SD Friday Wrap: Gold hasn’t even technically died on the charts, but already the question is being asked. Here’s an answer worth its weight in gold…
This seems an appropriate way to start the SD Friday Wrap:
For the wrong reasons.
I want to direct your attention to the descending blue 50-day moving average and the still rising red 200-day moving average. I’ve been talking a lot about “death crosses” this week.
As a reminder, a death cross happens when the 50-day moving average crosses below the 200-day moving average.
Death Crosses are bearish, but it’s all about perspective.
In this case, the 50-day is rapidly closing in on the 200-day, and if you’re a Silverbug, this is one of those instances when a “death cross” is actually a good thing.
It means that silver is about to really start outperforming gold. This is all part of the great set-up in the making. I’ve called the rolling top in the GSR, and like clockwork, we’re fast approaching the cross.
While it may not seem like it, this is all technical action we must see develop if we’re going higher in price.
Side note: Other instances you would welcome a death cross would be if you’re selling short a stock, because at that point you would want the stock price to go down.
I explained what “short selling” is in an introduction to this post.
That’s for those who want to learn a little more, bit by bit, when it comes to the market lingo, it’s a real quick read.
Back on track:
Now, on to the big question, but not the $64,000 question: Did we get our death cross in gold?
Well, look closely on my chart:
I super zoomed-in to show that I’ve got the 50-day and the 200-day right on top of each other, and the yellow highlighted numbers show the average price is right there at $1307.60, for both.
In other words, the 50-day is neither above the 200-day nor below the 200-day.
The 50-day moving average is exactly on top of the 200-day moving average.
If we wanted to use an analogy, technically speaking, gold just flat-lined.
Is gold dead?
Is gold alive?
Technically speaking, yes.
Zooming out a little, we see what is about to happen:
The death cross is going to happen.
Counting backwards with yesterday starting at number 1 (assuming my eyes didn’t betray me as I counted each candle), we see that 51 days ago, we we’re at 52-week highs in gold.
Now that’s trading days, so that’s more than two months, but it just goes to show you how close we were to the break-out before the cartel literally unleashed pure heck on us.
But here’s my point about the dreaded death cross: About a week after putting in that high at $1369.40, gold started dropping, bigly.
In fact, price went from an intra-day high of $1357.70 to a closing low of $1304.60 in 9 trading days.
I say that because this means the 50-day moving average (currently $1307.60) is going to start really pointing down here in just a matter of days.
So we’re gonna cross, it’s just a matter of time.
There’s no avoiding it.
I’ve always said I’m a terrible mathematician, so don’t tread on my math, but common sense tells me the cross will be clear for everybody to see next week.
I mean, the moving averages are stacked like some Denny’s pancakes anyways.
So it’s coming, and there’s no way to avoid it and no reason to think we can just keep gold on life support.
Because the cartel is going to pull the plug on gold.
On the gold weekly chart, we can even see what could be a bearish trend developing:
That is definitely a series of two lower-highs and lower-lows.
Generally speaking, however, you want to see a series of three to confirm the trend.
So all of this gold talk brings us to the $64,000 question: Has gold bottomed?
Short answer, I don’t think so.
I apologize in advance if you don’t think you got your $64,000 worth of an answer.
But there’s more, so don’t give up on me just yet.
Let phrase the question a different way: Where is gold headed from $1271, the price we are at today?
Short answer: I think we’re going lower.
But let me explain because there’s a lot of chatter about this very question right now.
Some analysts and traders are already calling the bottom in gold.
Michael Ballanger just called the bottom in gold, and we’ll know soon enough if he’s right.
Now I know, Ol’ Half Dollar and his tiny trading account with his amateur trading skills ain’t got nothin’ on a trader who’s been trading since before I was born.
But I’m gonna go there: I think Michael is wrong.
He’s calling the bottom based on the Relative Strength Index (RSI), and remember, things can remain “oversold” for much longer than what seems likely.
A recent example of this, while not “oversold” but still equally valid, is the rally in the dollar, which on the RSI has been “overbought” for longer than most thought possible, including Ol’ Half Dollar.
Let me argue my case –
I think the cartel is determined to make the gold death cross plain as day for the whole world to see, and, hopefully in the cartel’s eyes, people will sell gold based off of the cross.
It’s really psychological warfare at this point, and like I said the other day, the cartel failed last time, so I wouldn’t count on them to fail this time around.
On the other hand, I did say to watch $1260 to $1265 for the cartel to really wipe the slate clean, and we hit that zone just yesterday morning.
