The Moneychanger
Daily Commentary
Tuesday, 28 January a.d. 2014 Browse the commentary archive

Sorry I missed sending y'all a commentary yesterday, but I was busy finishing my monthly Moneychanger newsletter for paid subscribers. Paid subscribers can go pick it up now by logging in at

Now if I wanted to put millions of people back to work in America, the very first thing I would do is-- raise wages 39%! Yes, socialist moronism now reigns supreme in Washington, where His Federal Highness, Bernard O'Bama, is decreeing today that all those federal government contractors now paying their minimum wage folks $7.25/hr must raise them to $10.10. This will prompt those employers to look at their payrolls, scratch their heads, and fire the lot of them, as they cannot afford to raise them 39%.

Thus Bernard, our first communist president, will manage to throw countless thousands out of work. Between him & the Fed, it's a job to figure out who is stupidest.

Speaking of the Fed, its long, twisted shadow hangs over markets this week because the FOMC has another meeting tomorrow. Chances are Yellow Janet will be terrified by the stock market waterfall cascading over the headlines & put The Mythical Taper in the dame class with the Easter Bunny, Sasquatch, & Santa Claus, announcing that money creation (and its floor under Wall Street) will continue on, world without end.

I have to leave early today, and am writing this just before the stock market closes, but I'll include closing prices below.

Stocks are in big trouble, although it's not clear yet whether this is merely a correction, or we have seen the ultimate top. For now, I'll opt for a severe correction into February, with the ultimate top later this year, subject to changing my mind at the drop of an index.

Stocks have been flashing all sorts of portents through January, mostly with the Dow refusing to join the party. Right now the Dow stands up 94.44 at 15,932.32, up 0.6% on the day, but in truth doing no more than a dead cat does when thrown from a three story building. The bounce signifyeth not life. S&P has managed to climb 10.93 (0.61%) to 1,792.49, but other indices are down slightly.

Stocks are in such trouble that it's a fair bet that whatever comes out of the FOMC meeting tomorrow, it will contain fat meat for stocks. Ergo, no taper.

Dow in Gold has fallen clean out of the trading channel & made half the journey from the 50 DMA (13.06 oz) to the 200 DMA (11.74 oz). DiG stands now at 12.73 oz (G$263.08 gold dollars). Dow in Silver hasn't been so rambunctious but at 817.75 oz has quite broken below its 50 DMA (812.76 oz).

US Dollar index has gone flat last two days, & is unlikely to move today, waiting for the Fed's Delphic Oracle to predict the future.

Yesterday gold closed Comex only 90 cents lower but in the aftermarket lost another $10. That showed up today at the Comex close, lower by $12.60 to $1,250.80, about 1% lower than yesterday. Yet as I said, most of that loss had already showed yesterday. Unlike recent months, gold did not follow through yesterday's weakness.

Gold's hesitation here is easily explained: it is bumping against the downtrend line from April 2013. Thus Friday it couldn't get through the $1,267.50 December high, though it came so close. Nothing is out of order here, but gold might drop back to its 50 DMA at $1,238.04. Further drop would call its intentions into question. However, the Fed's mumblings tomorrow might derail gold for a while. Just no telling how the market will take their words.

Silver casts the only gloom over this brightening precious metals picture. It lost 28.8 cents (1.5%) today to end at 1948.3c. Remember that on Friday silver's weakness gainsaid gold's strength. Worse, platinum & palladium are falling, too. Copper has fallen back to its 200 DMA.

So the situation is unclear, and will remain so until the FOMC shoots its wad tomorrow. My gut & the trends in place say, regardless what the Fed intones, stocks will continue lower and gold will keep climbing, even pulling silver up. Dow would have to beat 1,500 to change that outlook, and gold would have to drop below $1,210.

On 28 January 1547 King Henry VIII of England died and was succeeded by his nine year old son, Edward VI, securing a Protestant succession. Edward lived only five years, and was succeeded by his half sister, Bloody Mary who attempted to restore the country to Roman Catholicism. She died in five years, and the unknown little Elizabeth returned to the throne and the country to Protestantism.

On 28 January 1871 the surrounded & besieged French army surrendered Paris to the Prussians. This freed France finally from its second emperor, the posturing Louis Napoleon, but restored Elsass & Lothringen (Alsace & Lorraine) to Germany, from whom Louis XIV has stolen them fair and square in the 17th century. This transfer set up a thirst for revenge that would bear its rotten fruit in World War I, the war to end Western civilization.

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
28-Jan-14 Price Change % Change
Gold, $/oz 1,250.80 -12.60 -1.00%
Silver, $/oz 19.48 -0.29 -1.46%
Gold/Silver Ratio 64.200 0.298 0.47%
Silver/Gold Ratio 0.0156 -0.0001 -0.46%
Platinum 1,407.70 -11.70 -0.82%
Palladium 715.60 -6.05 -0.84%
S&P 500 1,792.50 10.94 0.61%
Dow 15,928.56 90.68 0.57%
Dow in GOLD $s 263.25 4.11 1.59%
Dow in GOLD oz 12.73 0.20 1.59%
Dow in SILVER oz 817.56 16.50 2.06%
US Dollar Index 80.58 0.02 0.02%
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SPOT GOLD: 1,251.90      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,283.20 1,293.21 1,293.21
1/2 AE 0.50 637.96 659.75 1,319.50
1/4 AE 0.25 320.54 336.14 1,344.54
1/10 AE 0.10 131.34 137.08 1,370.83
Aust. 100 corona 0.98 1,220.98 1,229.98 1,254.82
British sovereign 0.24 296.47 308.47 1,310.39
French 20 franc 0.19 235.48 238.53 1,277.61
Krugerrand 1.00 1,270.68 1,280.68 1,280.68
Maple Leaf 1.00 1,266.90 1,281.90 1,281.90
1/2 Maple Leaf 0.50 719.84 657.25 1,314.50
1/4 Maple Leaf 0.25 319.23 334.88 1,339.53
1/10 Maple Leaf 0.10 132.70 136.46 1,364.57
Mexican 50 peso 1.21 1,497.22 1,508.22 1,250.91
.9999 bar 1.00 1,256.28 1,270.90 1,270.90
SPOT SILVER: 19.51      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 23.00 25.00 32.68
VG+ Peace dollar 0.77 20.00 22.00 28.76
90% silver coin bags 0.72 14,628.90 14,878.90 20.81
US 40% silver 1/2s 0.30 5,563.70 5,713.70 19.37
100 oz .999 bar 100.00 2,451.00 1,996.00 19.96
10 oz .999 bar 10.00 195.10 201.10 20.11
1 oz .999 round 1.00 19.51 20.06 20.06
Am Eagle, 200 oz Min 1.00 20.76 22.21 22.21
SPOT PLATINUM: 1,407.70      
Plat. Platypus 1.00 1,432.70 1,472.70 1,472.70
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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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