The Moneychanger
Weekly Commentary
Friday, 6 January a.d. 2017 Browse the commentary archive
Here's the weekly scorecard:
  30-Dec-16 6-Jan-17 Change % Change
Silver, cents/oz. 1,593.60 1,646.60 53.00 3.3
Gold, dollars/oz. 1,150.00 1,171.90 21.90 1.9
Gold/silver ratio 72.164 71.171 -0.993 -1.4
Silver/gold ratio 0.0139 0.0141 0.0002 1.4
Dow in Gold Dollars (DIG$) 355.24 352.15 -3.09 -0.9
Dow in gold ounces 17.18 17.04 -0.15 -0.9
Dow in Silver ounces 1,240.12 1,212.43 -27.70 -2.2
Dow Industrials 19,762.60 19,963.80 201.20 1.0
S&P500 2,238.83 2,276.98 38.15 1.7
US dollar index 102.29 102.17 -0.12 -0.1
Platinum 901.60 966.50 64.90 7.2
Palladium 682.65 757.75 75.10 11.0

The new year dawned with a week of stocks stalling, the dollar index breaking, and silver, gold, & the white metals rampaging.

Yesterday the US dollar index broke. Take a look here,

Dollar index lost an obese 118 basis points yesterday (1.15%) and closed below the lower boundary of the megaphone. Yep, today it swung the other way, up 64 basis points (0.63%), but remains below its 20 day moving average, the downturn trigger. Meanwhile, the Relative Strength Index (RSI above the chart) and the MACD both scream for lower prices. Large question looming is whether the dollar will crack support about 101.30. Count on it.

A larger question is, will the dollar continue rising after this pullback to 106.50, or will this breakout prove false when the dollar resumes its gravity-driven fall to its intrinsic value, zero. My mind is slowly turning against a further dollar rally.

Dow came within a gnat's eyebrow of 20,000 today, but the gnat won in the end. Dow closed higher by 64.51 (0.32%) at 19,963.80. S&P500 augmented by 7.98 (0.35%) to close at 2,276.98.

Dow chart lurks here, S&P500 is hiding here,

Both charts spin the same tale, and quickly. Stock's Trumpophoric rally off November 7 broke its uptrend line 22 December, and has since traced out a broadening top or megaphone. RSI looks strong but MACD calls for lower prices. However, this could stretch out a while with a push through 20,000. Either way, it's a rally based on moonbeams, the triumph of optimism over reality.

Platinum & Palladium went hog-wild this week. Platinum jumped up 7.2% and palladium pulled on its seven league boots and stepped out 11%.

Today Comex gold ended $7.80 (0.7%) lower at $1,171.90, after yesterday's spectacular $15.90 leap to $1,179.70 & a new high close for the move. Silver also backed up 11.8¢ (0.7%) to 1646.6¢. Yesterday's close was 1658.4¢.

Gold is steadily filling up that bowl bottoming formation, working toward the lip about $1,205. Chart will make it plainer:

My present interpretation is that gold & silver bottomed in December, coming full circle with bottoms in December 2015. 'Twill probably take another week, maybe two, for gold to jab and prod its way through $1,205 resistance. Once gold clears $1,205 it should run speedily toward $1,300.

Now y'all look at silver,

Working on completing an upside-down head & shoulders bottom, silver has wormed its way through the old downtrend line and its 20 DMA. RSI & MACD both favor higher prices. Mightiest hurdle silver faces is 1725¢, and it may take longer to work though 1725¢ than it will take gold to beat $1,205.

Bottom line is, it's safe to buy now. Bottom lies behind us in December.

Yea, but I know even writing that that people love a rising market, and so will always chase a rising price. That explains a lot of the stock market's rise since November. You can shout, push, and cajole, but most people just won't buy a market that has been falling, like silver & gold. But I reckon if it was easy, everybody'd be riche, even a natural born durn fool from Tennessee like me.

Today is the Feast of the Three Kings or the Epiphany. It marks the twelfth day of Christmas, and in some parts of the South was known as Old Christmas. That probably arose because it used to be celebrated more than Christmas, and in come countries still is.

Happy Epiphany!

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
6-Jan-17 Price Change % Change
Gold, $/oz 1,171.90 -7.80 -0.7
Silver, $/oz 16.47 -0.12 -0.7
Gold/Silver Ratio 71.171 -0.469 -0.7
Silver/Gold Ratio 0.0141 -0.0001 -0.7
Platinum 966.50 -5.60 -0.6
Palladium 757.75 20.15 2.7
S&P 500 2,276.98 7.98 0.4
Dow 19,963.80 64.51 0.3
Dow in GOLD $s 352.15 3.50 1.0
Dow in GOLD oz 17.04 0.17 1.0
Dow in SILVER oz 1,212.43 12.52 1.0
US Dollar Index 102.17 -1.18 -1.1
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: 1,171.00      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,207.30 1,210.23 1,210.23
1/2 AE 0.50 606.94 617.70 1,235.41
1/4 AE 0.25 309.32 314.71 1,258.83
1/10 AE 0.10 127.24 128.22 1,282.25
Aust. 100 corona 0.98 1,142.08 1,151.08 1,174.33
British sovereign 0.24 277.72 290.72 1,235.01
French 20 franc 0.19 218.63 224.63 1,203.14
Krugerrand 1.00 1,185.05 1,195.05 1,195.05
Maple Leaf 1.00 1,181.00 1,195.00 1,195.00
1/2 Maple Leaf 0.50 673.33 614.78 1,229.55
1/4 Maple Leaf 0.25 298.61 313.24 1,252.97
1/10 Maple Leaf 0.10 124.13 127.64 1,276.39
Mexican 50 peso 1.21 1,403.29 1,414.29 1,173.00
.9999 bar 1.00 1,175.68 1,181.00 1,181.00
SPOT SILVER: 16.46      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 23.00 27.00 35.29
VG+ Peace dollar 0.77 17.00 20.00 26.14
90% silver coin bags 0.72 11,979.83 12,265.83 17.16
US 40% silver 1/2s 0.30 4,662.48 4,812.48 16.31
100 oz .999 bar 100.00 1,635.50 1,660.50 16.61
10 oz .999 bar 10.00 166.05 171.05 17.11
1 oz .999 round 1.00 16.71 17.01 17.01
Am Eagle, 200 oz Min 1.00 17.96 19.46 19.46
SPOT PLATINUM: 966.50      
Platinum Platypus 1.00 981.50 1,011.50 1,011.50
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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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