SD Midweek: Mixed signals are being sent with regards to gold & silver. Let’s break them down to see if we can get a clear picture to come into focus…
There has been no shortage of confusing forecasts lately. From technical analysts calling the bottoms to Elliott Wavers saying we haven’t bottomed yet, and from fundamentalists saying there’s even more bearish factors to consider to cycles guys flip-flopping, It’s really been a wet bag of hot doo-doo on the calls lately.
Is it any wonder why gold & silver investors could be confused about what is going on with gold & silver?
Here’s the thing: This is all a good sign. Volatility happens at major turning points, and if I may, there is massive volatility with investors, pundits and traders alike when it comes to how adamant everybody is about which way gold & silver are headed. In other words, we are at a major turning point, and since we’re at a major turning point, the question then becomes, are we turning and moving higher, or are we turning down yet again, and moving lower?
Aside from the run in 2016, we have basically been in a bear market for seven years, so in my mind, the coming turn isn’t towards a coming crash, but rather, the turn is towards higher prices.
Many fundamental factors support this thesis:
- Longest stock market bull run, ever.
- A dollar that nobody loves being strong.
- Rising crude oil prices.
- Rising inflation.
- Record high home prices and a real estate bubble that looks like it is popping.
- Geo-political risk that has been effectively mitigated for so long that something is bound to pop-off.
- Collapsing currencies around the globe.
There are technical factors that support my thesis as well:
- The internals of the longest stock market bull run ever are terrible.
- A dollar that looks like it has topped just shy of 97.
- The incredible short position of the large specs in both gold and silver combined with a paring of the short positions held by the commercials.
- Negative real interest rates
In other words, taking a step back and looking at gold and silver objectively, it is clear that there are a dozen reasons to be bullish for every reason to be bearish. Furthermore, if I had to boil down all of the bearish factors weighing on gold & silver right now, I could, and it would all boil down to Peak Trump. Peak Trump is still weighing on the prices of gold & silver, and will, in my opinion, until mid-November, because if the mass arrests aren’t made for those 45 million sealed indictments, or whatever number we’re up to now, then I think a large portion of Trump supporters get frustrated and begin to lose hope, and they will come to see it as mere hype.
Why in mid-November?
Because the whole “Q” movement, which isn’t even one year old, which came out of nowhere and has millions of people fiercely defending every last “drop” as they’re called, has been consistent in hinting towards something major happening on or before Veterans Day. Additionally, many of the most prominent voices that fully support President Trump have bet the farm on the mass arrests, including the arrest of Hillary and Bill.
Granted, what does that mean from here until the end of the year?
Well, let’s slow it down even further and just look towards the end of the week.
Yesterday, I said there is the potential for an epic short squeeze in silver this week. If you have not checked out that article, it is both informative and educational, and I recommend you do so.
That said, we all know what happened to the price of gold & silver yesterday – they were steadily walked down and went out on the lows of the day.
Well, let me present the gold chart for a glimpse into why:
Yesterday we were coming up on erasing all of the mid-August beat-down, and where I drew the horizontal line, that is where gold topped-out on the day. Thankfully, looking at it from the cartel’s perspective, it hit that high at 5:45 a.m. EST, well before most traders are even out of bed. The point is that were gold not walked back down yesterday, there was a very high chance we would have seen the start of an epic short squeeze in gold. Remember, as gold was dropping in mid-August, the larg specs kept on piling on the shorts, so you know there are a ton of auto-buy orders somewhere around that horizontal line.
The next question is, why didn’t the cartel want it to happen yesterday?
Unfortunately, Ol’ Half Dollar doesn’t have a direct line to the inside, so I can only speculate, and I think I will. The reason the cartel prevented it yesterday was because of the desire to bring the Dow up to all-time record highs one last time, just to prove all the bears wrong in the short-term, and a spiking gold price would have given the cartel more on their plate than they would have liked to have. So gold has been walked down somewhat, and as you will see later, the Dow walked up somewhat.
But let’s stick with the metals so I don’t just start rambling again.
