Hard week for the big things, but great week for the little ones. S&P500 has dropped for nine days running, its longest losing streak since December 1980 [sic]. US dollar index proved this week it has no lungs tough enough to breathe the rarified air above 99. US 30 year treasury bond continues to fall, forecasting the worst economic mess in history. Silver & gold had a great week, breaking through resistance at 1800¢ & $1,300, & are set for another big rally.

Next Monday and Tuesday markets will be frozen, waiting to see whether the evil teenager or the blustering teenager wins. Truth to tell, 'twon't make a hill of beans to the economy. It has already been crippled by 36 years of interest rate suppression & the last 8 years of central bank madness (Quantitative Easing, zero interest rates, negative interest rates). Trouble is already baked into the cake, so it doesn't matter which communist is elected. Still, Wall Street thinks a Trump victory will do for US stocks what Brexit did for British stocks & the pound. Maybe a self-fulfilling prophecy.

Dow today lost 42.39 (0.24%) to 17,888.28. S&P500 fell 3.48 (0.17%) to 2,085.18.

Stocks are bracing to leap off a cliff edge. Here's the Dow Chart, http://schrts.co/wfVIft

In this chart of the last 11 months you can see the stock rally that began off the January/February double bottom, began losing steam, made a sharp wedge up to a new high in August, and has rolled down the hill since then. In the last three days the Dow has closed below support at about 18,000. Maybe the 200 day moving average will catch it at 17,768, but I doubt it. Should Hellery win the election, stocks might rally briefly, but reality won't go away & will soon catch up with them. A Trump victory will likely push stocks over the edge immediately.

Read it & weep, the US dollar index chart, http://schrts.co/OkJ5UT

US dollar index has sunk for the last 5 days. Now it has finally breached 97, closing today 23 basis points lighter than yesterday (down 0.23%) at 96.97. Next support is around 96.25. We know currency markets are a rigged game, but that's as negative a chart as you'll find anywhere.

As the mirror images of the US dollar, the yen & euro have gained from the dollar's losing streak, but not enough to inspire any optimism. Euro today rose 0.27% to $1.1137. Yen lost 0.06% to 97.06. I imagine that a Trump victory would send the dollar lower, another way of saying "Send gold higher."

Y'all better give ear about these bonds & interest rates. Look at the 10 year treasury yield, http://schrts.co/vUJO4G

Do y'all see that it is positioned above its moving averages & is challenging the downtrend line from 2007. It stands above its 200 DMA. It is tugging at the leash to rise.

Now look at the US 30 year treasury bond chart, http://schrts.co/7t8IsF

It "threw over" the blue channel line last July, and has since collapsed through the (green) rising wedge. Zero interest rates have forced it higher and higher, to an all time high in July. No place to go but down, and there beneath its 200 DMA, 20 DMA, and 50 DMA the bond is working mighty hard on dropping. When this market explodes, it will knock down virtually the whole world.

Comex gold rose a tee-tiny $1.20 (0.1%) today to $1,303.30. Silver gave back 4.1¢ to 1834.2¢.

But look: gold has closed THREE days above $1,300 resistance, silver 4 days above 1800¢. These resistance levels have been conquered, now silver & gold will move to the next ones. Next week will be filled with fear & uncertainty, which can bleed any market, but the course is set for the rest of the year and 2017: UP.

Before I say good-bye for the week, here's another Susan story.

Susan was tight: never stingy but she could squeeze a nickel till it begged for mercy. It was a game for her that she delighted to play, getting the most for those she loved out of her resources. Her five brothers and sisters are every bit as tight as Susan. They compete at tightness.

In 1999 when we moved into our log house, it came with an unfinished barn or garage. In the loft was a wooden casket the fellow who built our house had made for someone who never paid him for it, so he just threw the casket in with the house.

Now that casket worked on Susan's mind and stimulated her frugality. She used to tell me, "Whichever of us dies first, we're going to use that casket." She was absolutely serious.

A few hours after she died some of my sons and my eldest grandsons were standing out in the drive, and I thought about that casket & Susan's instructions. "You boys get on up in that loft and get that casket down. Mama Sue wanted to use it." They all called her Mama Sue.

They dragged it down, covered with an inch of dust, but it wasn't bad looking. Made of poplar, which ages out to a beautiful honey color, with a walnut cross on the top and metal handles. They took it up to the farm and cleaned it up, polished it, & painted the metal handles. One of my sons used to work for a casket manufacturer not far from us, and he took it down there & they installed a lining.

So Susan got a fine free casket & played the final trump card on her siblings: no way they'll ever get free caskets!

Y'all enjoy your weekend.

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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