19 1,338.37
1/4 AE 0.25 337.50 340.94 1,363.75
1/10 AE 0.10 134.37 139.55 1,395.46
Aust. 100 corona 0.98 1,237.26 1,246.26 1,271.44
British sovereign 0.24 300.42 312.42 1,327.19
French 20 franc 0.19 238.62 241.65 1,294.31
Krugerrand 1.00 1,287.63 1,297.63 1,297.63
Maple Leaf 1.00 1,283.60 1,298.60 1,298.60
1/2 Maple Leaf 0.50 729.45 666.02 1,332.03
1/4 Maple Leaf 0.25 323.49 339.35 1,357.40
1/10 Maple Leaf 0.10 134.47 138.28 1,382.77
Mexican 50 peso 1.21 1,517.19 1,528.19 1,267.47
.9999 bar 1.00 1,273.04 1,284.60 1,284.60
SPOT SILVER: 19.89      
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 14,968.53 15,218.53 21.28
US 40% silver 1/2s 0.30 5,674.33 5,824.33 19.74
100 oz .999 bar 100.00 1,978.50 2,073.50 20.74
10 oz .999 bar 10.00 203.85 204.85 20.49
1 oz .999 round 1.00 19.99 20.49 20.49
Am Eagle, 200 oz Min 1.00 21.64 22.89 22.89
SPOT PLATINUM: 1,427.10      
PLATINUM Fine Tr.Oz. BID ASK $/oz
Platinum Platypus 1.00 1,452.10 1,492.10 1,492.10
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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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