The Moneychanger
Daily Commentary
Tuesday, 4 February a.d. 2014 Browse the commentary archive

When it comes to smoking dope, Bernard O'Bama thinks it's no worse than alcohol. One wonders whether one reaches that conclusion from smoking too much dope, or not drinking enough beer.

To be clear, I oppose prohibition. I think smoking dope is nature's way of bleaching out the gene pool, but if people want to burn up their brain cells that way, have at it. The War on Drugs has only eaten away at constitutional protections and created a drug law enforcement industry, not to mention a prison industry, a vast, lucrative black market, and millions of new dope-smokers. Ditto alcohol Prohibition.

But I have to wonder why Obama is so selectively constitutional. He supports the right to smoke dope, but not freedom from warrantless searches, freedom from torture, the right to earn a living freely, and the right to life. I reckon I'm just such a nacheral born durned fool it's too complicated for me to understand. Or then again, maybe it might be easier for a police state to control a nation of dope smokers. I ain't smart enough to tell the difference.

By the way, waste not your precious time writing me smoking hot emails about the blessings of marijuana. I'm old and I've known too many people who have betrayed every loyalty and ruined their lives for marijuana. Why do you think they call it dope? To be fair, lots have done that with beer, too.

So, on to markets.

Every once in a while I check the numbers just to see if things are as bad as I suspect they are. In the last eight days the Japanese Nikkei 225 stock index has lost 10.8%. Reckon that Abe-nomix has hit a little hiccup.

Since 21 January when the present waterslide began, the Dow has lost 969.2 points or 5.9%.

Today the Dow bounced up 72.44 (0.47%) to 15,445.24. S&P500 clawed back 13.31 (0.76%) to 1,755.20.

Where does that leave stocks? Launched off a cliff, lifted on a tiny updraft, with no ledge in sight. Dow cut through its 200 DMA yesterday, bounced back to it today, but has little reason to stop here. More likely place is 14,760. But of course I could be fooled, & if the Dow turns, climbs, & crosses 16,000 y'all will know I was. Otherwise, bet on gravity.

Gold fell $8.70 at Comex close today & stocks rose, but by the end of the day the Dow in Gold had risen only 0.7% to 12.32 oz (G$254.68 gold dollars). Dow in silver fell 0.51% to 792.47 oz, and is trying to break down. In case y'all have forgotten: Dow in Metals down, good for metals; Dow in Metals up, bad for metals. These indicators show the value of stocks in metals, whether metals are gaining or losing value against stocks.

Since mid-September the US dollar index has been jailed between 81.50 and 79.70, with one spike to 79.06 in October. It rises, it falls, it makes neither progress nor regress. Today it gained 10 basis points to 81.24. Unless it can jump over 81.60 or falls below 79.50, it's just jawing.

The euro, however, declineth in earnest. Down another 0.1% today to $1.3515. If the euro's chart were your EKG, you'd be scrambling for the phone to make sure your burial insurance was up to date. Hard to see why it won't sink to $1.3300 at least.

The radioactive Yen, on the other hand, is rallying in earnest, from a 94.83 c/Y100 low in January to 98.31 today, down 0.54% for the day but aiming for the 200 DMA at 100.1.

Gold dropped as low as $1,246.80 & the 20 DMA ($1,247.44) but came right back to close Comex at $1,251.70. Then it gained $3.20 in the aftermarket. Silver gained an infinitesimal 1.3 cents to 1940.2c.

Gold is trading out into the nose of a triangle formed by its rising uptrend line and the downtrend from its April high. See chart at

This is an even sided triangle so could break either way, but gold remains above its 20 & 50 DMAs and has been steadily advancing, recovering every time it is knocked back. Reasonable to expect it might cut through that post-April downtrend this week, barring a close below $1237.50.

Since December began silver has traded sidewise between 2050c & 1889c, with one intraday low at 1872c. It has just bounced off that roughly 1890 support again, and now needs to cross 1950c and get past 2050c.

Other reasons to look for gold's rally to continue: the gold/silver ratio appears to have peaked and begun dropping. The Gold/Philadelphia Bank Index, which reflects investor confidence and risk appetite, has been falling since December ended. See chart against gold price at Think about it: when investors buy bank stocks, which are mostly the Too Big To Fail/Too Big To Jail banks, they MUST have confidence in the financial system and its outlook. On the other hand, buying gold shows a lack of confidence in those same stocks, and turning away from risk toward safety. The chart divides the gold price by the bank stock index so when it rises bank stocks (the denominator) are gaining on gold (the numerator), and vice versa when it falls.

On 4 February 1787 Shay's Rebellion in which debt-ridden Massachusetts farmers revolted, failed. Same only story: shoot the debtors if they complain.

On 4 February 1861 the Confederate Constitutional convention met for the first time in Montgomery, Alabama and elected Jefferson Davis our first president of the Confederate States for a six-year term.

Argentum et aurum comparanda sunt —
Silver and gold must be bought.

— Franklin Sanders, The Moneychanger

Your source for gold and silver. Read our latest reviews and testimonials.
Market Snapshot See more charts and market data
4-Feb-14 Price Change % Change
Gold, $/oz 1,251.70 -8.70 -0.69%
Silver, $/oz 19.40 0.01 0.07%
Gold/Silver Ratio 64.514 -0.492 -0.76%
Silver/Gold Ratio 0.0155 0.0001 0.76%
Platinum 1,371.80 -13.20 -0.95%
Palladium 699.90 -2.60 -0.37%
S&P 500 1,755.20 13.31 0.76%
Dow 15,445.24 72.44 0.47%
Dow in GOLD $s 255.08 2.95 1.17%
Dow in GOLD oz 12.34 0.14 1.17%
Dow in SILVER oz 796.06 3.20 0.40%
US Dollar Index 81.24 0.10 0.12%
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: 1,254.90      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,286.27 1,298.82 1,298.82
1/2 AE 0.50 639.49 661.96 1,323.92
1/4 AE 0.25 333.85 337.25 1,349.02
1/10 AE 0.10 132.91 138.04 1,380.39
Aust. 100 corona 0.98 1,223.90 1,232.90 1,257.81
British sovereign 0.24 297.18 309.18 1,313.41
French 20 franc 0.19 236.05 239.09 1,280.61
Krugerrand 1.00 1,272.47 1,282.47 1,282.47
Maple Leaf 1.00 1,269.90 1,284.90 1,284.90
1/2 Maple Leaf 0.50 721.57 658.82 1,317.65
1/4 Maple Leaf 0.25 320.00 335.69 1,342.74
1/10 Maple Leaf 0.10 133.02 136.78 1,367.84
Mexican 50 peso 1.21 1,503.83 1,514.83 1,256.39
.9999 bar 1.00 1,259.29 1,270.90 1,270.90
SPOT SILVER: 19.47      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 25.00 26.50 34.64
VG+ Peace dollar 0.77 22.00 24.25 31.70
90% silver coin bags 0.72 14,596.73 14,846.73 20.76
US 40% silver 1/2s 0.30 5,550.43 5,700.43 19.32
100 oz .999 bar 100.00 1,936.50 1,996.50 19.97
10 oz .999 bar 10.00 199.65 200.65 20.07
1 oz .999 round 1.00 19.57 20.07 20.07
Am Eagle, 200 oz Min 1.00 21.22 22.47 22.47
SPOT PLATINUM: 1,371.80      
Plat. Platypus 1.00 1,396.80 1,436.80 1,436.80
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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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