The Moneychanger
Daily Commentary
Wednesday, 8 January a.d. 2014 Browse the commentary archive

It's amazing how much power printing money out of thin air gives you. For a while, you can even suspend the law of cause & effect.

Extent of that power was seen today when the mighty stock market wilted at the hint in the Federal Open Market Committee's notes of its last meeting that it might, someday, somehow "taper." This taper handle turns out to be the best tool for manipulating public opinion since terrorism was invented.

Clearly, by its money printing the Fed has placed a floor under stock prices. Everybody knows it, that's why they wilt at the magic word "taper." 'Twill be hard to resist the pull of this magic.

Excepting the Nasdaq twins, stock indices fell across the board. Dow lurched down 68.2 (0.41%) to 16,462.74 while the S&P500 stumbled 0.39 (0.2%) to 1,837.49.

Just the chart, ma'am, & a syllogism. Definition: a downtrend is a series of lower lows and lower highs. Since 31 December 2013 Dow & S&P500 have posted lower lows and lower highs. Ergo, the Dow & S&P500 are in a downtrend, transitory and migratory as it may be. Whether this downtrend will be of the evanescent or long-lasting variety time has not yet revealed to us.

But stock's slide was not enough to lower the Dow in Gold & Dow in Silver, since metals dropped more than stocks. DiG ended at 13.44 oz, up a wee 0.07%. DiS jumped 1.25% to 843.81 oz.

US dollar index pulled away from its congestion today, rising 17 basis points (0,21%) to 81.18. 'Tis now reaching for the 200 DMA at 81.65. Crossing that will add gas to its tank.

Euro broke clean through the lower boundary of its rising bearish wedge & lost 0.30% to $1.3578. Needs one more lower close to cement the breakdown. Next support does not appear until $1.3295. Ow.

Yen changed its mind again today and fell back 0.24% to 95.38 cents/Y100. Japanese Nice Government Men don't want it to climb above that 20 DMA.

Ten year US Treasury Note yield ticked up today, 1.91% to 2.993%. Probably on "taper" news. Momentum remains upward, although at a glacial pace.

Silver & gold find themselves fighting over familiar ground. Gold dropped $4.10 (0.3%) to $1,225.30 while silver lost 24.7 cents (0.13%) to 1951.8c.

Today changes nothing & adds no new insight. Gold remains above its 20 DMA and in the uptrend begun on 31 December. Gold has drawn a falling bullish wedge and broke out of that, & the breakout remains above the wedge's upper boundary line. Touched off it today.

Silver shows a similar wedge, and a like performance. Not counting the 1872c thin market low on 31 December, silver is in an uptrend with a lower boundary rising through its December lows. However, it teeters on the edge. Really can't close below 1940c and gold must hold on above $1,220.

It's all one big wheezy deal, and how it turns out is anybody's guess. Balance of proof they have bottomed remains on shoulders of silver & gold, & can only be borne by rising to higher prices.

On 8 January 1815 Tennessee & Kentucky volunteers under General Andrew Jackson defeated a British invasion army at Chalmette near New Orleans, thus saving y'all's yankee bacon. Unknown to the combatants a peace treaty had already been signed on 24 December 1814, but if Jackson had not stopped the British they, not knowing any more than he that the war had ended, would have worked their way up to St. Louis where they would have forced everyone to put down their coffee & start drinking tea, or whatever they had in mind. What would they have done with Louisiana anyway? 200 years later Louisianans still haven't been tamed!

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
8-Jan-14 Price Change % Change
Gold, $/oz 1,225.30 -4.10 -0.33%
Silver, $/oz 19.52 -0.25 -1.25%
Gold/Silver Ratio 62.778 0.577 0.93%
Silver/Gold Ratio 0.0159 -0.0001 -0.92%
Platinum 1,412.20 -0.50 -0.04%
Palladium 737.40 -3.40 -0.46%
S&P 500 1,837.49 -0.39 -0.02%
Dow 16,462.74 -68.20 -0.41%
Dow in GOLD $s 277.74 -0.22 -0.08%
Dow in GOLD oz 13.44 -0.01 -0.08%
Dow in SILVER oz 843.46 7.09 0.85%
US Dollar Index 81.18 0.17 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: 1,224.80      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,260.93 1,267.67 1,267.67
1/2 AE 0.50 624.14 646.08 1,292.16
1/4 AE 0.25 325.84 329.17 1,316.66
1/10 AE 0.10 129.72 134.73 1,347.28
Aust. 100 corona 0.98 1,194.55 1,204.55 1,228.88
British sovereign 0.24 290.05 302.05 1,283.13
French 20 franc 0.19 230.39 233.47 1,250.51
Krugerrand 1.00 1,247.46 1,258.46 1,258.46
Maple Leaf 1.00 1,239.80 1,254.80 1,254.80
1/2 Maple Leaf 0.50 704.26 643.02 1,286.04
1/4 Maple Leaf 0.25 312.32 327.63 1,310.54
1/10 Maple Leaf 0.10 129.83 133.50 1,335.03
Mexican 50 peso 1.21 1,464.81 1,479.74 1,227.29
.9999 bar 1.00 1,229.09 1,240.80 1,240.80
SPOT SILVER: 19.49      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 22.50 25.00 32.68
VG+ Peace dollar 0.77 19.50 22.00 28.76
90% silver coin bags 0.72 14,646.78 14,896.78 20.83
US 40% silver 1/2s 0.30 5,556.33 5,706.33 19.34
100 oz .999 bar 100.00 1,938.50 2,033.50 20.34
10 oz .999 bar 10.00 199.85 200.85 20.09
1 oz .999 round 1.00 19.59 20.09 20.09
Am Eagle, 200 oz Min 1.00 21.24 22.49 22.49
SPOT PLATINUM: 1,412.20      
Plat. Platypus 1.00 1,437.20 1,477.20 1,477.20
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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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