Some silly Austrian on the European Council resurrected from the dead today the idea of making a "bank" out of the European Stability Mechanism so it could borrow from the ECB & thus buy up all the rotten sovereign debt. This is really bright, moving the inflation back one layer, but building in a MASSIVE inflation still. Doesn't matter, nobody can think, & certainly not anybody in markets, as this stale news sent people flying into stocks & out of the dollar.

But we did get an "announcement," didn't we, as I suggested we might.

US Dollar index fell back from that 84 level like the Wicked Witch of the East facing Dorothy with a bucket of water. Lost 40.3 basis points (0.52%) to end at 83.60.

Euro was the big gainer, up 0.67% to $1.2154. Yen stayed flat at 127.93 cents (Y78.16).

Stocks couldn't make up their mind today. Most indices lost a little, like the S&P500 down 0.42 (0.03%) to 1,337.89. But the Potemkin Dow -- O! Miracle Made In Washington! -- rose 58.73 (0.47%) to 12,676.05.

Interesting is that most indices rose much higher today than they closed. Doesn't bespeak muscularity.

Since the Dow was the strongest index today, I peeked at its chart. There is say a breakdown beginning two days ago, and today's bounce up to give the lower wedge boundary line a final kiss good bye. Stocks are suffering from acute gravity poisoning.

Once gold reached $1,595 today all its enemies fled the field, throwing down their weapons as they ran like scalded dogs. From yesterday's $1,567.20 close Gold bounded to $1,609.82, & gave back very little at the close. Gained a total $31.90 & closed Comex at $1,608.10.

That mashes gold's nose plumb up against the upper boundary line of that even-sided triangle I've been talking about. Up against that line, I say, & not busted clean through. They're not the same thing by a long shot. Get this straight: gold must burst through that $1,610 line to break out of the triangle, & then confirm that breakout by moving smartly above $1,630 & $1,640. Today's move was helpful & stout, but all it did was light the fuse. Gold might still re-visit the lower boundary line before finally breaking through the upper.

Gold gained 2.02% today, silver gained 2.44%. Silver jumped 65.5 cents to close today at 2744.5, not far from the 2756 high.

All this is welcome as cold water on a blistering day, but it's not resolved anything yet. Silver, too, bumped up against the upper boundary of its flat-topped rising triangle. It must break through 2760 & then clear 2850c to confirm a breakout.

Awww, y'all be patient. It's coming, we just can't know from today's action whether that rally is here yet or not, although we know for sure it's setting up.

On 25 July 1775 Maryland issued a currency depicting George III trampling Magna Carta. Sound sentiment, but bad judgment. They printed it on paper currency, which has harmed mankind & justice more than all the kings, dictators, & tyrants in history.

On 25 July 1805 Aaron Burr visited New Orleans planning to establish a new country with New Orleans as the capital. I don't know . . . Could that be worse than what we ended up with? Mardi Gras would be a national holiday & the national motto, "Laissez le bon temps rouler!"

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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