Dow Jones Up, Up, and Away! Gold and Silver, Not So Much
This will be a shorten article, as this week is America’s 4th of July Celebration, the day America declared its independence from the British Empire in 1776. No other event in human history had brought forth such wonderful developments for the average human being. America was where the “middle-class” was developed. The large sector of society that didn’t live in luxury at the top, or endured the grinding poverty at the bottom. Not everybody would agree with that, but they would be wrong, for reasons of ignorance, or of too much college education.
Yes, I’m grateful for America, and for all its faults, I thank God for it. I wouldn’t care to live way back in the Roman Empire, or today in Paris France. Oh, give me a home, where the buffalo roam, and the deer and antelope play, somewhere pistol ammunition sells at a discount a couple of times a year – yes America.
The Dow Jones continues advancing towards; well, who can say towards what? Towards the ultimate all-time high of this almost three-year advance. What that ultimate all-time high maybe, I haven’t a clue, but I know it’s up there, somewhere.
Unless the financial system suffers a shock from the debt market, a high-tech disaster, or something else that would give pause, and force the market to finally take a good look at the lofty heights the stock market currently is trading at, I can see the Dow Jones trading above 60,000, and then some. 60,000 on the Dow Jones is only 13.4% from this week’s close of 52,900. As it is, the Dow Jones could do that by Christmas.
And why not? This week the Dow Jones closed at a new all-time high, on three of its four trading days, its 92nd to 94th since it entered into scoring position in November 2023. That is a lot of BEV Zeros. For as long as the Dow Jones continues residing in scoring position in its BEV chart below, we can anticipate additional new all-time highs to come.
The Dow Jones’ BEV chart, and frequency table below tells the tale; since November 2023, daily it has closed in scoring position, while seeing two small corrections;
- April 2025 / 15% correction,
- April 2026 / 10% correction.
Here is the frequency distribution table for this advance. Since 20 November 2023, of all daily closes (within the table’s red rectangle), 14.35% closed at a new all-time high, and 68.55% in scoring position. This is a solid advance, and I expect more to come.
This (table above, and chart below) is what a multi-year advance, in the Dow Jones looks like, in the Bear’s Eye View Format.
To see what this advance looks like in the dollars the Dow Jones is published in, I included the chart above, plotting the Dow Jones with its 52Wk High & Low Lines, going back to April 2015, the last ten years of this advance in the Dow Jones.
I enclosed the actual advances inside of Red Rectangles, those times the Dow Jones was actively pushing up on its 52Wk line. Inside these rectangles, each time the Dow Jones pushed its 52Wk line to a new 52Wk high, it produced a new BEV Zero on its BEV chart.
Looking at our current advance, the far-right rectangle, it’s easy identifying the two corrections the Dow Jones saw in April 2025 and April 2026. Following those corrections, the Dow Jones began advancing to new 52Wk highs / new all-time highs.
Taking a quick look at these advances. Following a correction, the Dow Jones is seen advancing to new all-time highs, for a good period of time, a good number of new all-time highs, before the next correction. As the latest correction has recently terminated, the Dow Jones should have ample headroom for it to advance in the year to come.
Of course, that assumes nothing goes wrong, somewhere / something, that would bust-up this party on Wall Street.
Plotting the Dow Jones in daily bars below, last week we were looking at the Dow Jones at 52,000. This week, it closed just 100 points short of 53,000, an advance of about 900 points.
How did the rest of the stock market do this week? The best way I know of illustrating that, is to look at the BEV values for the major market indexes I follow, in the table below.
New all-time high production in the stock market increased this week, as seen in the BEV Zeros below, peaking at six of the major indexes closing Friday, at a new all-time high. Also, Friday saw ten of these indexes close inside of scoring position, within 5% of their last all-time high. This is excellent market action.
Summer for the stock market, is supposed to be a boring place to be. But, should this continue, and I think it will, this summer may provide some excitement for the bulls.
The problem I have with that is; historically speaking, when everything is looking great, and no one can see anything coming to ruin the party on Wall Street, little clouds begin forming on the horizon, that soon grow to rain and thunder on the stock market. That, plus this advance began in November 2023, making this a very mature advance. So, do I see any clouds forming on the Western horizon? Not a one. But I will keep looking!
Looking for what? Oh, rising bond yields and increases in daily volatility for the Dow Jones are two market metrics I follow. The stock market loves falling bond yields.
In the chart below of Barron’s Corporate Bond Yields (two charts down), it’s no surprise from 1966 to 1981, the Dow Jones attempted to break above 1000, five time, and five times failed to remain above it, because of rising bond yields. In August 1982, as bond yields had declined for the past year, the Dow Jones began an advance that continues to this day.
The massive bull market we are still enjoying today, began in August 1982, as bond yields began a two-decade long decline (chart below). That was no accident. These corporate bond yields then bottomed in late 2020, and have been rising these past six years. So, why hasn’t the stock market seen a bear market, or stagnated as it did from 1966 to 1982?
Because bond yields, and valuations in the stock market are not bolted together. There can be significant lag-times between an action in the bond market, and a reaction to it in the stock market. Bond yields in the chart below, began rising in 1951, as the Dow Jones continued advancing until 1966. But once an unknown threshold in yields is crossed, as it was in 1966 below, rising bond yields’ impact on the stock market then becomes apparent, as seen in the chart above.
So, corporate-bond yields have been rising since late 2020, for six years with little impact on the Dow Jones, my proxy for the broad stock market. According to Mark’s Theory on Bond Yields’ impact on Stock-Market Valuations, the unknown threshold in bond yields still lays somewhere above, still not crossed.
