Markets were thoroughly confused today, not to say schizophrenic. Long ago I gave up expecting any rational reaction out of markets, addicted as they are to government spending and "stimulus." Today the Federal Reserve Open Market Committee said it expects "to maintain a highly accommodative stance for monetary policy" keeping interest rates at "exceptionally low levels for the federal funds rate at least through late 2014." Plus the FOMC extended Operation Twist -- selling short term treasure debt and buying long term -- until year end. Supposedly this will drive down long term interest rates & increase lending. (All of which is grade B hogwash, as it will only further prolong the depression by preventing the market from adjusting with higher interest rates.)

Although the Fed handed stock investors the plum they were expecting -- more inflation, 'cause that's what a "highly accommodative monetary stance" means -- stocks spent most of the day underwater, barely poking their nose above the surface, only to sink again vigorously. S&P 500 & Dow dropped, other indices rose slightly. This may be the level where stocks stall, 1,405 S&P target notwithstanding.

Dow today lost 12.94 (0.1%) to close 12,824.39. S&P500 lost 2.29 (0.17%) and ended at 1,355.69.

STOCKS -- you can't get into the Poor House without 'em.

Currencies reacted a bit more logically to the FOMC announcement. US dollar index lost 57 basis points (0.69%) to end at 81.38. This changeth not the chart, since today's low struck about the same spot as yesterday's (81.16). It catches my eye that this is the 50% correction level of the rise from the May low to the 1 June high. Thus it becomes a candidate for a turnaround, since the dollar remains in an uptrend as long as it remains above 80.90. Don't short dollars for the short term.

The Yen threw down its cards today and fled the room. Dropped 0.73% to 125.76c/Y100 (Y79.52/US$1). It busted clean through its 20 DMA (126.35) & fell for the 50 DMA (125.22). One more down day establishes a down trend with two lower lows and a lower high.

The euro tried to make good its upward escape today, rising 0.17% to $1.2708. Never mind: just below $1.2800 the euro will meet starchy resistance. Long term, the euro is cooked. Roasted. Poached. Toasted. Crispy fried. Read a clear-eyed & insightful analysis last night by Steve Belmont of Options Edge. Euro members have basically three choices: default, ditch the euro, or pool all the debt & print enough money to inflate the burden away. This is like being offered the option of death by barbed wire, burning, or boiling in a vat of acid. No matter the method chosen, the euro is cooked.

Oh, and those European banks? They're so insolvent that they make US banks look good. This ain't a recipe for economic progress. If any road leads to safety other the gold and silver road, I don't know it.

Today proved me wrong and right. A sharp, sudden decline came, but $1,610 gold didn't hold, sort of, and it sort of did.

Gold closed at $1,614.80, down $7.40, but intraday it reached $1,591.50. Gold's chart today mirrors all the other bizarre charts today, including the dollar & stocks. It declined into 12:30, waiting for the FOMC's announcement, shot up on the announcement, wallowed in indecision, then gave up about $7 of a $30 climb. Central banks simply wreak havoc on markets.

Gold hits its 20 DMA ($1,598.83) but closed above that and above its 50 DMA ($1,613.8). Today gold nearly touched its uptrend line from the May low. Maybe that's the limit of the move, maybe it goes lower. I expect that uptrend line to hold, but my crystal ball is broken, so I will roll when it punches me. More I think about that euro & those European banks, the more I think about 2008. The more I think about 2008, the more I remember that although paper silver & gold dropped sharply, you couldn't get physical metal except at premiums 50% or more above market.

The more I think about all paper money & banks & central banks, the more gold and silver I want to own.

SILVER dropped as low as 2775 cents but closed down only 2.1c at 2838.3c. Which way next?

Since its May trough, silver has formed an even-sided triangle & today touched the bottom boundary. Even- sided triangles don't tell you which way they will break out, up or down, only that they will break out soon. Upside that boundary stands about 2875c, below at 2775c. MACD wants to roll over downward, not an encouraging sign. Today's comeback, though was strong.

This sort of frustration & meaningless back & forth is liable to continue through July. However, I don't believe the downside risk is great here, & I think silver will hold its own, although may prove me a fool. But wait! That's all I claim to be anyway, a natural born fool from Tennessee, so I have nothing whatever to lose by voicing my opinion. This is great: when you ain't nobody, you ain't got nothing to lose! It's like a bank going bankrupt -- How could it? It's already insolvent!

On 20 June 451 at the Battle of Chalons a combined Roman-Visigoth (Germans) army defeated Attila ("the scourge of God") and his Huns. Attila had built an empire stretching from the Baltic to the Danube and from the Ural River to the Rhine, and he was not a nice person, hence his nickname. He died in 453 & his empire quickly dissipated.

On 20 June 1863 the Union which was fighting a bloody war killing millions to suppress the right of secession accepted as a state West Virginia, which by aid of military force it had encouraged to secede from Virginia & the Confederacy. I reckon the rightfulness of secession depends on your standpoint.

MORE THINGS WOMEN DON'T GET:

Women don't get that no matter how gnarly his toes and toenails, most men do NOT want a pedicure, and surely not with a roomful of women watching.

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

This is not an offer to buy or sell. Prices subject to change without notice. To enter an order, call us at (888) 218-9226 or (931) 766-6066. Sorry, no sales to Tennessee.

For complete details on how to buy from us or sell to us, please click here.