'Twas a tough week for silver & gold, but a good week for stocks & a flat week for the US Dollar. And it's got me scratching my head. The one thing you have to keep on doing constantly is to keep questioning your own presuppositions. Is the chart changing primary trend, or pulling your leg? Stop asking that & the market will one day behead you.

Stocks finally broke through 13,000 this week, & shot 2.4% higher. Stock indices spake with the Voice of Babel today, most lower but the S&P500 higher. Dow shaved off 20.12 (0.15%) to stop at 13,232.55. S&P500 won a psychological victory this week by crossing above 1,400, and rose today 1.56 (0.11%) to 1,404.16.

What has me scratching my head is not lice (I hope), but the Dow in Gold Dollars, my most reliable indicator. It has been headed down since August 1999 at about G$940.50 & today stands at G$165.28 (7.993 oz). This takes the DiG$ out above the current downtrend line. Normally when the DiG$ bumps its forehead against a downtrend line or even slightly crosses it, it foretells a big drop in stock coming against gold. In other words, that bump into the downtrend line marks the spot where stocks have spent all their strength against gold -- generally.

Yet the DiG$ rose a little higher. Could mean two things, either that the DiG$ may make a foray up to its 200 day moving average, which has happened before & would change no primary trend, or that the primary trend has changed. That would change everything, since the primary trend we have been riding is "Gold & Silver up, Stocks & Dollar down."

I resist the latter conclusion, even while I look it in the eye, because no upside blow-off has yet overtaken metals. At the end of every bull market in every investment, a blow-off occurs. So this may be a painful time when stocks outperform gold, even send the DiG$ to the 200 DMA, but there's no hard evidence the primary trend has turned.

Yes, I am not unaware that multitudinous croakers from Wall Street are singing like spring peepers that gold & silver have passed their peak, & that the US economy is on its way to recovery. The first is wrong, the second is the triumph of hope over reason.

Meantime, we hold our silver & gold & stick with a strategy that has brought success since 2001 & that has not yet been gainsaid by events. Tried, but not gainsaid.

US dollar index dipped lower today than I expected, & reached the lower limit of believability. Dollar closed down 0.45% to 79.80 after a 79.68 low. Either the dollar turns around here, or the Nice Government Men mean to send it down again for a while, & let the other Potemkin currencies rise.

The euro & yen both rose today, but let's address them one by disgusting one. I say "disgusting" because any morally & rationally fastidious mind must recoil in pain & horror at the monetary set up we use every day without the least shiver or tremor of nausea. If a man from Mars should arrive, I don't want the job of explaining the monetary system to him. He would just look at you in disbelief & disgust, spin on his eight heels, climb back into his flying soupbowl & spin away to some saner planet, shaking both heads.

But I digress. Euro today rose 0.67% to $1.3168. That has the look of a turnaround upward on the 5 day chart, but to make good on that threat, the Euro must close above 1.3200. Euro appears a bit more equivocal on a longer chart, but has in the last 6 days smashed into its critical moving averages -- 50 & 62 day -- and turned up. However, above remains the 20 DMA at 1.3227 & a little gap. Euro may be doing no more than filling that gap before it resumes its earthward trajectory.

The yen, having made the huge downward adjustment the Nice Government Men wanted, today posted the first half of a Key Reversal. Specifically, it hit a new low for the move yet closed higher on the day. It will complete the Key Reversal if it closes higher on Monday. Remember, however, that if it fails to close higher it will negate the Key Reversal. Close was 120.01c/Y100, up 0.18%.

There you go again, Moneychanger, filled with suspicion of the Nice Government men whose only intention is to do good. Why do you look at that nice Round 120 Number & say automatically, "Central Bank Target determined over rubber chicken at the monthly BIS meeting in Basel"? I am so ashamed of myself.

The more I pore over these silver & gold charts, daily & weekly, the louder those upside down head & shoulders formations shout. I'd say that within a month, maybe a little longer, they will be completed & ready to break out over the neckline.

Meantime, we suffer.

Gold shuffled down $3.60 to $1,655.50. Now that doesn't look like much of a performance, but the sellers attacked about the time New York opened and drove gold clean down to $1,640. But gold climbed right back to $1,664.70, leaving a clean V-reversal behind. Problem remains that gold did not exceed yesterday's high at $1,665.60 and indeed gave a little ground.

Thus $1,640 shapes up as strong support, but $1,665 as tough resistance, and like that little steel sphere in a pinball machine, gold seems trapped. One way or the other this will break next week.

Silver gave back a miserly 12 cents today to a 3257.3c close. Silver was attacked by sellers today, too, and fought them off but also failed to advance above yesterday's highs. Like a man trying to climb a cliff, I am watching 3150c support below, & 3300c resistance above.

MILESTONES OF AMERICAN CULTURE. On 16 March 1955 "The Ballad of Davy Crockett" reached No. 1 on music charts and stayed there for 5 weeks. It sold more than seven MILLION records, and kids across America nearly sent the coon population into extinction demanding coonskin caps.

All this may seem puerile & silly, but is that really so bad compared to the songs & celebrities that top the charts today? Think about it: Davy Crockett never took any drug stronger than white lightning, never had an affair with any of his close relatives, lower mammals, or invertebrates, and never bounced in and out of jail for drunk driving. We could use some celebrities like that today.

On 16 March 1950 the US congress voted to remove the federal tax on oleomargarine, determined to make America safe for Crisco, corporations, & clogged arteries.

On 16 March 1881 that quintessential American promoter & forerunner of 21st century politics, Phineas T. Barnum, debuted the Barnum & Bailey Circus. It's not sure whether he actually said, "There's a sucker born every minute," but he certainly bequeathed that to American politics as its guiding sentiment.

Y'all enjoy your weekend!

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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