The Moneychanger
Daily Commentary
Thursday, 9 February a.d. 2017 Browse the commentary archive

Well, it only took a few words from Trump to make a fool out of me. 'Pears he said he would introduce a "phenomenal" tax cut program, in his typically understated manner. As with all Trumpisms, folks tend not to think it through before they start buying stocks. By think it through I mean "consider all the trouble he has had getting a cabinet approved and remembering that no tax cuts could be enacted before 2018 or take effect much before 2019." Pay me no mind. I'm jes' a nat'ral born durn fool from Tennessee. How could I possibly understand such hi finanse?

'Twas enough to send the Dow Industrials leaping 118.06 (0.6%) to a new record at 20,172.40. Goosed the S&P500 13.2 (0.6%) to 2,307.87.

Y'all reckon that leaves me with AIG all over my face? Mebbe, mebbe not. Here's the Dow chart,

Now I could be the world's biggest fool, but I notice that even at today's high the Dow never climbed out of that megaphone top. Might tomorrow, who knows.

Likewise, ponder the S&P500 chart,

I don't claim to know a durned thang, but the S&P500 couldn't punch through the top megaphone boundary either. And it's already fallen through one uptrend line. Awww, all that may not mean a blessed thang & Dow might be on its way to 23,000. That'll make everybody so happy even radical Marxist feminists will be a-wearing Trump buttons.

Defying reason and logic, as usual, the US dollar today rose when Trump announced he would increase the government deficit, which is what cutting taxes will do. Dollar index rose 35 basis points (0.35%) to 100.61. Behold, the chart,

Dollar index tapped plumb against resistance at 100.70. Clearing that clears also the short term downtrend line, and turns the short term trend up. Bet it don't make it.

Yen took a 1.1% whupping today, falling to 88.33. See it here,

Almost any way you draw that (blue) uptrend line, the yen broke down today. True, it didn't rupture the 20 day moving average, but not for want of trying. Must stop here or slide much further. I'm not saying anything about the euro because it already broke down more than a week ago. Lost 0.7% today to 88.33.

Like two quarrelling children, silver & gold gainsaid each other today. Gold backed down $2.50 (0.2%) to $1,235.10 while silver added 3.7¢ (0.2%) to 1772¢.

For now the good news I that gold closed above $1,233 support after a $1,231.70 low. Bear in mind these limits: gold needs to hold above $1,233 and overhead needs to pierce the $1,246.60 level that has twice blocked it. By the way, gold could slip back all the way to $1,220 without damaging its chart. Remember that since December an uptend has been in effect, and still is.

Silver will look right shabby if it cannot hold its ground above 1765¢. Overhead it needs to bull its way through 1800¢.

Markets in all times and places are rife with uncertainty, but there's a difference between natural and political uncertainty. Because over 50% of income in the US arises from government spending, political uncertainty is the far greater threat. Y'all just think about how many businesses are never started, or never enlarged, simply because the political risk is too great. We're not talking about some banana republic here, but the US of A, where once we had the rule of law rather than the rule of politics. Fixing this requires MAJOR surgery.

Hot Ziggety! On 9 February 1871 the Almighty New-nited States congress established the federal fish protection office, and we've had the safest fish on the whole planet ever since. Makes you proud to be an American.

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-Feb-17 Price Change % Change
Gold, $/oz 1,235.10 2.50 0.20%
Silver, $/oz 17.72 0.04 0.21%
Gold/Silver Ratio 69.701 -0.004 -0.01%
Silver/Gold Ratio 0.0143 0.0000 0.01%
Platinum 1,019.20 2.80 0.28%
Palladium 772.60 2.80 0.36%
S&P 500 2,307.87 13.20 0.58%
Dow 20,172.40 118.06 0.59%
Dow in GOLD $s 337.62 1.30 0.39%
Dow in GOLD oz 16.33 0.06 0.39%
Dow in SILVER oz 1,138.40 4.29 0.38%
US Dollar Index 100.61 0.35 0.35%
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SPOT GOLD: 1,229.90      
GOLD Fine Tr.Oz. BID ASK $/oz
American Eagle 1.00 1,260.65 1,270.49 1,270.49
1/2 AE 0.50 632.88 647.54 1,295.08
1/4 AE 0.25 322.59 330.54 1,322.14
1/10 AE 0.10 129.03 134.67 1,346.74
Aust. 100 corona 0.98 1,196.51 1,205.51 1,229.86
British sovereign 0.24 291.69 304.69 1,294.35
French 20 franc 0.19 229.62 235.62 1,262.04
Krugerrand 1.00 1,245.89 1,255.89 1,255.89
Maple Leaf 1.00 1,239.90 1,253.90 1,253.90
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Mexican 50 peso 1.21 1,471.65 1,482.65 1,229.70
.9999 bar 1.00 1,229.90 1,241.90 1,241.90
SPOT SILVER: 17.64      
SILVER Fine Tr.Oz. BID ASK $/oz
VG+ Morgan $B4 1905 0.77 23.00 27.00 35.29
VG+ Peace dollar 0.77 17.00 20.00 26.14
90% silver coin bags 0.72 12,290.85 12,648.35 17.69
US 40% silver 1/2s 0.30 5,012.05 5,162.05 17.50
100 oz .999 bar 100.00 1,754.00 1,779.00 17.79
10 oz .999 bar 10.00 177.90 182.90 18.29
1 oz .999 round 1.00 17.89 18.19 18.19
Am Eagle, 200 oz Min 1.00 19.14 20.64 20.64
SPOT PLATINUM: 1,019.20      
Plat. Platypus 1.00 1,034.20 1,064.20 1,064.20
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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.
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  • 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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