Ain't that just like summertime? For all the markets' turmoil this week, Friday landed about the same place Monday started. Oh, silver & gold did confirm the stout hardihood of their earlier lows.

Ned Schmidt always says that gold's best friends are central banks. This week the European Central bank is boosting gold's price with its new zero percent deposit rates, which is pushing interest rates into negative territory for all investors. For countries not yet beset by crisis, yields and repo rates are below zero, while bank to bank Euribor rates are in freefall, according to a Reuters report. Last week the ECB cut its main refinancing rate to 0.75% and its overnight deposit rate -- what it pays to banks for parking cash overnight -- to zero. Yep, zilch.

Gold is as sensitive to interest rates as blonde Swedes are to sunburn. After all, holding gold means you must give up whatever interest you might otherwise earn on the funds. So ponder the cul-de-sac the poor central banking sociopaths have worked themselves into with their political economics: they stupidly maintain, maybe even believe, that forcing interest rates lower against the market's tendency will stimulate the economy. Of course, this is hilariously wrong, and only guarantees more capital will be misdirected and squandered, but let that alone for a minute. By keeping rates low, central bank felons increase the public's incentive to buy and hold gold, because they decrease the opportunity cost of holding it.

Don't you feel sorry for the poor criminals, felons, & miscreants? They're like con-men defrauding a gullible old lady. Once they steal all her money, they're out of a job! Their victory guarantees their defeat.

The dollar index fell from its marginal new high yesterday, tumbling 37.3 basis points (0.48%) to 83.334. Y'all stifle your jubilation there -- Dollar's trend remains skyward until/unless it closes below 81.52, the last intraday low. If the dollar can come back & beat that 83.50 high, then its upside target becomes 88.70.

Hard for me to imagine the Fed felons allowing a rise that high. They want stability, & don't want to see the dollar making outsized gains against the yen or the euro.

Yen is reaching for its 200 day moving average at 126.76. Closed today at 126.25 cents/100 yen (Y79.21/US$1), up 0.14%. Last time it touched the 200 DMA, it collapsed. No reason to presume it's any stronger this time.

Euro managed to close higher -- 0.41% -- at $1.2249. Wow. That takes it up almost to the last low ($1.2288). Italy's debt was downgraded two steps today. Yeah, sure, everything's just hunky-dory in Euroland. Emperor's wearing a fine new birthday-suit.

Stocks broke out in a regular love fest today, driven maybe by low European interest rates. Rally carried to 12,785, somewhere in the direction of Tuesday's 12,830 high. Dow revived its hopes by closing 12,777.098, up 1.62% or 203.82, above its 20 DMA (12,718). Dow has formed a bearish rising wedge, foretelling lower prices soon.

S&P500 gained 1.65% (22.02) to close at 1,356.28. Upper limit of this move is 1,380.

Riddlesome remains the Dow in Gold Dollars. It has formed a diamond topping pattern. A break below G$163.30 (7.900 oz) should drop like your wedding ring down the kitchen sink drain. However, diamonds are frustrating & slow to unfold.

Gold followed up on silver's two non-confirming up days -- and the touch yesterday on the even-sided triangle's bottom boundary -- with a 1.7% ($26.70) rise today, closing Comex at $1,591.60.

Today's leap took gold to its 50 DMA $1,591.21) & above its 20 DMA ($1,590.53). It will shoot quickly toward the upper boundary, today around $1,620, but without strongly piercing that line, will fall back again toward the bottom boundary. This is typical summer doldrums base building. MACD & RSI have both turned up.

Expect higher gold prices next week, but be patient. Buy the declines.

Silver, too, labors in a triangle formation, but a falling wedge. Today it hit the upper boundary of that wedge, but even if it breaks through, the upper boundary of a larger decline triangle that encloses it awaits with resistance about 2800c. Silver gained 20.8c today to end at 2734.4c.

Well I know that it runs contrary to human nature to buy when there's blood in the streets, but few nervy acts pay off so richly. Most folks, however, wait to buy until a market is making new highs. Right now, silver is still bloodied.

On 13 July 1863 rioting erupted against Lincoln's draft law. The riots lasted three days, killoed somewhere between 120 & 2000, and were suppressed only by intervention of the army and navy.

On 13 July 1931 a major German financial institution, Danabank, failed. This led to closing all German banks until 5 August, & the resulting economic hardship helped bring Hitler & the Nazis to power later.

Y'all enjoy your weekend.

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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