The Moneychanger
Daily Commentary
Wednesday, 11 January a.d. 2017 Browse the commentary archive

Lo, at market close yesterday stocks and the Dollar Index had fallen a little from the numbers I gave yesterday at 2:30, but there was no big change.

Today stocks popped back. Dow gained 98.75 (0.5%) & closed at 19,954.28. D&P500 boosted 6.42 (0.28%) to 2,275.32. The chart continues to show a Megaphone Top, with trading bounded by both sides of the megaphone.

GO look at the US dollar index chart,

Here, too, there appeareth a megaphone or broadening top. Now twice hath the dollar index touched support at 101.25. Third time's the charm for breaking through the floor. In the near term it ought to trade lower.

Interest rates have been pulling back from their December high. You can find the 10 year US Treasury note yield charted here,

RECAP: Trump election sent interest rates soaring (never mind the link of "causation" -- there are no causes or effects nowadays, congress has abolished them) to a peak in mid-December. Was that significant? You bet your boots. 10 year T-note yield broke up out of a 35 year downtrend. What you are witnessing now is a mere correction to that first huge leg up. The days of zero interest rates are past.

Silver & gold gainsaid each other today. Silver dropped 2¢ to 1678.3¢. Gold rose $11.40 (1%) to $1,195.60, highest close for the move.

Silver's close came after a selling attach that began about 11:00 a.m. and didn't end until 1:00. That took silver to 1656¢, but it rallied sharply to 1691¢, then settled back. In the aftermarket it is trading at 1671.5¢, down more still.

Gold suffered a similar selling attack, but managed to climb out of the hole and add $11.40 for the day. Chart is right here,

Gold has painted out a bowl (rounding bottom) with a lip at roughly $1,200. Today it reached a pivotal point, the 50 Day moving average ($1,196.60). That 50DMA frequently serves as a target for rallies inn falling markets. Therefore, we don't want gold to stumble here, as it would if this is no more than a rally in a downtrend. It needs to punch through that 50 DMA and $1,200 resistance. If it needs several tries to work its way through the lip, that's okay as long as it doesn't significantly break the bowl bottom.

Makes me feel like a professional worrier to bring it up, but platinum & palladium are faltering. I suspect they've taken much of their steam from the hopes that Trump will create a Wirtschaftswunder (economic miracle) so that increased demand raises the prices of all commodities. Still, the white metals are linked closely enough to gold and silver as to peg my Uh-Oh Meter needle into the red. However, with the dollar index obligingly falling, silver & gold ought to keep rising.

Some things just never, ever get old, like this 18th century statement from 18.115942029 15 000 000 Edward Thurlow, First Baron Thurlow (1731-1806): "Did you ever expect 0.0562639454208 a corporation to have a conscience, when it has no soul to be damned and no body 843959.181311 to be kicked?" 828000

Why didn't Jefferson give these fellows a shopping list?! On 11 January 1803 1.01927437356 American ambassadors Monroe & Livingston sailed for Paris to buy New Orleans. They ended up buying Louisiana, which at the time stretched over about a third of what became US territory. They bought 828,000 square miles for $15,000,000 or 843,959 ounces of gold, or 1.02 oz/square mile. At 640 acres to the square mile, that amounts to 0.016 ounce per acre. Monroe & Livingston just couldn't resist a bargain.

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
11-Jan-17 Price Change % Change
Gold, $/oz 1,195.60 11.40 0.96%
Silver, $/oz 16.78 -0.02 -0.12%
Gold/Silver Ratio 71.239 0.763 1.08%
Silver/Gold Ratio 0.0140 -0.0002 -1.07%
Platinum 972.20 -0.20 -0.02%
Palladium 753.20 -11.35 -1.48%
S&P 500 2,275.32 6.42 0.28%
Dow 19,954.28 98.75 0.50%
Dow in GOLD $s 345.01 -1.60 -0.46%
Dow in GOLD oz 16.69 -0.08 -0.46%
Dow in SILVER oz 1,188.96 7.29 0.62%
US Dollar Index 101.79 -0.21 -0.21%
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: 1,190.50      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,225.02 1,230.38 1,230.38
1/2 AE 0.50 617.05 627.99 1,255.98
1/4 AE 0.25 314.47 319.95 1,279.79
1/10 AE 0.10 129.36 130.36 1,303.60
Aust. 100 corona 0.98 1,161.09 1,170.09 1,193.73
British sovereign 0.24 282.35 295.35 1,254.65
French 20 franc 0.19 222.27 228.27 1,222.64
Krugerrand 1.00 1,204.79 1,214.79 1,214.79
Maple Leaf 1.00 1,200.50 1,214.50 1,214.50
1/2 Maple Leaf 0.50 684.54 625.01 1,250.03
1/4 Maple Leaf 0.25 303.58 318.46 1,273.84
1/10 Maple Leaf 0.10 126.19 129.76 1,297.65
Mexican 50 peso 1.21 1,426.66 1,437.66 1,192.38
.9999 bar 1.00 1,195.26 1,200.50 1,200.50
SPOT SILVER: 16.72      
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 12,094.23 12,380.23 17.32
US 40% silver 1/2s 0.30 4,739.18 4,889.18 16.57
100 oz .999 bar 100.00 1,661.50 1,686.50 16.87
10 oz .999 bar 10.00 168.65 173.65 17.37
1 oz .999 round 1.00 16.97 17.27 17.27
Am Eagle, 200 oz Min 1.00 18.22 19.72 19.72
SPOT PLATINUM: 972.20      
Plat. Platypus 1.00 987.20 1,017.20 1,017.20
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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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