The market was kind to stock investors today. The Dow made a 4 year intraday high, 13,338.66, but backed off that to close 13,279 (up 65.69 or 0.5%). That barely bested, but bested still, the previous high at 13,264.49 on 2 April 2012. (Odd, just exactly a month later?) S&P500 did not make a new high, offering a mild divergence. S&P 500 rose 7.91 (0.57%) to 1,405.82.

Assuming that the Dow can advance tomorrow, that will prove the head & shoulders we have been watching is a consolidation pattern and not a topping formation. As long as this continues and doesn't fizzle in the next few days, that sets the Dow on track to challenge the October (14,164.53).

No, I still would not buy stocks, but today does illustrate a well known principle of human behavior: people buy a rising market. I suppose that's one strong driver of bull markets, that so few people are willing to buy when the price is flat, and after a long decline. Then as the market begins gaining, only a few more will hop on. Ahh, but when the big rises come, you have to beat the buyers away with a stick. That's how you know a top is near.

And of course frenzied stocks & plentiful headlines suck investor dollars away from silver & gold.

Therefore it will do little good if any for me to point out to y'all that stocks are at the end of a long rise & face every fundamental economic headwind, while silver & gold have spent 12 & 7 months respectively correcting. People like the pizzazz & razzle-dazzle of rising markets, and never mind the fundamentals. That's what drives bubbles. Ask any former real estate agents.

CURRENCIES did very little today. Appears on the 5 day chart that the US Dollar Index double bottomed yesterday and today, then bounced up off that bottom for a 78.97 high. At the end of the day, though, it's all smoke and dust, 'cause the dollar gained only 3.4 basis points to wind up at 78.835. Euro played the mirror image of the dollar, breaking at mid-day from a high, closing up 0.02% to $1.3243. These moves are becoming too small to measure. Yen backed off 0.49% today to 124.73c (Y80.17/US$1), but is in a roaring uptrend.

SILVER & GOLD continue to confuse & bewilder their supporters. Gold did challenge $1,670 today -- on a spike -- but fell back just as quickly to bump along $1,660 support. Closed Comex at $1,661.70, down $1.70. It's stalling, & in this world you either go forward or backward, but you can't stall. Move that thing!

Silver lost a tiny 8.2c to close at 3087.7. Chart looks like an EKG, just moving right across the paper. Silver is range bound by 3060c beneath and 3140c above. Nothing happens till it breaks one of those lines.

As to those falling wedges silver & gold have traced out, there's no change. Gold remains above the upper boundary line of its wedge, as does silver, but both must climb from here to make good their escape.

On 1 May 2011 President Barack Obama announced that Osama Bin Laden had been killed by a Navy Seal team and his body dumped in the Indian Ocean. In a related story, he also announced that a Special Forces team had killed Big Foot in the forests of Washington State, but on the ride back to base the body fell out of the helicopter into Puget Sound. Bad luck, that.

Today is May Day, but we don't celebrate like we did when I was a child. When I was 7 I lived in Southwest Virginia and May Day was one BIG event, complete with dance around the May Pole & other festivities. Today only communists come to the party, and they're not as much fun as a bad cold.

I received two good questions from a reader: "At what point do you think the declining silver American Eagle sales will affect the price of silver? Doesn't that along with the climbing silver stocks in Comex depositories show a bearish sign?"

No, declining silver AE sales is an EFFECT, not a cause. Sales are declining because silver has been correcting, & therefore losing investor attention, since April 2011. Just as the US Mint minting silver Eagles does not CAUSE the public to buy them, so declining sales does not cause silver to drop.

I pay no attention whatever to silver stocks or to physical supply/demand (commodity) analysis for silver, because all that is immaterial to this bull market & does not drive it. Monetary demand alone is driving this bull market. Warehouse stocks & increased scrap reclamation don't change that at all.

ONCE AGAIN, I must ask,

Will the person who wrote me Friday from 78257 please send me an email with a name and address I can read? I cannot comply with your wishes otherwise.

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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