I believe it was $1262 and some change.
So we’ll see, but I really think this is the cartel’s plan.
I think the cartel plan will be executed in two steps:
- Strong arm the market all next week, possibly even allow a “relief rally” up to $1290 to $1300.
- Come in the week after and beat gold into a bloody pulp again.
Here’s why I see it unfolding like that –
Next week is full of Fed Head speeches and a bunch of potential gold bashing data dumps (new home sales, trade data, income data, etc), but the week after next, that’s when the damage to gold really gets done.
The week after next (I’m talking July 2nd through July 6th) is a holiday shortened week (4th of July), and Independence Day falls right smack dab in the middle of the week, so I’m thinking people will be taking extended weekends ether in advance of, or more likely, after the actual holiday.
If the latter is the case, which my experience in the Army tells me it is, the cartel will be able to pound the gold “market” on Tuesday and not worry about the gold “market” again until Wednesday night/Thursday morning, at which time many U.S. traders and investors will be enjoying summer vacation anyway and therefore those traders and investors will be away from their trading and investing activities.
Remember, people who are traders and investors, especially the business professionals doing it for a living for some company, have posh benefits with awesome vacation time, so while much of the country no longer has paid time-off, those who are in the “markets” certainly do, and in two weeks, they’ll be using that paid time-off coupled with a federal holiday to the fullest.
But wait, it get’s worse!
The Fourth of July is not the only thing we have to worry about that week.
That Friday, July 6th, we get the data dump of the June 2018 BLS Jobs Report, which we all know will be prime time for cartel smashing.
So it’s really not looking good, fundamentally speaking, over the next two weeks.
So be prepared for it: Next week could bring us a relief rally in gold, followed by another absolute pounding two weeks later.
Can you imagine what that would do to sentiment?
That said, once we get past that week, which would be Monday, July 9th, I think we will begin the next rally.
So I’m making a time call, not a price call, and I’ll recap: Sideways to slightly higher next week, and possibly a relief rally, followed by a pounding the week after to really crush sentiment
Hopefully we do a relief rally and get back up to $1290 – $1300 next week, because then we would have a higher place to fall in price from.
Half Dollar’s call: The rally finally begins on July 9th.
As far as price targets, well, we’ll cross that bridge when we get there.
Besides, this is a recap, not an outlook.
I will say this though: My calls have been spot on for the last several months.
No need to put the silver weekly chart up.
In fact, no need to put any silver chart up.
We know the price already.
But just to remind everybody:
I drew the narrow range of the sideways channel of pure agony.
We’re at the lower-bound of the narrow range.
With what I just said about gold, the same applies to silver.
That said, my call is that the rally will begin in earnest beginning on July 9th.
There’s good news: Last July when we began the rally, silver went up over 20% in price before meeting the cartel hammer.
This year, however, I’m even more optimistic for he rally.
To me, the next rally is even more promising.
Two words: Crude Oil.
The price of crude oil was still in the $40s last July, and we’re at nearly $70 today.
You’ll want to keep on reading this entire Friday Wrap, because I’m going to end it with crude oil and a point/question that I think is very interesting.
Palladium has finally found an up-day:
That said, I’m in more of a wait-n-see with palladium.
What we really don’t want to see is another leg down, so the next two weeks will be critical.
I don’t have to show the platinum chart either, because just like with silver, we know what to expect with platinum:
But look closely and see that there’s an interesting pattern on that chart.
Looking at all of those prior lower-lows, it seems as if platinum is now going to rally from here.
However, here’s the scary part: If I’m right about my timing call on gold & silver (July 9th), then we’ll likely see a rise next week in platinum.
And what has happened the last seven times that platinum rose in price?
It rose in price only enough to put in a lower-high and start falling again.
So we’ll see.
To wrap up the precious metals, I don’t think the bottom is in for gold & silver.
Price wise, I think the cartel is banking on the momentum carried through by gold’s death cross, and they’ll also rape the traders with a possible “relief rally” next week that they will quickly smash the week after next.
Let’s hope I’m wrong.
See how momentum carries on death crosses or golden crosses:
OK, “but Half Dollar, everybody knows the dollar had that huge spike-up because of uber-dove Mario Draghi over there in Eurolandia!”.
Uh, fine, but which came first, the chicken or the egg?
The dollar was rallying into the Draghi, and even coming off of Draghi, the dollar still climbed a bit, so the momentum is there, in part because of the golden cross.
And look how pronounced the cross is on that dollar chart.
