It's been a long while since silver & gold (let alone the platinum metals) have been hammered this hard in one week. Gold lost $61.10 (3.7%), Silver lost 152 cents or 5%. Stocks are wallowing in deep swells, too, down 1.7%. To what do we owe all this joy? The US dollar rose 1% last week. Well, and the euro coming unraveled like Frankenstein at the stitching.

US DOLLAR INDEX today is trading 11.7 basis points (0.15%) higher. Greek politicians of the left won't be able to form a government, so more elections will probably be announced this weekend, according to a friend of mine there. If so the euro will gap down on Monday's open & dollar will rise more.

Adding fuel to the dollar's tank were JP Morgan Chases revelations that it lost $2 billion in 6 weeks on derivatives. Mmmm. . . If THEY can't do it, who can? CEO Jamie Diamond's admissions raise further doubts about other big banks. Where have all the adults gone? Who put these ridiculous infants in charge?

STOCKS had a ragged day, falling off the opening, rising, then falling for the day. Dow lost 34.44 (0.27%) to 12,820.60. S&P500 lost 4.6 (0.34%) to close at 1,353.39. Dow in Gold Dollars remains hovering near the top of its diamond formation, not yet ready to yield and fall.

End to all discussions of whether stocks will soar or sink stands in those head and shoulders tops on the S&P500 & Dow's charts. S&P500 drilled through the neck line earlier in the week -- a "break down" -- rose back to the neck line for a final kiss good-bye yesterday, then plunged again today. Dow has all but penetrated the neckline of its own H&S, & will do when it crosses 12,650. MACD & RSI indicators both point earthward, and volume has risen on the decline. Add to that the seasonal summer desert approaching for stocks: "Sell in May, & go away."

Somebody explain to me what cause for optimism lurks here.

Clearly, I read the metals wrong yesterday. Today they contradicted yesterday's hopeful signs by closing below yesterday's lows. Gold has all but invalidated its falling wedge formation and silver already has, tumbling down out of the formation.

Gold gave up $11.50 to close Comex at $1,583.60. Silver misplaced 27.8 cents to end at 2885.8c.

Gold was driven down to $1,572.34 long before New York opened, climbed to $1,590.50 by 10:30, then lost energy the rest of the day.

Now that gold has fallen to $1,583.60, it's time to reckon what will happen if this level holdeth not. First support appears at the low- before-last in December at $1,562.50, next steps forth at $1,535 - $1,525. Next week promises to be bloody unless gold can scramble back above 1600

Only bright spot in today's trading for me was making a lot of swaps from gold back into silver. One customer had a 47% gain in silver ounces over the silver he traded in last year. Now most of them were in the 10% to 25% range, but still, that's not a bad gain for an investment that payeth no interest or dividends.

SILVER made a new low for this move at 2844.6c. High could not rise above 2910c. Next support for silver hides at 2812c, the early December low, but reaching the ultimate December low at 2615c does not lie outside possibility.

I am aware how gloomy all this seems, but silver's RSI has dipped below 30, indicating it is heavily oversold. MACD is falling still, but hasn't neared December's lows. About the time y'all think it's the end of the world -- or the bull market at least -- silver & gold will surprise you. Legendary oilman H.L. Hunt said, "Never get really elated in victory; when times are tough, never get down." I may be as self-deceived as an ugly rich boy in love with a show girl, but I expect lows are near. May see them next week, although you'll fell as if somebody threw you into a cement mixer by the time it's over.

It all boils down to this: What do you trust? The paper money system, that since 1913 has dragged the dollar down from $20.6718 to the gold ounce to $1,583.60 today? They system that picks your pocket every day, and worse, is now run by thieves, incompetents & tapeworms? Or gold and silver, which mankind has valued since the sun came up on Eden? When I talk about this some folks laugh at me and point out that the system has been chugging away since 1913. This differs nothing from telling me that a 1913 Stanley Steamer is a great car because it still runs. The world can no longer afford parasite capitalism, crony central banks, crooked banks, & prosperity-through-government-borrowing. It's breaking up, and I'd rather belong to the new world building than the old world dying.

But y'all hang on to them yankee dollars. I understand Confederate money is worth more than its face value today..

On 11 May 1812 the waltz was introduced into English ballrooms. Observers called it disgusting and immoral. Good thing they never got to watch American TV. They'd keel over with a coronary at the first glance.

What do you do when the people who are supposed to uphold the law become the chief oppressors? Tom Moore's book, No Heroes, No Villains, looks that question square in the eye. In Carroll County, Virginia in March 1912 Floyd Allen, chief of a clan in the southern part of the county, was kangarooed into a conviction by the courthouse gang. When the guilty verdict was announce, Floyd said, "Gentlemen, I ain't a-goin'." A shootout commenced -- doubtful the Allens fired the first shot -- that left Floyd wounded and seven dead. A great manhunt followed and eventually Floyd and his son Claude were electrocuted and four other Allens spent years in prison. No Villains, No Heroes, signed by the author, is available from www.thomasmoorebooks.com. While you're there, check out The Hunt For Confederate Gold, too.

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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