It may be somewhat frustrating to watch silver lag, but silver is doing exactly what we need to see :
Understand the sequence (and where we are at in it):
- Silver overshoots gold to the downside – CHECK
- Gold turns first – CHECK
- Silver then turns – CHECK
- Silver catches-up to gold – YOU ARE HERE
- Silver outperforms gold
- Silver overshoots gold to the upside
Of course, all of this is also reflected in the gold to silver ratio:
Whenever I have stacked lately, I have made 100% of my purchases in silver. With the ratio where it is, and the fact that everything ultimately reverts to the mean, I find the potential arbitrage play too much of a factor to ignore. And the ratio is still screaming “buy silver”. I think anytime it’s over 80 the ratio is screaming. Personally, I’d buy 100% silver with a ratio over 70, but it is up to everybody to decide what their own personal ratio preferences are. Just keep in mind that historically, on the bi-metallic gold and silver standard (which our nation was on for more time than it has been off), the ratio was 16, and the rate at which silver is pulled out of the ground compared to gold is 9 to 1.
It’s safe to say palladium is leading the charge:
This pullback is nice too, because it means were putting in a higher-low, which is the very first step to establishing an uptrend.
Platinum even shows like it is finally turning here:
Remember that of the four precious metals, platinum is the only one which put in a new bottom and taken out the low from back in December of 2015. Suffice to say, we do not want platinum to be the one leading the charge!
Unless, of course, you’re a buyer here. It’s all about where everybody is on their journey to being a gold & silver investor, and to those who are just starting out, this is a great time to be getting in, and to those who are underwater on their physical positions, well, I am too, but my point is that this is a great time to dollar cost average lower. DCA is how much, on average, does one ounce of silver, in hand, cost. My DCA, last time I checked, was somewhere between $18 – $19, and that is for a variety of coins, rounds, bars, and what not, so you can see that if I had the funds, and I bought here, my dollar cost average could come down. Gold and silver are long-term plays, but the term has been very long as it is over the last seven years, and as I argued above, in my opinion the next major move is up, not down.
Copper has pretty much recovered all of the mid-August waterfall losses:
If the dollar is indeed rolling, then we may have indeed found the short-term bottom here.
Crude oil hasn’t been able to punch through its 50-day moving average for three days in a row:
Granted, the first day would be what is known as “testing”, but crude oil really needs to make up its mind here.
Yoda was recently overheard saying, “Use the farce Powell”.
And it looks like Powell heeded the advice:
Just look at that ridiculously tight range. What a farce!
I think it is by design, however, like I said earlier, and that “by design” is to get the Dow to all-time record highs. Think about it for a second. All of the other major indexes have recently – the S&P 500, the Russell 2000, and the Nasdaq, but not the Dow. And with a falling dollar, the cartel is really running out of time.
Here’s the distance needed to travel to that all-time record high:
I think it will happen.
And if I can put on my tin foil hat for one moment –
I think the top in the Dow will be 2666X.XX. Then the crash will happen. The “X.XX” will be the signal to the globalists of the date of the crash, so on the close of that day, or on the intra-day high, if we see something like 26669.11, then get ready for a stock market crash on Tuesday, 9-11. Didn’t something happen one Tuesday, 9-11 in some year? Hmmm. I think so. And, assuming Jim Sinclair is right about the “flavor of the day”, which I do think he is right about, as far as the globalists making the choice of what goes up, what goes down, and by how much, and knowing that the globalists are at the very minimum pure evil, and most of them are literally satanic, it would not surprise me one bit if that is how this whole thing plays out.
That’s my conspiracy theorist approved forecast.
– Tin foil hat removed.
Here’s what that top in the dollar I’ve been talking about looks like:
It is hard to see, but the candle from overnight and into this morning is not touching the 50-day moving average. That means that the dollar is set to open below the major moving average, and how anybody can claim that is anything but bearish is beyond me.
For the better part of the year now, notice the yield on the 10-Year Note has gone nowhere after the initial run:
This is why we are seeing the flattening, and most likely, the yield curve inversion. You see, the yield on the 2-Year is moving higher, but the 10-Year is not moving at all, so the spread between what a person earns for holding US government
garbage debt for two years is nearly the same as holding the debt for 10 years.
Complete insanity, but then again, why anybody would trust US government debt that will either be defaulted on or hyper-inflated away is beyond me.
So here we find ourselves on Hump Day. I still think the potential paper silver short squeeze is in play, and by the looks of the gold chart, the gold short squeeze too, so look for signs of that for today or tomorrow, but I also think the cartel wants to get that Dow to hit all-time record highs, so count on them to have their best jugglers and plate spinners performing as we move into the close of the week.
– 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.