Amazing, human nature! Astounding how fads & rumors propagate. Take the stock market. You can literally watch prices ebb & flow with whatever shallow & meretricious opinion fad reigns for the nonce. Come January's end & they'll all be holding their breath over whether the Dow finishes January up or down, which allegedly predicts the rest of the year.

Savages who believed a solar eclipse meant that a sky dragon was eating the sun were no less rational. Rationally, the outlook for stocks ought not vary from the economy's outlook, but O my! When humans in crowds are involved, rationality flits thru the window.

In like fashion are rumors propagated, like the one I addressed days ago about the Bernancubus suddenly devaluing the dollar by 40%. Folks, the man did say he might devalue the dollar in his speech on 21 Nov 2002, "Deflation: Making Sure 'It' Doesn't Happen Here." He discusses all the measures he can undertake to inflate, and he mentions Roosevelt's sudden 40% devaluation, but apparently the rumor-spreader overlooked that, although The B-thing clearly intimates that devaluation is one policy tool. Go read it at http://www.federalreserve.gov/boarddocs/speeches/2002/20021121/default.htm.

But nothing here is new. Devaluation is ALWAYS the inevitable outcome of the Federal Reserve's existence, because it is an engine of inflation. It was spawned to inflate, & must inflate or die. Will it inflate? OF COURSE. So instead of looking at the plain historical record -- the US dollar down to 1.3 cents of its value in 1913, when the Fed took charge of managing the dollar -- rumor mongers fluff up everybody's dander with silly "sudden devaluation" stories and myths about gold confiscation. taking minds off the real action -- constant theft by inflation -- and leading them onto a red herring, thus handily keeping the victims in the dollar trap. A person more suspicious than I might think that this very rumor was actually created in a Nice Government Disinformation & Rumor Mill.

I've told y'all before, & will keep telling you till you want to put cotton in your ears or in my mouth, there is less chance of the yankee government confiscating your gold than there is of your being abducted by flying-saucer riding aliens. This is not 1934.

When somebody asked bank robber Willie Sutton why he robbed banks, he answered, "Because that's where the money is." Why did bank-robber Roosevelt confiscate gold in 1934? Because that's where the money was -- THEN, but not now. Today the large pool of wealth sitting on the shelf waiting to be stolen is -- IRAs, 401(k)s, and pension funds.

Wherefore, fool that I am, I see little point in worrying about rumored, hypothetical, and six-sigma unlikely sudden confiscations when (1) you already know the Fed is CONSTANTLY devaluing the dollar, and (2) your retirement is where the yankee government can pick it up anytime they want.

I'm not saying they WILL, only if they want to make a 1934-type forced loan, that's the window where they'll do the borrowing. Meanwhile, all the victims still keep their wealth in paper dollars. Beats me!

I've burned up my lines without even mentioning today's market.

Stocks eased up. Dow swung a leg over 12,400, up 69.78 to 12,462.47. Not terribly convincing. S&P500 rose 11.38 to 1,292.08. But listen -- I got this story straight from my barber's cousin who shine shoes at a Washington barber shop where Ben Bernanke's janitor gets his hair cut, and he told me the Big Ben thinks stocks will end January higher. Un-huh!

US dollar fell a mite today -- 16.2 basis points, a chigger bite, no more -- and still only needs hold on at 79.50 to maintain its rally. Euro rose a gnat's eyebrow to 1.2775, ditto the yen to 130.17c/Y100 (Y76.82/$1).

As I was musing yesterday, that a gold up/silver down (or vice versa) close seems usually to lead to a higher day following, so it did.

Gold rose $23.50, smashing down the gates at $1,625 like driving a tractor trailer through a chain link fence. Closed Comex at $1,631. Stretched as high as $1,639.65, never reached lower than $1,615.40.

SILVER rose a smashing 3.6%, 103.4 cents to 2978.3c. Overhead it reached into new territory above 3000c, as far as 3026.6c. Never bowed lower than 2908c.

Little doubt left in my mind that gold will touch $1,680 before it backs off and silver will react 3100c to 3200c. Of course, silver needs to remain above 2980 and gold must stay above $1,625.

They will, then we will see in the following correction what they are made of.

Listen: don't y'all let all this talk with a mere day-to-day focus deceive you. It's just entertainment. The real show is playing out in the Primary Trend for silver and gold, UP, UP, UP for several more years in an unbeatable bull market that will give a wild ride to shake off as many riders as possible. Don't be among 'em -- HANG ON! Watch the horizon, not the road in front of your hood ornament.

On 10 January 1429 the Order of the Golden Fleece was established in the Habsburg dominions. Today, membership is reserved for bankers and central bankers alone.

On 10 January 1901 oil was discovered in Beaumont, Texas, setting off the Texas oil boom that hasn't stopped yet.

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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