The Moneychanger
Weekly Commentary
Friday, 3 February a.d. 2017 Browse the commentary archive
Here's the weekly scorecard:
  27-Jan-17 3-Feb-17 Change % Change
Silver, cents/oz. 1,710.00 1,745.30 35.30 2.1
Gold, dollars/oz. 1,188.40 1,218.50 30.10 2.5
Gold/silver ratio 69.497 69.816 0.319 0.5
Silver/gold ratio 0.0144 0.0143 -0.0001 -0.5
Dow in Gold Dollars (DIG$) 349.52 340.51 -9.01 -2.6
Dow in gold ounces 16.91 16.47 -0.44 -2.6
Dow in Silver ounces 1,175.07 1,150.03 -25.05 -2.1
Dow Industrials 20,093.78 20,071.46 -22.32 -0.1
S&P500 2,294.69 2,297.42 2.73 0.1
US dollar index 100.56 99.60 -0.96 -1.0
Platinum 979.40 1,003.20 23.80 2.4
Palladium 738.00 749.45 11.45 1.6

Slowly, slowly silver & gold continue to improve. Despise not the day of small beginnings. Twas a rough week on the dollar index, down nearly 100 basis points, a flat to lower week for stocks, and a bang up week for white metals.

US Dollar Index just couldn't climb up off the mat this week. Fell through 100.70, then hit a low at 99.19. Today it lost 4 basis points to 99.76. 'Pears headed for 97.50. This is good news for gold and silver, bad news for fans of the scrofulous fiat dollar. Expect this to last at least until that 97.50 is hit. Any rise in the yen or euro may be tallied not to their strength but dollar weakness.

Stocks lurched ;up off their sickbed today in a show of fleeting strength. Dow Industrials climbed 186.55 (0.94%) to 20,071.46, and the S&P500 floated up 16.57 (0.73%) to 2,297.42.

Mercy, mercy, I am not convinced. Here's the Dow chart, and here's the S&P500,

Blind distruster of overinflated, overvalued stocks that I am, I can see -- Heaven help me! -- only trading back and forth in a megaphone top, now rousing with seeming strength, now falling in a faint, spending energy and buying power until emptied of all, it fails.

Just to demonstrate that stocks have peaked & begun declining against gold & silver, behold this chart of the Dow in Gold, or the Dow in Silver, All my commentary would be merely gilding those lilies.

Little update on interest rates: they're still rising, wrecking Zero Interest Rate Policy & Negative Interest Rate Policy as Mother Market wallops Mother Yellen & Pappa Mario. And rates are not rising in the US alone, but all over Europe, leaving criminal central bankers sweating bullets and gobbling caviar & swilling fine wine to forget.

Y'all do get the import of higher interest rates, right? For 35 years the Fed (& others) have been suppressing interest rates. That's the reason the world's economy is in this mess. Once the market lets go that rubber band that has stretched so far, it will sting every arm it hits.

I don't usually talk about the mysterious white metals, platinum & palladium, but lately they need a few words because both are proving uptrends, and both usually rise with gold & silver. Platinum first, right here,

Notice the pattern similar to silver & gold. Bottom January 2016, rally into August, pullback into December 2016 bottom and rally since. Red arrows show resistance about $1,020 (Nov high), bottom in December followed by breakout through downtrend line in January, followed by a rally to the 200 DMA ($1,014) and that $1,020 resistance. In other words, platinum's primed either to fail at the 200 DMA (don't expect that), or push through that resistance in a new rally.

Here is the palladium chart,

Palladium has followed platinum's same track, twice confirming the bottom uptrend line and lately making a new intraday high for the move at $798. Ready to rumble, as long as it breaks not that uptrend line.

Gold today added $1.80 (0.15%) to $1218.50 on Comex. Silver scratched up 3.8¢ to 1745.3¢. Let's look at gold first,

Gold is fighting the same $1,220 resistance it has been fighting, digging through it day by day. Pressure is building so that when gold does break through, it will pop up like a basketball held under water. Minimum target is the 200 day moving average ($1,267 now) or the downtrend line from the Jul 2016 high, now about $1,320. Gold IS going higher.

Silver's chart can be found here,

Silver staged a key reversal last Friday and has leapt off that from 1664¢ to 1745¢. Not bad for five days. Once silver brushes through the 200 DMA (1794¢) and the post-July downtrend line (about 1800¢) it will speed toward 1900¢, the last high. Silver will become more expensive, quick.

Although he wrote all sorts of minstrel tunes and even "Old Folks at Home", Stephen Foster came in fact from Pennsylvania, not from the South. In 1854 he wrote what I consider his most beautiful, moving, and certainly his most haunting song, "Hard Times Come Again No More." It is a soul's cry against grinding grief.

I looked on YouTube and the version I thought did the song the most justice was by Iron and Wine, right here

For a version more like the 1854 original, the 2nd So. Carolina String Band's version is here,

Lyrics are here, and I recommend you read them,

I like my grieving straight, right straight to the heart. Susan loved this song as much as I do.

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
3-Feb-17 Price Change % Change
Gold, $/oz 1,218.50 1.80 0.1
Silver, $/oz 17.45 0.04 0.2
Gold/Silver Ratio 69.816 0.102 0.1
Silver/Gold Ratio 0.0143 0.0000 0.2
Platinum 1,003.20 7.10 0.7
Palladium 749.45 -9.65 -1.3
S&P 500 2,297.42 16.57 0.7
Dow 20,071.46 186.55 0.9
Dow in GOLD $s 340.51 2.70 0.8
Dow in GOLD oz 16.47 0.13 0.8
Dow in SILVER oz 1,150.03 8.20 0.7
US Dollar Index 99.76 -0.04 -0.0
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SPOT GOLD: 1,219.10      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,248.36 1,259.33 1,259.33
1/2 AE 0.50 627.32 641.86 1,283.71
1/4 AE 0.25 319.75 327.63 1,310.53
1/10 AE 0.10 127.90 133.49 1,334.91
Aust. 100 corona 0.98 1,186.00 1,195.00 1,219.14
British sovereign 0.24 289.13 302.13 1,283.47
French 20 franc 0.19 227.61 233.61 1,251.24
Krugerrand 1.00 1,233.73 1,243.73 1,243.73
Maple Leaf 1.00 1,229.10 1,243.10 1,243.10
1/2 Maple Leaf 0.50 700.98 640.03 1,280.06
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1/10 Maple Leaf 0.10 129.22 132.88 1,328.82
Mexican 50 peso 1.21 1,456.52 1,467.52 1,217.15
.9999 bar 1.00 1,219.10 1,231.10 1,231.10
SPOT SILVER: 17.45      
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 12,262.25 12,548.25 17.55
US 40% silver 1/2s 0.30 4,956.00 5,106.00 17.31
100 oz .999 bar 100.00 1,735.00 1,760.00 17.60
10 oz .999 bar 10.00 176.00 181.00 18.10
1 oz .999 round 1.00 17.70 18.00 18.00
Am Eagle, 200 oz Min 1.00 18.95 20.45 20.45
SPOT PLATINUM: 1,003.20      
Platinum Platypus 1.00 1,018.20 1,048.20 1,048.20
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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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