Based on my less than perfect knowledge of the bond market, and of the future, I suspect when Barron’s Best and Intermediate Grade Bond Yields, seen plotted above, once again increase to something over 7%, the stock-bull market that began in August 1982, will be terminated. If so, covering the stock market in terms of BEV Zeros, will then be only a fond memory.
Will corporate bond yields increase to something over 7%? Should consumer price inflation continue rising, or if credit standings of corporate America’s balance sheets come into doubt, we’ll see higher bond yields much higher than 7%. That can’t be good for the stock market.
But will that happen?
It’s a funny thing, the difference between what people think about during a bull market, verses what they think about in a bear market. During bull markets, people are optimistic, willing to ignore many ugly details apparent to anyone willing to look at them. Ugly details which during a bull market, people willingly ignore.
But during a bear market, people no longer look at the market’s silver lining, but focus on the dark clouds behind them. Dwelling on the macabre details of the market become the orders of the day in a bear market. As our economy is one fueled by debt, and has been for many decades, I don’t think I’m being radical believing many of today’s corporations, trading daily in the stock market, are in fact the walking dead, come the next big economic turndown.
Today’s bulls think little of corporate solvency; can a company pay its bills? Is a favorite stock trading today, a zombi corporation, one which can only pay its bills by taking on more, and more debt. As things are now, who knows / who cares?
Tomorrow’s bears will think little of anything else. In such a world, assets with zero counter-party risks will demand top dollar prices, assets like gold and silver bullion. Gold and silver miners will do very well too, as they did during the depressing 1930s.
So, let’s take a look at gold’s BEV chart below. Gold closed the week above its BEV -25% line, the first time since June 23rd. However, this remains a bearish chart. Hopefully, gold will remain above its BEV -30% line. But will it? Only time will tell. Considering this is correction has now gone on for about six months, and has done what all proper corrections finally do, shake out the market’s weak hands, I think we are closer to the bottom, than to the beginnings of this correction, in terms of both time and valuations.
So, I’m inclined to believe the next big thing for gold, is for it to rise up to its BEV -15% line, rather than fall below its BEV -30% line. But I’ve been wrong before. Let’s hope this time I’m not.
Here is silver’s BEV chart, what a tale of woe this is! Since January 28th, when silver saw its last all-time high of $118.45, two days later silver saw a one-day decline of 27.5%, to be followed by another one-day decline of 20.91% four days later. So, from silver’s January 28th last all-time high ($118.45), to breaking below its BEV -40% line ($70.63) on February 5th, took only six COMEX trading sessions.
That just doesn’t pass the smell test. Damn right, it stinks! Where are the commodities’ market regulators, the CFTC?
It is what it is. And what it is, is very odd; going from a new all-time high, to losing 40% of that during a six-day selling orgy at the floor of the COMEX.
It’s not because silver inventories at the COMEX are over flowing, due to the increases in the supply of silver bullion. An increase in supply that overwhelmed the demand for silver. It has not. Since COMEX silver inventories peaked last October, they’ve declined by 40%. So why today, is the price of silver down by 50% since last January? Why indeed!
Above is a chart plotting every day of extreme volatility for silver, or silver’s 5% days, days silver has moved +/- 5% from a previous day’s closing price. Above, red circle, is what the January 30th, one day 27.5% decline in the price of silver looks like. Nothing like it since January 1980. Where is the CFTC, the government’s market regulator created to ensure nothing dodgy is going on in the silver and gold market. They are nowhere to be seen, and after thirty years of “public service,” they get a nice government pension.
Below in gold’s step sum table, declining days still dominate the market. The bottom for this correction (so far), was seen on June 24th, when gold closed below $4,000. Let’s hope that bottom holds, and gold once again begins to see more advancing days, than daily declines, as seen over on the Dow Jones side of the table.
The Dow Jones’ 15-count has closed with a +7, five times since May 28th. A 15-count of +7 is an overbought market. Markets don’t like being overbought, and typically pull back following a +7, 15-count. But as seen above, the Dow Jones is not only overbought, but is overbought and loving it, with one new BEV Zero after another for the entire month of June.
How long can this go on? Well, this can’t go on forever. But it can go on for as long as necessary, to make me look like a fool, should I foolishly attempt to guess when this bacchanal of advancing days, and new all-time highs should cease.
So, I won’t guess. But I will say that expecting the Dow Jones to repeat in July, what we see in June above, is unlikely. But that doesn’t mean a market crash will follow. Not with the Dow Jones daily volatility’s 200D M/A currently at a very low 0.62%.
Don’t even think of the stock market crashing, until this metric of daily volatility begins to creep up to 1.00%, and Dow Jones days of extreme volatility, days the Dow Jones moves +/- 2%, or more from a previous day’s close become common daily occurrences.
Dow Jones’ 2% days are always big market events. With the Dow Jones now trading at 52,900, a 2% day would be a daily move of +/- 1,058 points. Such a one day move in the Dow Jones, will get everyone’s attention.
Here is a chart plotting every Dow Jones 2% day, since January 1900. When did the Dow Jones see its largest daily advances, daily advances well above a one day, 12% move? During the Great Depression Crash. So, when Mr Bear comes to pay Wall Street a visit, don’t be so quick to believe a big up day in the Dow Jones during a selling panic, is calling a bottom in the market decline. That is only what Mr Bear wants you to believe, and he is no friend to you or me.
Well, that is it for this week. Good Lord willing, I’ll be back next week, hopefully a week where gold and silver begin rising from their corrections lows.
Mark J. Lundeen
********
