The Moneychanger
Weekly Commentary
Friday, 12 January a.d. 2018 Browse the commentary archive
Here's the weekly scorecard:
  5-Jan-18 12-Jan-18 Change % Change
Silver, cents/oz. 1,720.50 1,706.90 -13.60 -0.8
Gold, dollars/oz. 1,320.30 1,333.40 13.10 1.0
Gold/silver ratio 76.739 78.118 1.379 1.8
Silver/gold ratio 0.0130 0.0128 -0.0002 -1.8
Dow in Gold Dollars (DIG$) 396.06 400.03 3.97 1.0
Dow in gold ounces 19.16 19.35 0.19 1.0
Dow in Silver ounces 1,470.26 1,511.70 41.44 2.8
Dow Industrials 25,295.87 25,803.19 507.32 2.0
S&P500 2,733.52 2,786.24 52.72 1.9
US dollar index 91.72 90.59 -1.13 -1.2
Platinum 971.20 991.20 20.00 2.1
Palladium 1,084.85 1,108.00 23.15 2.1

Strange, seldom-seen week: stocks rose, gold, silver, platinum, & palladium rose, & the dollar sank like your wedding ring falling into the garbage disposal. Hey, maybe that dropping dollar is the key to prosperity. We ought to tell those bubble heads at the Fed. All we have to do is reduce the dollar's value to zero, and we'll all be quadrillionaires!

Lo, how are the mighty fallen! Dollar index has broken support at the last low. In a market where a 0. 5% move is respectable, the dollar index lost 110 basis points or 1.36% today and closed at 90.59.

You have to reach back to early 2015 to find the dollar index this cheap. It has smashed all the lows since 2015. Behold, it breaketh down. News reports trace the cause to bad news today: weaker than expected US producer inflation & European Central Bank comments that hint at slowing its insane monetary stimulus.

At a deeper level, I recall the axiom that all currency exchange rates are manipulated. The dollar is dropping because Nice Government Men want it to drop perhaps? Certainly a lower dollar would answer Trump's complaint about trade agreements and trading partners, but who knows? Nice government men are expert at hiding their fingerprints.

Look at what today did to the euro, Yes, yes, that is a gap up and close above the last (September) high, and so a breakout that should carry higher. Closed today $1.2199, higher by a gargantuan 1.36%.

Now ponder the yen, It rose 0.2% to 90.04, but is bulging its way through that downtrend line that has tamed it since lat April. And it's above the 200 day moving average. Goin' higher.

Remember that every price is a denominator/numerator: 1 Watermelon divided by $2. When the numerator (dollar) loses value, the whole fraction must be re-rated. Hence a falling dollar has commodities rising across the board. Here's the CRB commodities index, It hasn't broken through out of that flat topped rising triangle yet, but it has been rising generally all year and one good twist will send it shooting through 196.

Ought to be careful what you wish for. Fed keeps wishing for inflation. Maybe they'll get more than they want.

Bitcoin today rose $560.00 or 4.2% on the CME futures exchange. On Coindesk it's now trading at $13,760.52, up 473.26 or 3.56%.

Recalling that Bitcoin was topping a month ago (Exact top came on the 16th) I went back to the gold & silver lows on 12 December 2017 to see how everything has fared in the last month. As of today, Bitcoin is $3,417.58 or 19.9% lower. Gold is $94.90 or 7.7% higher. Silver is 148.7¢ or 9.5% higher

Stocks are on a tear and apparently love a falling dollar (re-rates them higher). Dow Industrials spiked 228.46 (0.9%) to 25,803.19, a new high. S&P500 did the same, up 18.68 (0.67%) to 2,786.24. S&P500 chart can be found here Take a gander at that overbought RSI above.

'Pears the Dow in Gold topped about the same time in December that gold bottomed.

Palladium fractured its old all-time high today ($1,082.80 on 5 February 2001) by closing at $1,108.00.

Gold surged $12.80 (1%) to $1,333.40 and silver rose 17.5¢ to 1706.9¢. Up 1%. Gold rose for the fifth week running and the third month. Silver was shooting for a 5 week rally, too, but closed today below last Friday.

First I'm gonna be a worrywart and tell y'all what I don't like. Yes, gold did close above $1,325 resistance which I've been holding out as the measure of success, but silver didn't close above the analogous 1725¢, altho it did jump up there in the aftermarket. And, after all, both rose 1% so they confirmed strength.

Gold chart lurks here, Mark carefully that it has struck its head on that purple line, which represents sidewise resistance from 2013. It declines a bit to the right, but for generosity's sake, let's call the resistance $1,360. Loads of hungry people out there can read a chart, and when gold claws through that resistance, they will see, & believe, & buy. Liable to be some strong jumps off that platform.

Silver, seen here reached up and touched the 1724-1730¢ zone today but backed off. It's now riding above its 200 DMA and the uptrend line, but I can't shake the suspicion we might see one more leg down to this correction. You'll know that has vanished if gold and silver can both close higher Monday.

The gold/silver ratio, today plunged with the first half of a key reversal downward. It remains, however, uncomfortably high.

The little correction in the metals' strong rally that began in December has ended or nearly ended. They promise higher pries in January and in the rest of 2018. We're rolling now.

Here's an item that soothes like somebody running an orange zester over your teeth. On 12 January 1943 the Office of Price Administration (price controls) announced that standard frankfurters/hot dogs/wieners would be replaced by "Victory Sausages." It don't get no sillier or small minded than that.

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
12-Jan-18 Price Change % Change
Gold, $/oz 1,333.40 12.80 1.0
Silver, $/oz 17.07 0.18 1.0
Gold/Silver Ratio 78.118 0.742 1.0
Silver/Gold Ratio 0.0128 0.0001 1.0
Platinum 991.20 4.30 0.4
Palladium 1,108.00 29.10 2.7
S&P 500 2,786.24 18.68 0.7
Dow 25,803.19 228.40 0.9
Dow in GOLD $s 400.03 -0.26 -0.1
Dow in GOLD oz 19.35 -0.01 -0.1
Dow in SILVER oz 1,511.70 -2.14 -0.1
US Dollar Index 90.59 -1.10 -1.2
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GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,343.48 1,381.58 1,381.58
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Aust. 100 corona 0.98 1,297.23 1,310.33 1,336.80
British sovereign 0.24 317.04 330.04 1,402.05
French 20 franc 0.19 247.08 251.08 1,344.86
Krugerrand 1.00 1,342.15 1,352.15 1,352.15
Maple Leaf 1.00 1,344.80 1,360.80 1,360.80
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SILVER Fine Tr.Oz. BID ASK $/oz
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VG+ Peace dollar 0.77 14.50 17.50 22.88
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US 40% silver 1/2s 0.30 4,873.40 5,020.40 17.02
100 oz .999 bar 100.00 1,697.00 1,732.00 17.32
10 oz .999 bar 10.00 173.20 178.20 17.82
1 oz .999 round 1.00 16.97 17.57 17.57
Am Eagle, 200 oz Min 1.00 18.42 19.17 19.17
SPOT PLATINUM: 991.20      
Platinum Platypus 1.00 1,006.20 1,036.20 1,036.20
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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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