SD Midweek: Technicals were already breaking-down for gold & silver, but it might get even worse with what’s on the schedule today…
At 9:30 a.m. EST, we have a central banker love fest going on over in Europe:
Of course, we always look for market prep work before such high-profile events, so be on the look out for a move higher in all the things the central bankers hold dear to their hearts and a move lower in that which they hate.
Overnight, we can see the metals did roll before bouncing shortly after 6:30 a.m. EST:
Notice, however that the low at 6:35 a.m. gold was lower than yesterday’s low, by a very slight amount:
If this bounce fades, that lower-low will end up being bearish for the short term trend:
But enough of the tick-by-tick.
The real problem in gold is on the daily chart:
You know the cartel will most likely force the “death cross” where the blue 50-day moving average crosses below the red-dotted 200-day moving average.
Death crosses are bearish.
We’ll show the opposite of that when we get to the dollar, which recently put in a “golden cross”.
But sticking with gold, what’s the good news?
Is there any?
Well, we’re about to get “oversold”, and when the death cross happens, gold will be in “oversold” territory already.
But remember, things – as in stocks, bonds, currencies, gold, whatever, can stay oversold or overbought way longer than it seems possible.
So we’ll have to wait and see.
I’m grasping for anything hopeful here, but it’s really worse than that.
We now have three lower-highs and three lower-lows on the gold chart. That is also bearish because a series of three confirms the trend.
And so we need to talk about support right about now.
I’ve said $1270 or $1265 could be the price that wipes the slate clean for the cartel, but the support looks more like it’s at $1260.
To sum up gold: Death is knocking on gold’s door.
Let’s hope it’s quick and painless.
This is causing silver to have a nervous breakdown on the chart:
I’ve put the sideways channel of pure agony back on the silver chart.
That’s not a “break-out fake-out” last week as traders like to call it, because we’re talking about silver here. That’s “precious metals price suppression” after the break-out.
I drew the broad range of the channel which is $16.20 to $16.80.
When I say silver is about to have a nervous breakdown, I’m saying that silver is testing the low end of the range, and may break-down through the channel.
Is there any good news for silver?
Well, the last three times we’ve broken-down below $16.20, the very next day silver shot right back up again.
But again, I’m reaching out for any slightest bit of hope.
Because it is not looking good for silver right now.
The MACD has quickly made a bearish divergence, and the RSI is showing us that silver has plenty of room to run to the downside before becoming oversold.
As for price targets, I think the cartel will do it’s best to smash silver to a 15-handle.
If that happens, we need to watch $15.72. That’s the most recent closing, end-of-day low put in on December 11th, 2017.
We do not want to breach that to the downside.
But the problem is that because we’ve been in the sideways channel of pure agony for most of the year, there is an air-pocket below the channel with no recent support except for the channel itself.
Sure, there’s the “psychological” whole number support at $16, but with the light trading volume and seeming ability of the cartel to strong arm these markets right now, I’m not counting that chicken before it hatches.
In other words the next support for silver is also at the price we need to be watching of $15.72, so call it support at $15.75.
After the surge in the gold to silver ratio last week, the trend lower is still in-tact:
But then again, it’s in tact for the wrong reasons, and if the focus for the cartel is the death cross in gold more than the nervous break-down in silver, the ratio might start falling again, but for the wrong reasons (falling prices in both metals).
Right now, the low trading volume in both gold and silver is telling me the cartel is able to strong arm these markets right now.
The cartel is in full control.
It’s like when the bully sticks his hand out and holds the little kid back by pushing him on the forehead, and the bully says, “hit me”, but the little kid can’t even reach the bully with arms fully extended.
Actually, it’s not like that at all, because monetary policy and fiscal policy of the last 100 years in general, the last 30 years specifically, and especially in the last decade, have absolutely destroyed the dollar, destroyed savings, and by extension destroyed lives.
Pat the evil bastards on their backs and tell ’em “well done” because that’s what they’ve accomplished, by design and as intended.
But I digress.
Palladium has held up the best, but that’s not saying much:
Palladium’s 50-day moving average had been turning north, but if there’s more of a whooping coming for gold & silver than the 50-day could start moving away from the 200-day again, and that would set us back some.
We also have the bearish divergence in the MACD.
And platinum, well, death got tired of knocking so death just kicked-in the door:
Yesterday I said six lower-highs and lower-lows.
I was wrong.
I’ve never said I was a mathematician.
It’s really seven.
But overnight platinum put in another 52-week low.
If there is good news, platinum just entered “oversold” territory, and like you learn in the Army, “nothing lasts forever”.
But in the markets you learn “things can stay irrational longer than you can stay solvent”
Copper has completely put in an “inverse V-shaped puking pattern”:
They say Dr Copper gauges the health of the economy, but right now, Dr Copper is puking its guts out.
That can’t be good.
Crude oil is trying to find a short-term bottom:
I’ve been looking for crude oil to take a trip back down to the 200-day moving average, which is right around where crude opened 2018, but there is a wild card in crude with the big OPEC meeting this Friday.
Also, for people who like the tick-by-tick, at 10:30 a.m. EST we get the EIA Petroleum Status data.
Watch for movement at that time.
Here’s what happens, in this case with the U.S. Dollar, when you put in a “golden cross”:
After the big surge last week the dollar has kept on moving higher.
Golden crosses are bullish.
The yield on the 10-year is back below 2.9%:
If there’s some sort of “flight to safety” from all the emerging market chaos around the world, then we would expect to see rates fade lower.
As people rush into bonds, there’s more buyers than sellers, so the price of the bond goes up, and interest rates on those bonds go down.
That’s how the price of the bond and the interest rates move – always – that is to say, bond prices and interest rates move inversely – if it’s price up it’s yield down, and if it’s price down it’s yield up.
In one of these writings I’ll explain why again for those who don’t know what happens to price/interest rates in the bond market.
Wanna see the farce?
I know, I asked, but it’s not really a question, because It’s up next.
Behold the farce:
The VIX is still under 13.
Remember, I made up a term for the VIX – the “sideways channel of pure complacency”, and currently it’s between 12 and 13.
I’m still wondering if I’ll have to adjust my range, but so far so good.
The “Heartbeat of America”, the Russell 2000, is now making daily new all-time highs:
One of these days it will blow-off.
But for now, I mean, we do have the greatest economy, ever.
And since we’re talking about small cap American companies on the Russell 2000, we have daily all-time highs until further notice.
I blew my Russell 2000 call like seven daily highs ago.
But in my defense, I didn’t know we had the greatest economy, ever.
So, is there any good news today for gold & silver?
There is, and it’s fundamental in nature.
You see, there’s a Q&A session at that central banker love fest in Portugal today, and it’s quite possible one of the central bankers puts his foot in his mouth.
Most likely though, if that happens, it would likely be dollar bullish and cause another surge, maybe up to 96, because, you know, that how the doves in Europe and Japan fly, but depending how scripted the questions are in this Q&A session, who knows?
We’ll know soon enough.
– 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.