I've been thinking about this mess -- I mean this long, demoralizing silver & gold correction. You can only know after events prove your judgement, but I think I'm close to an answer.

Greece's feared new elections & possible withdrawal from the euro have markets moiled and sweating. What do they do when they're worried, God have mercy on 'em? They run to US dollars, which they see as "safety." Me, I see that as escaping a lion by running into a bear's den -- with the bear inside. I reckon they'll discover that.

US dollar index not only gained 59.5 basis points (0.77%) today but also cut through 81 like Napoleon through Italy. Shot straight up, & keeps on trying to steal the next base in the aftermarket. Dollar has now passed its last high and is working on passing its March high (80.74), maybe tomorrow. Dollar has risen for 11 days without a break, and as it slices through those resistance zones, bids fair to climb even more.

The euro took a tough beating with a big club. Lost 0.73% to $1.2732. Remember when -- a few days ago -- it seemed that $1.3000 would catch it? After gapping down yesterday, the euro's plunge accelerated today. Euro is more oversold than high heel shoes to women, but fear can make it more oversold still. Watch out for a short-covering rally that catches all those shorts, well, with their shorts down.

Yen lost 0.47% today to end at 124.62 cents (Y08.24/US$1). Yen may have spent all its fuel here. A rise above 126 would disprove that suspicion.

STOCKS tried to rally through 12,750, but when they got near that resistance, it hit 'em like Roundup sprayed on dandelions & knocked em dead. Owch, a lower low today, too (12,608). Is there comfort for stock investors in the S&P500? Well, Dow closed 12,632, down 63.35 (0.5%) and the S&P lost 7.69 (0.57%) to end at 1,330.66. Not as much comfort as a pillow full of two-inch bolts.

Metals slowed their downward trajectory a bit. Gold lost $3.80 (0.24%) to $1,556.80 silver lost 26.5 cents (0.94%) to 2805.4c.

I've been musing & musing on this, trying to take my own medicine & remember not to let a correction cast me down. Here are a few items that point toward it ending:

** Dow in silver double topped today at 450.20, matching its end-December top.

** Dow in Gold Dollars closed slightly over its end-December top.

** Buy-side premium for US 90% silver coin has climbed from an 80 cent per ounce discount to a 50 cent per ounce discount. That premium usually rises at lows.

** On 28 December 2011 silver reached its low against its 300 DMA at 80.2%. Next day, the day it bottomed, that percentage rose. Last two days silver repeated that performance. Seems crazy that the slow moving 300 DMA would pinpoint bottoms, but I reckon silver is so volatile & moves so fast that it works that way. Has in the past.

Let us hear the worst of the matter: gold might yet drop to $1,525 and silver to 2615c.

But silver has not been this oversold since last September, and before that since 2008. Gold's RSI is MORE oversold than last September, & you have to stretch back to fall 2008 to find it any more oversold.

Of the last 11 days, gold has declined 9. Silver has fallen 11 out of the last 12 days.

All these things argue for a rally in silver & gold soon. In the aftermarket today silver fell 40 cents and gold $12.50. Is that exhaustion selling? May be.

Today gold's low came at $1,541.53 and silver's at 2756c. Right now they are trading barely above those lows. Watch for more exhaustion & a turnaround this week.

GOLD/SILVER RATIO rose to 55.493 today. Time to swap gold for silver. Don't miss this opportunity. That ratio is notoriously quick to turn.

On 15 May 1602 British navigator Bartholomew Gosnold discovered Cape Cod. He named it Cape Cod because nobody would ever vacation on a place called Cape Gosnold.

On 15 May 1862 congress created the Department of Agriculture. Even though there was a war on, on 16 May 1862 farm prices began to drop.

MILESTONES OF AMERICAN CULTURE: On 15 May 1928 that starry rodent, Mickey Mouse, mad his first appearance in "Plane Crazy."

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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