Mercy! Gold & silver make it one day, & lose it the next. Worse than tourists at Las Vegas.

Few days ago I was reading something by Jim Willie of the Golden Jackass that really hit home. He implied -- with facts to back him up -- that the "flight to safety" explanation trotted out by the media every time the dollar rises is so much hogwash. It's not a flight to safety, but Nice Government Men fighting to keep the dollar from sinking out of sight. Regardless, as the economy & financial world continue relentlessly to deteriorate, the "flight to safety" folks will surely begin to prefer an airline that doesn't crash every other flight and has better planes than a Sopwith Camel with a canvas skin, namely, gold & silver.

That said, note that the Dollar index today for the third day knocked against the 83.50 ceiling, only to fall back down the ladder. More times it knocks, of course, more likely it is to break thru next time, but it seems odd the dollar's hung up there. Upside it needs to break 83.50 to continue rallying (the most likely outcome), downside it must close below 81.52 to turn down. Jury's still out.

Yen is poking it's head through the downtrend line, but since the trend is firmly down, that probably won't hatch anything but another fall. Closed today 125.92c/Y100 (Y79.41/US$), up 0.19%.

Your job may be bad, but you can thank heaven you don't have the job of nurse-maiding the euro. It dropped to a new low today, $1.2235, down 0.54% on its way to the earth's core. No reason now to expect it to stop before it reaches $1.2000, maybe even $1.1800

Stocks tried to rally today early but spent the rest of the day puking back those gains. Dow ended down 83.17 (0.65%) while the S&P500 joined the song, down 10.99 or 0.81% to 1,341.47.

A reader wrote today & asked me how so-&-so the famous radio personality & financial guru could write a book advising people to invest in mutual funds. My only answer is, either the jails or the loony bins are all full, so he's still running loose.

Listen, if you never hear anything this natural born fool says, hear, mark, learn, and inwardly digest this First Principle of All Investing: ALWAYS align your investments with the primary trend. The trend is your friend. NEVER buck the trend. The primary trend is the tide that carries an investment up (bull market) or down (bear market) for 15 or 20 years. Stocks entered a primary down trend in spring 2000, and that will last 15 or 20 years. Will every stock drop? No, of course not, but the majority will, the indices will, & almost every mutual fund. The guru's advice to buy mutual funds is comes with a guarantee: He WILL lose your money.

Gold today lost $9.30 to close Comex at $1,579.30. Silver lagged not far behind, dropping 56 cents to 2685.1c.

Recall what I wrote yesterday about the even-sided triangle gold has scratched out. Today the bottom triangle boundary stands about $1,550; gold's low touched $1,564.57. 'Tis the triangle's nature to ping-pong back & forth betwixt top & bottom limits. Gold just better not break that lower frontier.

So strong did my curiosity about that lower boundary wax that I went back to the two year chart, and LO! What found I there? That a line drawn from the November 2010 high at $1,424.30 through the December 2011 low at $1,523.90 supports the declines of mid-2011 & most of the lows since August 2011. Plainly, that's very strong support, which favors gold. However, gold has fallen below its 50 day moving average ($1,595.90) and 20 DMA ($1,595.92). That leaves things teetering on the edge, but remember: "It's a bull market, & bull markets usually resolve to the upside." On our side also is this correction's age, arguing that the bottom is behind us.

Silver's chart offers no such comfort. That is, you can draw a line from the January 2011 bottom at 2630c to the September 2011 low at 2615c to the December 2011 trough at 2615c & the June low at 2610c. This line is the last ditch.

But silver specializes in last ditches, & in scaring the life out of you. Remember November 2008 when silver hit 880c, losing 105% of the foregoing gain? Wasn't enough aspirin in Tennessee to ease my pain, but I hung with it and silver came back. I hung with it not because I was too stupid to change my mind, but because I knew that the small silver market is way, way more volatile than gold, AND that silver was only in the early stages of a primary up trend (bull market). That bull market ain't over yet.

On 10 July 1040 Lady Godiva rode naked on horseback to force her husband, the Earl of Mercia, to lower taxes. Can y'all imagine what might have happened if Hillary Clinton had done that to get Bill to lower taxes? One thing for sure, nobody would have looked.

And here's something for all y'all who like to pick on the French. On 10 July 1778 in support of the American Revolution, French king Louis XVI declared war on England. If he hadn't, y'all would still be singing "God Save the Queen" at baseball games. Make that cricket games. Vive la France!

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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