The Moneychanger
Daily Commentary
Thursday, 9 October a.d. 2014 Browse the commentary archive

Well, lookee here now! I reckon them FOMC market meeting gooses to the stock market work about like feeding cotton candy to a kid at a fair. It looks gracious big, and it goes down easy, but it don't fill you up & might make you throw up.

Yesterday the stock market cheerleaders were crowing over the Dow's biggest one day gain of the year. Today I reckon they are pretty shy over the Dow's biggest one day LOSS of the year, back to back.

Dow tail-spun 334.97 (1.97%) to 16,659.25. Mercy, the S&P500 did worse, losing 40.68 (2.07%) to land with a thud at 1,928.21.

Today's fall brought the Dow within 100 points of its 200 day moving average (16,591.44, S&P500's is at 1905). No, Virginia, this is NOT the place from great which bounce- backs begin, this is the edge of the cliff that waterfalls pour over.

'Bout time y'all started thinking about protecting those stock market gains by liquidating and buying silver & gold.

More & more it looks like the Dow in Gold, Old Reliable, has pinpointed the top in stocks. The DiG has COLLAPSED from that 3 October high at G$295.19 gold dollars (14.28 oz), punched through its 20 DMA (G$288.79 or 13.97 oz) and lost 2.13% [sic] today to close at G$281.34 (13.61 oz). DiG now has edged to within striking distance of the 50 DMA (G$278.04 or 13.45 oz) & the 200 DMA (G$267.49 or 12.94 oz). Just to give you your bearings, the uptrend line from August 2011 today stands about G$219.12 (10.6 oz). Here is the chart,

Dow in silver crashed through its20 DMA (S$1,244.95 silver dollars or 962.89 oz) & skidded to a stop down 1.89% atS$1,242.17 (960.74 oz). Captain Gravity has seized control of the ship. Chart is at

US dollar index bounced up today 0.33% or 28 basis points to 85.64, but the low came at 85.01, below the 20 DMA (85.28). Keep an eye peeled on this correction, because it will forecast the dollar's future for the next year. A failure here means no more rally, a success a long rally.

The euro punched into its 20 DMA and fainted, falling back 0.33% to $1.2691. Yen added 0.29% to 92.75 cents /Y100. A rally has begun.

Gold rose $19.30 (1.63%) from yesterday's Comex close to $1,224.60. Silver rose 2.07% or 35.2 cents to 1736.7c. Remember that in yesterday's aftermarket silver was at 1745c and gold at $1,223.60, so neither made any real gains today. HOWEVER, do not pass in ignorance by this other fact: they held their gains.

Notice that silver is beginning to show moves over 2% a day, and gold over 1.5%. Sizzling.

Gold climbed yesterday above its 20 DMA and today punctured that first $1,224 resistance. High today came at $1,234, above the next resistance at $1,232.70, but gold couldn't hold on there.

Silver at its 1772c high today punched through its 1769c 20 DMA, but fell back. Silver still has not penetrated its downtrend line from August, tomorrow about 1747c. That 1750c is also lateral support/resistance. Everything is still pointing heavenward.

Gold/silver ratio is one little question mark in my mind. After rising on 3 October to its peak, it gapped down, but has since traded back to fill the gap. Today it closed at 70.513. I would like to see it fall some, which would put silver outpacing gold a little, a component of nearly every precious metals rally. STILL TIME TO SWAP GOLD FOR SILVER.

Gold has given us three days' higher closes after a key reversal. That confirms a rally, but was that low on 6 October THE low, the end of the 3 year correction. Durned if I know yet, but I suspect it is.

I know I'm just a nat'ral born durned fool from Tennessee, but I bought more gold today.

On 9 October a.d. 768 Charlemagne and his brother Carloman I were crowned kings of the Franks (the Germans who took over what is now France and became the "French," but don't think about that, it'll give you a headache.) When Carloman died, Charlemagne (Charles the Great) became sole king and expanded his domain until it became the Carolingian Empire. He was crowned Holy Roman Emperor on Christmas Day 800, reviving the Roman empire. He united most of Western Europe and spurred the Carolingian Renaissance. When he died in 814 he was buried in his imperial capital, Aachen, in what today is Germany. (Told y'all it'd give you a headache.)

On 9 October 1000 Leif Erickson discovered "Vinland", probably northern Newfoundland. Since Ericson was travelling in a period of climatic warming called the Medieval Warm Period or Medieval Climate Optimum (950 - 1250), maybe it wasn't just marketing for him to name the place Vinland or for the Vikings to name their more northerly settlement Greenland. The Medieval Warm Period was followed by the Little Ice Age that lasted into the 19th century. As I have said before, long periods of cooling or warming are common in the earth's history, & anthropogenic global warming is hogwash.

On 9 October 1855 Isaac Singer patented the sewing machine and Joshua C. Stoddard received a patent for his calliope. Shame they never got together -- that would have been one barn-burner of a sewing machine.

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
9-Oct-14 Price Change % Change
Gold, $/oz 1,205.30 19.30 1.63%
Silver, $/oz 17.37 0.35 2.07%
Gold/Silver Ratio 69.402 -0.301 -0.43%
Silver/Gold Ratio 0.0144 0.0001 0.43%
Platinum 1,277.80 11.70 0.92%
Palladium 799.65 4.65 0.58%
S&P 500 1,928.21 -40.68 -2.07%
Dow 16,659.25 -334.97 -1.97%
Dow in GOLD $s 285.72 -10.49 -3.54%
Dow in GOLD oz 13.82 -0.51 -3.54%
Dow in SILVER oz 959.25 -39.53 -3.96%
US Dollar Index 85.64 0.28 0.33%
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: 1,224.40      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,252.56 1,267.25 1,267.25
1/2 AE 0.50 630.05 645.87 1,291.74
1/4 AE 0.25 315.03 329.06 1,316.23
1/10 AE 0.10 128.46 134.07 1,340.72
Aust. 100 corona 0.98 1,189.36 1,201.36 1,225.62
British sovereign 0.24 289.95 301.95 1,282.72
French 20 franc 0.19 230.31 233.40 1,250.11
Krugerrand 1.00 1,235.42 1,245.42 1,245.42
Maple Leaf 1.00 1,239.40 1,254.40 1,254.40
1/2 Maple Leaf 0.50 704.03 642.81 1,285.62
1/4 Maple Leaf 0.25 312.22 327.53 1,310.11
1/10 Maple Leaf 0.10 129.79 133.46 1,334.60
Mexican 50 peso 1.21 1,464.33 1,488.33 1,234.41
.9999 bar 1.00 1,228.69 1,240.40 1,240.40
SPOT SILVER: 17.36      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 24.00 27.00 35.29
VG+ Peace dollar 0.77 19.00 22.50 29.41
90% silver coin bags 0.72 12,412.40 12,984.40 18.16
US 40% silver 1/2s 0.30 4,929.45 5,079.45 17.22
100 oz .999 bar 100.00 1,726.00 1,786.00 17.86
10 oz .999 bar 10.00 178.60 179.60 17.96
1 oz .999 round 1.00 17.46 17.96 17.96
Am Eagle, 200 oz Min 1.00 19.11 20.36 20.36
SPOT PLATINUM: 1,277.80      
Plat. Platypus 1.00 1,302.80 1,342.80 1,342.80
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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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