The Moneychanger
Weekly Commentary
Friday, 13 January a.d. 2017 Browse the commentary archive
Here's the weekly scorecard:
  6-Jan-17 13-Jan-17 Change % Change
Silver, cents/oz. 1,646.60 1,672.00 25.40 1.5
Gold, dollars/oz. 1,171.90 1,195.30 23.40 2.0
Gold/silver ratio 71.171 71.489 0.318 0.4
Silver/gold ratio 0.0141 0.0140 -0.0001 -0.4
Dow in Gold Dollars (DIG$) 352.15 343.91 -8.24 -2.3
Dow in gold ounces 17.04 16.64 -0.40 -2.3
Dow in Silver ounces 1,212.43 1,189.34 -23.09 -1.9
Dow Industrials 19,963.80 19,885.73 -78.07 -0.4
S&P500 2,276.98 2,274.64 -2.34 -0.1
US dollar index 102.17 101.21 -0.96 -0.9
Platinum 966.50 982.40 15.90 1.6
Palladium 757.75 748.55 -9.20 -1.2

The worm is slowly turning. For the week stocks lost ground, & the weekly chart looks ripe for a correction. US dollar index continues to erode and promises to plumb depths yet again. Silver and gold rose for the week, but neither crossed roadblocking resistance. Interest rates are correcting their rally in a small pullback, but the future promises much higher rates. Next week Trump is inaugurated, & reality can bite down again.

Stock indices argued and gainsaid each other today: Dow fell, S&P500 rose, reflecting investor confusion. Dow sloughed off 5.27 (0.03%) to 19,885.73 while the S&P500 added 4.2 (0.18%) for a 2,274.64 close.

never mind for a moment whether stocks intend to keep rising to 23,000 Dow, as those who sell stocks are fond of singing, or stocks are about to fall over a cliff into the abyss. Either way the megaphones or broadening tops on both charts foretell an immediate fall. Here's the Dow, and here's the S&P500,

Only closes 3% above the top boundaries of these patterns would negate that outlook.

Here's the Dow in Silver,

The Trump rally rescued a dying market and took it back for a full year's circle double top with December 2015 (red arrows). Since the December high the DiS has fallen steeply through the 20 day moving average, now at 1,220 oz, well above today's 1,186.15 oz close. Confirming the DiS has turned down comes with a close below the 50 DMA, now 1,151.66.

Now look at the Dow in gold,

The DiG has also made a double top, but with a throwover above the level of the December 2015 top. However, after the December peak the DiG fell, and fell, through its 20 DMA & then through the old high and now from today's 16.62 is closing in on the 50 DMA at 16.29. Momentum indicators on both charts vote for continuing lower prices.

US dollar index, vampire bat on the globe's carotid artery, keeps on falling. That fall is aided by (for the time being) falling interest rates. Gaze upon the chart,

Once again we meet a broadening top. Dollar index is tanglefooted in 101.30 support and the 50 DMA at 101.11. Lost 17 basis points (0.16%) today to end at 101.21. That is low enough to call for follow through travelling toward the earth's core. I won't bother y'all with the euro & yen, as they are too ridiculous to talk about on a Friday afternoon. They are rallying as the dollar suffers, but 'twas ever thus and not for any strength of theirs. Mercy, I am so sick of fiat currencies. It's a fraud too vast for me to stomach.

Gold gave back $3.60 (0.3%) to sellers on Comex & closed at $1,195.30. Silver shaved off 6¢ (0.4%) to 1672¢. Let me tell y'all what I DON'T like first, then I'll tell y'all what I like.

Gold chart's right here,

Gold has formed a pretty bowl bottom pattern, but has bumped up against the bowl's lip. It's to be expected that it will have to make a couple of tries to break through that resistance. But there's a test here that gold might fail. The 50 DMA, where gold is presently, is also a frequent target for countertrend rallies in falling markets. Therefore it's critical that gold pierce that 50 DMA and step on out. First step toward that is to clear the bowl lip at $1,200.

Lo, here is silver's chart,

Here also is much to like, and a little to worry about. Silver also is tangled in its 50 DMA. To rally it needs to close above 1725¢ resistance. Pattern looks like an upside down head & shoulders, and that pattern itself implies that silver has a right shoulder to form, which might take four weeks.

So, yes, both silver & gold look hopeful, but have just begun to confirm those December lows as thee bottoms of the July - December correction.

Dear Readers, gold and silver investors must cultivate patience. Another debt crisis will come, and when it does, it will be too late to buy metals. Prices will skyrocket overnight. Got to have your silver & gold position BEFORE that happens.

Do not despise the day of small beginnings. On 13 January 1559 a little girl was crowned Queen of England: Elizabeth I. The Nation has just emerged from five years of turmoil under Bloody Mary. No one was quite sure what Elizabeth's reign would mean. In the event, it became England's greatest age in every way, from Shakespeare to privateers to theologians.

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
13-Jan-17 Price Change % Change
Gold, $/oz 1,195.30 -3.60 -0.3
Silver, $/oz 16.72 -0.06 -0.4
Gold/Silver Ratio 71.489 -0.213 -0.3
Silver/Gold Ratio 0.0140 -0.0000 -0.4
Platinum 982.40 1.50 0.2
Palladium 748.55 16.10 2.2
S&P 500 2,274.64 4.20 0.2
Dow 19,885.74 -5.27 -0.0
Dow in GOLD $s 343.91 0.98 0.3
Dow in GOLD oz 16.64 0.05 0.3
Dow in SILVER oz 1,189.34 3.94 0.3
US Dollar Index 101.21 -0.17 -0.2
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SPOT GOLD: 1,197.00      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,231.71 1,237.10 1,237.10
1/2 AE 0.50 620.43 631.42 1,262.84
1/4 AE 0.25 316.19 321.69 1,286.78
1/10 AE 0.10 130.07 131.07 1,310.72
Aust. 100 corona 0.98 1,167.43 1,176.43 1,200.20
British sovereign 0.24 283.89 296.89 1,261.20
French 20 franc 0.19 223.48 229.48 1,229.14
Krugerrand 1.00 1,211.36 1,221.36 1,221.36
Maple Leaf 1.00 1,207.00 1,221.00 1,221.00
1/2 Maple Leaf 0.50 688.28 628.43 1,256.85
1/4 Maple Leaf 0.25 305.24 320.20 1,280.79
1/10 Maple Leaf 0.10 126.88 130.47 1,304.73
Mexican 50 peso 1.21 1,435.89 1,446.89 1,200.04
.9999 bar 1.00 1,201.79 1,207.00 1,207.00
SPOT SILVER: 16.79      
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 12,112.10 12,398.10 17.34
US 40% silver 1/2s 0.30 4,761.30 4,911.30 16.65
100 oz .999 bar 100.00 1,669.00 1,694.00 16.94
10 oz .999 bar 10.00 169.40 174.40 17.44
1 oz .999 round 1.00 17.04 17.34 17.34
Am Eagle, 200 oz Min 1.00 18.29 19.79 19.79
SPOT PLATINUM: 982.40      
Platinum Platypus 1.00 997.40 1,027.40 1,027.40
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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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