The body of Friday's commentary contained an error that was corrected elsewhere. The Dow did not close dead on 11,000 but down 240.60 (2.16%) at 10,913.38. The data error changeth not the conclusions. Sorry, I was racing to get up to Nashville to catch a plane for a wedding in Wichita. Great wedding, but awfully fast trip.

And that Kansas is NOTHING like Tennessee. I looked around & I said to myself, "Dorothy, you're not in Tennessee anymore."

Y'all also need to understand something: I am not a fortune-teller. I don't even believe in fortune-telling, astrology, crystal-balls, & most market prognostication systems, or leastways, I'm too dumb or lazy to understand them. Fool that I am, I only know a few things, chief of which is "A Train Will Run Till It Reaches The Station." First principle of investing is, Always align your investments with the primary trend. That's the trend that runs 15 - 20 years, generally up or down (Gold & Silver, 1960-1980; stocks 1982 - 2000; gold & silver, 2001 - ?). You get onto that primary trend train as soon as you hear that whistle blowing, and get off it when it reaches the station. All the lurching, bumps, & stops inbetween don't amount to a hill of beans to a man riding to the last station.

Therefore, if y'all are expecting Cosmic Revelations about what will for sure take place tomorrow, better betake yourselves somewhere you won't be disappointed. I'm just riding this train until we reach the Sixteen-to-One Station, where I get off, and pointing out the scenery while we ride.

So many of y'all asked me about the performance comparison, I'm giving it to you again, as of today. Figure in parenthesis is the gain or loss calculated from 3 October 2011.

3 October 11 4 Oct 10 3 Oct 06 Dow 10,655.3 10,751.27 (-0.9%) 11,727.34 (-10.1%) Gold $1,655.00 $1,315.40 (+20.5%) $576.3 (+65%) Silver $30.75 $22.013 (+28.4%) $10.955 (+64.4%)

Now y'all have to be careful with comparisons like this, because the period chosen makes all the difference in the world, but this is sort of entertaining to thrust under the nose of those who insist stocks aren't in a bear market or metals are a terrible investment.

Stocks followed through downside today. Dow lost 258.08 or 2.36% and landed at 10,655.30. S&P500 lost even more, 2.85% (32.19) to end at 1,099.23 -- OWCH! -- below the psychologically sensitive 1,200 level.

Stocks -- the Grand Theft Auto of retirement expectations.

I don't reckon the panic in Europe is over right yet, despite all the assurances from the Eurocrats, commentators, etc. Stocks sure showed that, & so did the Euro, down a colossal 1.82% to 1.3172. Back when the Euro was lolling around 1.3900 folks were laughing about me expecting to see the Euro at 1.3000. Now that's not nearly as funny as it was, or my awaiting it's trip to 1.2000. Watch for it. It might delay, but it will come.

Japanese yen closed at 130.57c/Y100 (Y76.58/$1), bouncing up off the triangle line and its 20 & 50 DMAs. Doesn't want to give up, and may not.

US DOLLAR INDEX rose a gargantuan 103.1 basis points (1.31%) from where 'twas trading Friday, to 79.603. Will reach 81.25 at least, creating bad suction on stocks, silver, & gold.

What's wrong with a man so suspicious he watches gold rise $35.60 and close at $1,655 on Comex, then rise another ten bucks in the aftermarket to $1,664.20 & still refuses to jubilate? He might be remembering last week when gold ran out of gas & failed at $1,675, especially when he sees today's high at $1,672. Maybe he's just tired and hungry, maybe he's missing something, but he doesn't see any cause for gloating short of gold clearing $1,725 & advancing like a hog running for supper. This back & forth over the same territory -- $1,675 to $1,575 -- doesn't build anything & it burns up buying power.

Okay, maybe gold is bracing up to run to $1,725, but "to" that mark without "thru" that mark proves nothing. A downtrend in force remains in force until broken, and it's not near breaking yet.

Silver's no different. It rose 70.9c today to close Comex at 3075, but remains trapped beneath 3100c (high today came at 3139c). Both the silver & gold charts appear to be tracing out pennants or flags, & the rule says, "Flags always fly at half-mast." That is, they form about half-way through a move. If those are flags, then they're storm flags & y'all better screw some plywood over your windows, put your lawn chairs in the garage, & get inside.

The POINT: Silver & gold remain in a long term primary uptrend that will last another 3-1/2 to 10 years, but they are presently undergoing a major correction that hasn't ended yet.

Y'all will appreciate this tid-bit of historical irony. On 3 October 1776 the Continental Congress borrowed $5 million to halt the rapid depreciation of paper money in the colonies. If anybody here thinks that worked, call me about some great beach front property in Kansas.

On 3 October 1990 the Wall of Shame, the wall separating East Germany from the West came down and the two became one re-united country.

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

— Franklin Sanders, The Moneychanger

Copyright Notice

© 2015 Little Mountain Corporation, d.b.a. The Moneychanger. All rights reserved. May not be republished in any form, including electronically, without our express permission.

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.

Other Important Information

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