While markets are becalmed in the summer doldrums I'd like to re-visit some eternal verities. Well, not eternal, really, but rock-bottom, never-going-to-go-away, understand- this-first-or-understand-nothing verities of the fascist economic & political system we live under. (Don't y'all bother writing me a bunch of smoking emails about the word "fascist." I am using the word technically because it precisely describes a system of "government-business partnership" run by government for benefit of big business, a form of socialism. Look it up.) First, stability above all. Central bankers & governments above all are trying to keep everything from exploding into panic and collapsing. Second, they care not a hoot for the long run. Like the pseudo-economist Keynes said, "In the long run we're all dead." All they care about is keeping the system running until they get off at 5:00 p.m. Permanent reforms, economic justice, equal opportunity, debt relief, rule of law, all these are just labels to make the public drink the jugs of hogwash. Third, not a single central banker, US or otherwise, wants to see the dollar gain or lose drastically against its own currency. When a currency rises against others, that raises the price of its exports & lowers internal economic activity. If a currency drops too fast, it might spark a panic out of the currency. Nope, they want those exchange rates steady within a tight band, and they do manipulate currency markets to keep them there. Fourth, & most important for y'all to understand because it determines the future, massive debt & government deficit spending are not an accident, not an excess of the system, but as organic to it as blood to the human body. Therefore, though they may criticize borrowing & spending, they cannot stop it because they must INFLATE OR DIE. That is the system's nature, & that is why silver & gold offer such promise. They will keep inflating, and inflating drives silver & gold up. Fifth, no market runs up or down forever. At some point silver & gold will peak & you must sell them. Speaking of that, the yield on US treasury debt is now about lower than it was in the Great Depression. That can't persist forever, although I can't foretell when it will turn. Probably not too long, and when that yield starts rising (and bonds start dropping), silver & gold will become the last safe haven standing, and profit accordingly. Today the US Dollar Index, in danger of rallying away toward 90, was whacked on the head by an invisible hand holding an invisible ball peen hammer. Generally speaking, in today's world the invisible hand is always Nice Government Men acting in your benefit. What?! You don't want them acting in your benefit? You think it's to your detriment instead? Hoi polloi! Peasant! What do you know about really big stuff? Whoops, got carried away. Anyhow, the Dollar index fell 0.33% or 25.4 basis points to 83.094. While 83 is the looming mile marker, that was a bad tumble technically, bouncing off the top boundary of a trading channel (kick 'em while they're down, is the NGM's motto), which suggests a fall to the bottom boundary about 79.50. Crossing the last low at 81.52 would put that target in gear. Today's dollar weakness boosted the euro 0.22% to $1.2276. At least that gets it up off Friday's $1.2163 low, lowest prices since June 2010. NGM may slow, but will not stop, the euro's shrinking to $1.2000 or lower. Proving the utter looneydom of currency markets, the yen today, scabbiest, most scrofulous, & weakest of all fiat currencies, mounted 0.4% to 126.83c/Y100 (Y78.85/US$1). That pokes its head above the 200 day moving average (126.74) & promises to rally to the downtrend line at 128. Go figure. Stocks today never even crawled as high as unchanged. After Friday's 1.6%+ rises, indices rolled over today. Dow paid back 49.88 (0.4%) to 12,727.21 and the S&P500 coughed up 3.14 (0.23%) top 1,353.64. From here the S&P500 could rally to 1,380 & Dow to 13,000 & the moves would mean nothing. At those levels the necklines of completed head and shoulders formations linger above, waiting to knock stock indices flat every time they draw near. Let me make this clear about stocks. They represent a diverse cosmos of undertakings, and even when the economy languishes in depression, somebody will be making money. However, the indices average the performance of many stocks. As the economy prospers or sickens, those indices wax or wane. Those indices, along with the economy, entered a WANING phase in 2000, a primary downtrend, a long term bear market lasting 15 to 20 years. Therefore if you stick with the conventional diversification wisdom and buy broad mutual funds or index funds, you will lose your shirt, your belt, and your underwear. Either pick individual stocks in waxing industries (gold mining, for example, or oil exploration) or stay away from stocks altogether. And since most folks have neither patience, temperament, nor skill to pick individual stocks, best for most to stay away. Silver & gold are range bound at their slow, low season, so most trading we are witnessing amounts to no more than white noise, meaningless static, UNLESS they close outside that range. Bottom of that range for silver is 2600c, top is 2800c; for gold, $1,550 & $1,640. While you're waiting, it's a good idea to buy whenever they fall toward those bottom boundaries. Today gold lost a meaningless 40c to close Comex at $1,591.20. Meaningless, except that a stall means something, too. Gold did close above its 20 DMA ($1,588.42) today & smack on its 50 DMA ($1,590.19). That rouses hope, but decides nothing. Most likely Gold is headed for that triangle's top boundary line, today about $1,620, & may bounce off that for another round trip. Won't know till it gets there & shows us. Pay attention here: I'm not blackening gold or its prospects, merely pointing out what "range-bound" means. Silver eked out a 4.7c loss today to close 2729.7 cents. I'm encouraged that's above 2700c, and it's bumping up against the 20 DMA (2737c). One more reason arguing silver & gold will not drop to lower lows is the high premiums on US 90% silver coin and on Krugerrands and American Eagles. These subtle but eloquent clues point to strong physical demand. Y'all bridle your impatience. It's summer, & summer'll be over soon enough. Gold & silver are doing just fine, thank you very much, still in a bull market. On 16 July 1054 began the Great Schism between the Eastern and Western Churches, an estrangement that continues today. It hangs on two words -- filioque or "and the Son" -- the Western Church added to the creed without the whole Church's agreement. Sometimes comes something along so amazing & promising that I have to share it: the documentary Fat, Sick, & Nearly Dead. 310 lb. Joe Cross and 478 lb. Phil are fat, sick, & nearly dead, plagued with all the diseases of obesity plus an auto-immune disorder urticaria. Joe's a successful businessman from Australia, and decides he will juice his way across America, driving and talking to Americans about diet. That's right, I said "juice" as in turning vegetables & fruits into juice and drinking that alone for food. Along the way he meets Phil, in worse shape than he is. Here's the amazement: juicing works. They both shed down to the neighborhood of 220 lb., and with the weight shed their health problems as well, in less than six months. I confess, before this film I believed there was no hope for morbid obesity except having your stomach stapled or having the fat surgically removed. That's wrong -- juicing does it, more slowly, I admit, but with far less blood loss and pain. Go watch the movie. It could mean life or death to you or someone you know. Download it for free at http://www.fatsickandnearlydead.com/
Argentum et aurum comparanda sunt —
Silver and gold must be bought.
— Franklin Sanders, The Moneychanger
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