The Moneychanger
Daily Commentary
Tuesday, 17 January a.d. 2017 Browse the commentary archive

The picture is clearing for silver & gold with an upside breakout today.

US dollar index is ailin'. Lost 89 basis points (0.88%) to 100.32. Y'all ought to look at this chart,

Today the dollar index smashed support about 101.25 then smashed through the bottom boundary of that broadening top pattern. Whoops, left something out. Smashed through its 50 day moving average as well. All this sets the dollar up for a drop to 99 or even 98. As a native & perpetual dollar skeptic, I always thought that dollar rally was trumped up anyway.

Both the yen and the euro have rallied off double bottoms to cross ABOVE their 50 DMA. Euro gained 0.64% to $1.0712 today. Yen leapt 1.67% to 88.78.

Stocks don't seem to be contemplating Trump's inauguration with the same glee they viewed his election. Both challenged their broadening top's upper boundary last week, only to fall back today. S&P500 chart's here,

Maybe the Trump rally was a case of buy the rumor (election), sell the news (inauguration). Indicators I watch, RSI & MACD, both point down. Volume on today's fall was higher than volume Friday on the rise. Somebody's trimming positions.

Dow industrials lost 58.96 (0.3%) to 19,826.77. S&P500 backed down 6.75 (0.3%) to 2,267.89.

More instructive still are the Dow in Gold and Dow in Silver. Dow in Gold chart lieth here,

Behold, since the December high it hath lost 7.3% from 17.62 oz to 16.35 oz today. Along the way it has fallen through the 20 DMA, support from the December 2015 high, & today came to rest against the 50 DMA. Meanwhile the RSI & MACD look heavy, like a big ship taking on water in a stormy sea.

Lo, the Dow in Silver chart,

DiS hath tumbled 8.6% since the December high, with ne'er a sign of turning up yet. Both indicators need to drop further to keep confirming a downturn, but they've done a pretty convincing job so far.

I note in passing that the stocks of banks, those vicious, venemous, vile vampires on the commonwealth, sucking the blood of rich, poor, and weak together, plumped down today. They have been enjoying a rallier rally than other stocks because Trump kept promising to remove regulations on the big banks. Today the Bank Stock Index BKX, broke down. Oh, 'tis only a little cloud the size of a man's hand on the horizon, but it broke. Chart shows it, Tain't comin' back any time soon, either. Hide and watch.

But y'all don't care a hoot for all this, y'all just want to know what silver & gold did today. Okay. On Comex gold rose $16.70 or 1.4% to $1,212.00. Silver pole-vaulted 38.3¢ (2.3%) to 1710.3¢. I reckon that will put a smile on y'all's faces!

Let us ponder gold. Five day chart paints a steady advance from last Friday. More to the point, look at gold's chart, friends,

Today gold broke skyward out of that bowl it has been painting since last November. It threw a leg over the lip of that bowl and boosted itself right up. Now it stands above its moving averages and with only a little resistance between here & $1,233, gold has a clear field to $1,270, where it broke down before and where the 200 DMA awaits. It is rising on rising volume, & it don't get much better than that.

Silver is a leetle more complicated. Looky here,

Silver appears to have traced out the left shoulder of an upside-down head & shoulders. Well, now it has reached the neckline of that pattern, so it's time to ask, "Is this an upside down head and shoulders, or a double bottom?" If a head and shoulders, then it's out of synch with gold. Generally a head and shoulders doesn't amputate one shoulder, but filling out that right shoulder would take another month's trading below the neckline.

Next few days will tell us, because silver is nearing its 200 DMA at 1785¢. Piercing that would argue right loud that silver has traced out a double bottom. Indicators point up and volume is rising, so silver has the right forces pushing it.

But silver premiums are soft. US 90% premium at wholesale has now fallen to the same level (melt + 50¢/oz) as one ounce silver rounds. If you're looking to buy silver, at wholesale we can get 100 oz silver bars for 25¢ an ounce over spot rather than their usual 45¢. Lower premiums suggest not much retail buying.

Where in the world are we? Y'all go back and look at those silver & gold charts. Think back to December a year ago. Both metals made lows then, rallied out of January into July, then corrected from July through December, TO HIGHER LOWS THAN THE YEAR BEFORE. An uptrend is a series of higher highs and lower lows. We got us an uptrend!

The silver & gold lows we saw in December were the lows for the correction. From here, silver & gold will keep gaining, even if they don't run away. Wherefore, 'tis time to get off the sidelines and into the game: buy!

I have to ask y'all's indulgence and your prayers again. On Wednesday, 25 January I have to undergo another surgery on my foot, this time pinning three toes. I'm looking forward to it like a possum looks forward to being skinned, but my frantic mind still has not discovered an excuse solid enough to deliver me from it. I'll have those toes pinned six weeks, but the surgeon assures me I won't have any problem negotiating stairs. However, for Tuesday, Wednesday, & Thursday I will be far enough out of commission to send no commentary. God willing, I will pick back up again Friday, 27 January. Happily I can report that although I won't have Susan to baby me this time, my children have promised to fill the gap. I would deeply appreciate y'all's prayers for a successful surgery and swift recovery. Thanks in advance.

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
17-Jan-17 Price Change % Change
Gold, $/oz 1,212.00 16.70 1.40%
Silver, $/oz 17.10 0.38 2.29%
Gold/Silver Ratio 70.865 -0.624 -0.87%
Silver/Gold Ratio 0.0141 0.0001 0.88%
Platinum 979.10 -3.30 -0.34%
Palladium 752.40 3.85 0.51%
S&P 500 2,267.89 6.75 0.30%
Dow 19,826.77 -58.96 -0.30%
Dow in GOLD $s 338.16 -5.74 -1.67%
Dow in GOLD oz 16.36 -0.28 -1.67%
Dow in SILVER oz 1,159.26 -30.08 -2.53%
US Dollar Index 100.32 -0.89 -0.88%
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: 1,214.10      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,249.31 1,254.77 1,254.77
1/2 AE 0.50 629.30 640.44 1,280.88
1/4 AE 0.25 320.71 326.29 1,305.16
1/10 AE 0.10 131.92 132.94 1,329.44
Aust. 100 corona 0.98 1,184.11 1,193.11 1,217.21
British sovereign 0.24 287.94 300.94 1,278.43
French 20 franc 0.19 226.67 232.67 1,246.24
Krugerrand 1.00 1,227.46 1,237.46 1,237.46
Maple Leaf 1.00 1,224.10 1,238.10 1,238.10
1/2 Maple Leaf 0.50 698.11 637.40 1,274.81
1/4 Maple Leaf 0.25 309.60 324.77 1,299.09
1/10 Maple Leaf 0.10 128.69 132.34 1,323.37
Mexican 50 peso 1.21 1,456.40 1,467.40 1,217.05
.9999 bar 1.00 1,218.96 1,224.10 1,224.10
SPOT SILVER: 17.13      
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 12,319.45 12,605.45 17.63
US 40% silver 1/2s 0.30 4,861.60 5,011.60 16.99
100 oz .999 bar 100.00 1,703.00 1,728.00 17.28
10 oz .999 bar 10.00 172.80 177.80 17.78
1 oz .999 round 1.00 17.38 17.68 17.68
Am Eagle, 200 oz Min 1.00 18.63 20.13 20.13
SPOT PLATINUM: 979.10      
Plat. Platypus 1.00 994.10 1,024.10 1,024.10
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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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