Act 87, Scene 1 opened in the European Financial Crisis Farce today, & the audience swallowed it like a big bass nailing a minnow -- hook, line, and sinker.

IMF "announced" it would be seeking another $300 million in funding for bailing out Europe. This is, mind y'all, pie in the sky -- no agreements, no approvals, no plans, no money, just the "want-to"s. (Besides, being bailed out by the IMF is like having your life saved by a surgeon who amputates all your arms and legs to cure your hangnail.)

(By the way, if you believe the timing of this IMF announcement was accidental, talk to me about some great bargains on Florida swamp land.)

That was all the euro needed, since it was way oversold to begin with. Everybody in the world expects it to drop to 1.2000, so "everybody" has already sold it & there are no new sellers to drive it down further. Scrofulous euro rose 0.94% to 1.2856 at the close. This pokes thru, but barely, the downtrend line. Before you pop a cork, remember that the euro did the same on the first trading day in January, then promptly fell to new lows. Thus this doubter needs to see a three day close above that downtrend line. 20 DMA stands at 128.99, not far above.

The Japanese yen stood flat-footed today, up a squeenchy 0.4% to 130.23c/Y100 (Y76.79/US$1).

Of course the scabby US dollar index paid thru the nose for the scrofulous euro's rise. Dollar lost 0.86% (66.8 basis points) to 80.514. Closing below 80.50 will make the dollar look brown around the edges; below 80 sends the dollar testing its parachute. Today's low came at 80.47. No confirmation yet, but clouds are lowering over the dollar's future.

Taking enthusiasm from the IMF announcement, stock investors send stocks back up to their resistance ceiling. Dow rose 96.88 (0.78%) to close at 12,578.95, just below that 12,600 resistance. S&P 500 closed at 1,308.04, up 1.11% or 14.37 points.

Doesn't matter what I or anybody else thinks about the future of stocks, some patterns always hold true. One is the "Three Strikes & You're Out." Stocks challenged this level in May & July, & now knock upon that same door. A failure this time seals their fate, just as a significant penetration of 12,600 would send them much higher.

By the by, that July failure sent stocks to 10,600 in a few weeks.

Gold & silver advanced respectably today, but noticeably slower than the last few days. Gold rose 4.30 to $1,659.50 on Comex. Silver added 40.8c to 3051.4c.

Gold almost reached $1,662, but had not strength to break through. Low was $1,650.95, so it closed at least near the top of its range. Yesterday's high was higher, at $1,667.30. Gold's feet are getting heavier as it nears the top of the $1,680 mountain. That this sloth struck on a day the dollar dropped markedly causes one of my eyebrows to twitch.

Plainly, gold's job tomorrow is to move ahead toward $1,680, and to breach that $1,667 barrier.

Call me a worrier, but I am not easy with silver's chart. Today's high was 3057c, yesterday's was 3056c. Silver's stalled dead at 3056c.

On the 5-day chart this leaves a double top, which silver must break through or pay the consequences. If silver falls through 2980c, it will fall another 40c in a heartbeat, then to 2850c. That would set silver up for a trip to 2600-ville.

Remember those rising wedges in both gold & silver I fretted about yesterday. They abide there still, until contradicted by higher prices.

Today I've been thinking about all the reasons the bull market in metals has not yet ended, despite all the Wise Persons opining so. Here's yet another. At the bull market peak, the Wise Persons & all media headlines will be screaming about a New Era of Perpetually High Silver & Gold Prices. Doubt it not, nor doubt that ne'er a bull market hath ever ended amid widespread doubts it will go higher. Bull markets climb a wall of worry. They end when the worrying stops.

On 18 January 1871 after defeating Louis Napoleon & his French armies, Bismarck declared the Second German Reich & Wilhelm I of Prussia was crowned Kaiser or Emperor. The First Reich harkened back to medieval times, & actually spread out from the French, who at the time were really Germans ("Franks"). The Second Reich collapsed with Kaiser Wilhelm II's abdication in 1918. Later the Nazis tried (rather unconvincingly) to appropriate the symbolism of the Reich by calling their regime the Third Reich. All that ended in 1945, but now without anybody declaring it, the Fourth Reich is ruling Europe, with the Germans (minus the Kaiser) very much in charge.

On 18 January 1850 the British blockaded the Greek port of Piraeus to enforce their mercantile claims. I reckon nothing much has changed in the last 160 years after all.

Here's a little warning about pyrethrins, the widely used insecticides -- pour ons, collars, ear tags, -- from D.H. Volkmann in the Proceedings of Applied Reproductive Strategies in Beef Cattle, 8/31 - 9/1/2011, Joplin, MO.

Seems that bulls, boars, and rams treated with pyrethrins suffer transitory (2-8 week) sterility. Apparently they interfere with the enzyme that converts testosterone to dihydrotestosterone which drives accessory sex gland function. So if you have a dog, cat, bull, ram, or boar, don't pour pyrethrins on him before breeding season. Y'all might want to stay away from them yourselves, wondering what else they might affect.

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.

For complete details on how to buy from us or sell to us, please click here.