Today was a day of trifling & bewilderment. Stocks sank to the scalp, dollar burped back some of Friday's gains, silver & gold suffered losses not apparently large, but significant still. Here's a closer look.

Dow dropped 14.78, down 0.11% to 12,962.81. looking at the lines, they have dropped out or are about to drop out of the deadly rising wedge forming since last October. Dow cut through, but did not stay below, its 20 day moving average (12,920.88), barely saving face for its momentum.

S&P500 did no better, down 5.3 (0.39%) to 1,364.33. These rising wedges do not end well for bear markets, falling out downside -- and sharply -- almost every time.

Should the Dow break 12,880 (today's low), wave bye-bye. Quickly.

US dollar index dropped 3.1 basis points today, nothing, to end at 79.359, still crowing above that 79 level. Euro gained 0.14% today to close $1.3217, but the one year chart has peaked and should drop like the back side of the Matterhorn. Yen tried again today to bottom, closing at 122.62c/Y100 (Y81.56/US$1). Yen remains severely oversold, but gives only feeble signs of turning up.

It wasn't a great day for silver or gold. Gold dropped down to $1,694.93 to feel around with its toes for a bottom, then closed Comex at $1,703.00, down 5.80 but more damaging to morale, below critical $1,705 support. Gold tried to move higher today but was stopped cold at $1,713.

What bothers me is that gold closed below its 150 day moving average ($1,715.09) which pushes momentum downward. Gold might catch at the 50 DMA, $1,687.30, or might drop to the 200 DMA at $1,673, but in any event it looks like this week will be painful.

Silver dropped 2.4% (83c) to 3365.1c. That lands silver below the crucial 300 DMA (3485), way below it. Face it, that augurs lower prices, & offers 3250c to 3200c as a low.

Watch. Let's see what unfolds. I'm not expecting a gigantic drop, but this week silver & gold will probably struggle. A gold close above $1,725 would gainsay that.

On 5 March 2012 Francisco Fernandes introduced smoking tobacco into Europe. The following year he introduced chewing tobacco, and dip the next year.

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

— Franklin Sanders, The Moneychanger

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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.
• 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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