lladium 662.60 649.50 -13.10 -0.0197706006641 802.00 -0.234795996921

For this special year end edition I have added two columns to show the end-2010 close & % change from 2010 to 2011. By the way, y'all print out a copy of today's commentary & keep it so you can calculate what your silver & gold portfolio was worth at end-2011.

Looking at the 2010-2011 results, this was not a year for commodities. Platinum & Palladium, down 26.9% & 23.5%, took the biggest hits this year, and silver lost 10.9%. Yet in the teeth of all that, gold rose 9.2%. Hmmmm.

The gold silver ratio gained 18.2% in 2011, so we made the right move selling the ratio (swapping silver into gold) early last year. We have now come in the last two days to within a gnat's eyebrow of our 57.5 trigger point to swap back from gold into silver, but market has not hit that yet. If it ever comes, it ought to come very soon.

In the Potemkin economy, stocks finished the year blowing hot & cold out of both sides of their mouth. Dow gained 5.3%, but the Dow comprises only 30 giant stocks. The broader S&P500 gained -- nothing. Virtually identically flat, from 1,2547.52 to 1,257.60.

Nasdaq lost 1.8% for the year; Nasdaq 100 gained 2.7%, while the very, very broad Wilshire 5000 lost 1.3%. Banner year, huh?

'Twasn't really a year for the US dollar, either, which gained a meager 1.3%. However, the dollar is now rallying. If it can penetrate 80.50, it will run very hard in the first quarter for 83.50, maybe much higher (88.50).

One thing you must keep foremost in your mind: THE BULL MARKET IN SILVER & GOLD HAS NOT ENDED. It will run another three to ten years.

No harbinger flits above the horizon signaling that the economy will get better next year, or that governments & central banks have yet learned their lessons, namely, they cannot efficiently control the economy or the money supply, and that inflating the currency will not cure a depression caused by inflating the currency & government economic interference.

In other words, they are all dead as do-do birds, along with their system, but they refuse to recognize it, lie down, and die without torturing the rest of the world several more years. Eventually they will be abolished, but how many more tears & years will be needed?

Today the Dollar lost a meaningless 13.6 basis points (0.17%) to 80.361. It remains in its uptrend. However, the Japanese yen flashed out its sword and cut my head off. Just about the time I thought it was going nowhere, it jumped 0.96% to 130.06c/Y100 (Y76.89/$1). The yen has vaulted over its 20 day moving average (128.49) and its 50 DMA (129.08). Unless the yen backs off immediately, it has its eye on 131 or higher.

SILVER & GOLD staged a rally today all out of proportion to the US dollar's meager drop. Gold gained $25.90 to close Comex at $1,565.80 while silver added 60.1c to close 2787.5c.

Sure, maybe that jump arose out of folks closing out short position before the long weekend, but maybe not. Remember that silver closed higher yesterday while gold fell. It's way to early to say definitively, but we may have seen gold's bottom at $1,522 (intraday) yesterday. Silver might continue to struggle.

For the new year, silver & gold may move sideways in frustration until mid-February, or at worst, late May. I'm basing this on their behavior when they previously crossed below their 300 & 200 DMAs in correction.

This much I am sure of. Unless the European bank solvency crisis breaks out into a delirium & frenzy (daily a possibility), I was wrong to wax so bearish on metals at mid-December. We will NOT see huge drops in silver & gold unless a financial panic breaks out in Europe. But panic or not, silver & gold will be higher this time next year than they are now, because THEIR BULL MARKET IS NOT OVER. Look at 10 year charts of silver or gold to prove it to yourself. And neither in price nor in time have they fulfilled their bull market promise yet.

What would signal trouble? Silver breaking below 2600c and gold below $1,500. Only way I know to deal with this is to buy and keep on buying as they step down, or if they step down.

On 30 December 1861 the US government & banks stopped paying out gold for gold obligations. Not much new, is there? They've been cheating us for centuries, banks and governments.

On 30 December 1917 Mountain City, Tennessee set the Tennessee low temperature record at - 32 degrees Fahrenheit.

Now for all you folks who are convinced the world is the world is going to hell in a handbasket & that all the good, honest, hard-working people have died, and so wake up every morning puking in your wastebaskets, I've got news for you: 'tain't so.

I talk to hundreds of people every month, lots of my readers and lots of customers, and they are serious, responsible, decent adults who -- this is one of the very greatest compliments I can pay -- keep their word, even to their own hurt. They are not under the ether of the government managed economy or the mainstream media or -- heaven forefend -- presidential politics. They think for themselves, CAN think for themselves, and are willing to take the risks & responsibilities of their own decisions. These folks are NOT the problem. I'll let y'all guess who the real problem is, but will hint that their initials are U-S-G and F-R-B.

So don't sell your neighbors short. They're fine people living under a tyranny, & surviving as best they can. Who could ask more?

God bless you all in 2012 and always!

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

This is not an offer to buy or sell. Prices subject to change without notice. To enter an order, call us at (888) 218-9226 or (931) 766-6066. Sorry, no sales to Tennessee.

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