It will roll, in time.
Speaking of rolling, is the stock market rolling over?
The Dow Jones Industrial Average looks like it might be rolling over here:
The stock market will come down, bigly, one of these days.
I want point I want to make about the stock market in general, and the Dow specifically.
It’s an important point and here is what it’s about: People always compare the stock market to gold.
When people talk about the stock market, they are usually talking about the Dow.
But here’s the thing – the Dow is made up of 30 companies, and the 30 companies that are in the Dow changes all the time!
We just got word that the last original company, General Electric (GE), is not going to be in the Dow any longer.
So here’s my questions:
1. Is one ounce of .999 fine gold always one ounce of .999 fine gold?
Yes it is.
2. Is the stock market (Dow) made up of the same companies as when it was created?
No it is not.
3. So, how in the heck can you compare the stock market to gold?
Comparing gold to the stock market is like comparing transportation by horse to a plasma TV.
They are two different things entirely.
And before anybody says, “Half Dollar, transportation by horse is stupid, just like gold”, well, just don’t, because you will get shredded in the comments.
But I digress.
Comparing the stock market to gold is like comparing transportation by horse to a plasma TV.
There is no comparison.
One ounce of .999 fine gold has been one ounce of .999 fine gold for 5000 years, but the Dow changes the companies all the time, and isn’t even one of the original companies left withing the Dow.
The VIX looks like it could be waking up here:
If the VIX does start waking up, then we would indeed be looking for the stock market to roll over.
But the yield on the 10-Year Treasury Note is not giving us any clues:
We’re at the low end of the range, but yield is still range-bound at 2.9% to 3.0%.
Copper is finding a reprieve here:
The bleeding hasn’t stopped, but at least the puking has.
Finally, ending with crude.
I’m glad you stuck around for it, because I think it’s important, and it may even be philosophical in nature.
Hope OPEC will increase output substantially. Need to keep prices down!
— Donald J. Trump (@realDonaldTrump) June 22, 2018
Followed by the chart:
OPEC just announced a 600,000 to 800,000 barrel per day increase in production, yet the price of crude oil still spiked on the day.
But that’s not my point.
My point is this: Why is it that rising oil prices are bad, according to our President?
I mean, if you work in the oil and gas industry, rising prices are good, right?
It’s all relative.
Granted, I get it – for me, rising prices are not good, because I have no direct positions in the energy sector, and, generally speaking, the only direct contact I have with the oil and gas sector is when I’m filling-up my or my wife’s vehicle at the pump.
There’s a point here.
Higher oil prices and by extension higher gas prices are good for some, but higher prices are bad for others.
President Trump is likely thinking of the consumer.
If you agree with that statement, that’s why President Trump thinks oil prices are too high.
High oil prices hurt us Deplorables where it counts – in the wallet.
But how can President Trump have his cake and eat it too?
You see, on the one hand, where the President want consumers to have relief at the pump, he doesn’t want homes to be affordable.
See for yourself in a Tweet from just last fall:
— Donald J. Trump (@realDonaldTrump) October 31, 2017
I’d like to buy a house, but am I going to buy one after they are at “all-time record highs”?
If home prices have been rising for now some nine years, is now a good time to buy a house, fundamentally speaking?
What about first time home buyers?
What about people who would like to move up in house?
What about people who are renting, but would rather own a house but houses are too expensive?
What about the increased property tax burden?
You see, if rising oil prices are bad, how are rising home prices good?
How can you have your cake and eat it too?
I went off on that paradox to mention something that has been bothering me lately.
Call it a rant.
First of all, this:
We know President Trump is a Goldbug.
And while one can debate whether rising gas prices are good or bad.
And while one can debate whether rising home prices are good or bad.
There is no debate when it comes to gold (and silver).
Everybody has to decide what is an appropriate percentage, but there is no debate.
Owning some physical gold and some physical silver is the safe and smart thing to do.
So If only President Trump would Tweet something to the effect that we should all own some gold & silver.
Because it’s a win-win and the smart thing to do.
Wouldn’t that be great for all Americans?
I certainly think it would.
– Half Dollar
About the Author
U.S. Army Iraq War Combat Veteran Paul “Half Dollar” Eberhart has an AS in Information Systems and Security from Western Technical College and a BA in Spanish from The University of North Carolina at Chapel Hill. Paul dived into gold & silver in 2009 as a natural progression from the prepper community. He is self-studied in the field of economics, an active amateur trader, and a Silver Bug at heart.