My, O, my, finally an interesting day! Nothing seen clearly yet, but the haze is beginning to dissipate. Maybe.

US DOLLAR INDEX barely rose, 3 basis points to 80.169. That was enough room for all the markets battered for the last 8 days to lift their heads up for a breath.

Dollar now at a crossroads where it will either advance toward 89, or fall away toward the 2008 low near 70. No, I don't know which, but lean toward the rally, which would last probably six months, although it hard to imagine that anybody would want to hold dollars if O'Bama is re-elected in the fall. Rally will blow a headwind against silver & gold, but they've already reached their bottoms, although it will be a long, painful climb back to their last highs and above. That could well eat up another six months.

Euro bounced today, not high enough to change anything. Yen lost 0.46% to 125.02c (Y79.99/US$1). Still points toward the clouds.

Like the famous cat dropped from a ten story building, STOCKS bounced today. Bounce took the S&P500 up for a (likely) kiss good-bye to the neckline it fractured two days ago on its way to meet gravity at the earth's core. Dow still has not reached the neckline with its final (right) shoulder, but it stands outside hailing distance of its 50 DMA (13,055) and 20 DMA (13,050), so inertia is pulling it down.

Now to silver & gold, & with a better will & more gladsome mind than I've had in more than a week.

I watched them trading this morning from early on. About 6:00 a.m. EDT gold hit the trough of a fall from $1,596 to $1,585.90. From there it rose strongly until it peaked at $1,600.90 just before 10:00. Dropped back to $1,592, then oscillated between $1,597 & $1,592 the rest of the day. Comex closed up $1.40 at $1,595.10. All That's all well and good, but that's not really what my eye was feeding on. Let me tell you about silver first.

Silver ended the day 6.1c lower at 2913.6c.

Silver's progress mirrored gold's, with a fall from 2935c about 4 a.m. to 2893c about 6:00 a.m. Climbed till 10 up to 2945c, then backed off to end the day spinning between 2910 and 2895c.

Here's what I watched unfold on silver's 5-day chart that entranced me. Tuesday had traced out a mid day low about 2910c, an upside down left shoulder perhaps? Wednesday declined & drew out a head with a mid-day low about 2860c, then it climbed over 2920. Today it traced out the second (right) shoulder with a low at 2893c and a rise to that neckline at 2945c. More than that, the shoulder itself was formed as an upside down head and shoulder as I watched, like nesting Russian dolls. Gold's chart was not as pellucid, but followed the same pattern. You can see the chart at http://quotes.ino.com/chart/?s=FOREX_XAGUSDO

Now all this will be moonbeams & gainsaid if silver breaks 2995 tomorrow. On the other hand, it could found a rally that would reach at least 3040c before it stops.

If you are short silver, or intend to buy more, this constellation favors taking a chance. On gold, too.

GOLD/SILVER RATIO today closed at 54.747, & I am really tiring of waiting for a higher ratio. Ratio can turn and savage you -- fall like a brick -- without warning. If you swapped silver for gold at 49.80 last year, you can swap back into silver today with a 12.6% profit. Best think hard about taking the profit & scooting.

With its population of 111,000, on 10 May 1979 the Federated States of Micronesia became self-governing. Here's what I don't get. We have 6.5 million in Tennessee. How come they get independence and we don't?

What do you do when government goes bad, & becomes the enemy of the people rather than protector of their rights and liberties? On 10 May 1676 29 year old planter Nathaniel Bacon and 1,000 Virginians answered that question by rising up against their British governor and his policies toward the frontier folk. The farmers lost, but Gov. Berkeley was recalled. Of course, nobody rises up today. We all just lie down and take it. Till now.

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

— Franklin Sanders, The Moneychanger

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© 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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