I'm sending out this weekly wrap-up on Thursday because this evening I'm driving over to Pickwick Lake to spend the weekend with my sons. Every year the women in my family take a week off at the lake -- they give us two nights. Mercy, I'm glad to get that. Till this year it's been only one night.
Markets are confused and spooky, the result of feeding off central bank inflation. Like a drunk at a bar, they get nasty & unpredictable when the bartender threatens to cut them off.
US dollar index lost 1.9% last week, and another 1.1% this week. Silver & gold eroded, slowly but painfully, and platinum & palladium were squashed, mostly today.
Although stocks returned from yesterday's thrashing with a bouncy day, they still closed the week lower.
Dow gained 1.21% (180.85) today after yesterday's 0.84% loss (126.79) and closed at 15,176.08. S&P500 today gained 1.48% to close 1,636.36.
All this up & down generates loads of broker commissions, but standing back & looking at a chart, stocks have been locked in a downtrend since their May high. Today's trading did no more than bring them back to the downtrend line. Both indices did touch their 50 day moving averages, which is a logical place for a little rally-ette to begin. On the other hand, closes below this mark will feed panic.
A strong feeling of "I've been here before" overcomes me when I view the Dow in Gold & Dow in Silver charts. The high struck in August, 1999, a big drop followed, then the Dow in gold spent another year rolling over. Dow in silver was even slower to make that final high.
I don't think the same thing is happening, only observing the sloth in rolling over. Stocks are a very, very big market and take a long time to roll over. Add to that silver & gold's present weakness, & a frustrating back & forth plagues the chart & our nerves.
Dow in gold today closed up 0.243 oz (2.3%) at 11.016 oz (G$227.73 in gold dollars). Yesterday it fell through the 20 DMA, today closed back above it. Downtrend from May high, though, remains undamaged.
Dow in silver today jumped up 15.2 oz (2.2%) to close 703.18 oz. This should turn down soon.
For whatever reason, the Mighty Masters of the Universe, a.k.a. "central bankers," have decided to swing the pendulum the other way, jacking up the yen & euro & knocking down the US dollar index. Come to think of it, I hope they're manipulating exchange rates. Otherwise this chaos means nobody is in charge. Come to think of it . . .
Technically the US dollar index has broken down badly and is targeting 79 or lower. Today it peeled off another 15.8 basis points (0.2%) to end at 80.774. That's well below the 200 day moving average(81.07), below internal support, just below everything. There's some chance it might catch around 80.25, & as far as it has fallen already, it's due at least a small correction.
Those who live by inflation, die by inflation. Nikkei stock index had gamboled & cavorted higher as the Japanese Nice Government Men drove the yen lower and lower. Yen is now rising and today the Nikkei lost 6.5%. Think an 825 point loss on the Dow & you'll approximate the pain. Now, as a point too painful for rational and fastidious minds to ponder, I pass over the grotesquely mythological Keynesian notion that depreciating a nation's currency by inflation can either spur economic activity or raise stock market values. However, that insanely goofy notion now driveth stock markets around the globe.
Yen rose 0.77% today, made a new high for the move at 106.47, & closed at 104.93 cents/Y100. Euro rose 0.22% to $1.3363, heading for $1.3500.
Riding the same old seesaw, silver lost 21.4 cents (1%) today, falling to 2158.2c. Gold lost 1%, too, or $14.20 and ended at $1,377.60. For the week gold fell 0.4% and silver slid 0.7%.
Silver & gold are both trading in tight ranges, $20 today for gold and 45 cents for silver, and they've done that all week. Ranges never last, so this one will break out one way or the other soon. Since the trend is down, most likely breakout direction is down, too. Silver's range is 2133c to 2200c, gold's $1,375 - $1,415. Closes above or below those levels will lead to long moves. I expect one more plunge to end this long correction, and I expect it before June ends, but what I expect and what the market may be two very different things.
Most of all, silver & gold investors shouldn't worry about the "end of the bull market." It hasn't ended, because the cause (inflation) hasn't ended, and there's no end in sight. Where is the statesman who will tell all those living off government that the game is over? That rotten banks must fail? That you can't have your cake and eat it, too? He's nowhere in sight, so the corruption will continue, and so will the silver & gold bull market.
After all the revelations of government spying, the Establishment damage control teams are being trotted out to tell us why it really is a good thing to spend billions spying, & to kill US citizens with drones. Let me see if I can dissect this insanity.
They issue, what -- an order, a warrant -- to murder a US citizen. Where is THAT in the constitution?
Who is "they"? The government -- read "some people" -- secretly identifies some person as a "terrorist." We don't know by what procedure they do that, but is it administrative and not judicial, therefore not subject to due process of law. The victim has no opportunity to controvert the government's claim. All is done secretly.
Then the government -- or the president -- arrogates to itself a "death warrant" to kill some person because he MIGHT commit a crime, or MIGHT be thinking about committing a crime someday. Thus he is punished in advance of committing a crime. Very efficient, but still no due process.
If they do this in the green tree, what will they do in the dry? They will MOST ASSUREDLY also apply this secret assassination policy to US citizens inside the US. Only a matter of time, & not much of that.
Hard sometimes not to throw up your hands in despair. The more you know, the worse it gets. To my great relief I read Psalm 12 this morning, which cured my lame perspective.
Y'all enjoy your weekend!
Argentum et aurum comparanda sunt —
Silver and gold must be bought.
— Franklin Sanders, The Moneychanger