SD Midweek: The short-term gold & silver charts are already looking pretty ugly, and the pressure could be increasing all day long…
We new there would be pressure this week, and if the overnight and pre-market action are a taste of things to come, it’s gonna be ugly:
That’s some choppy trading action.
Yesterday we were spared the huge paper dump over the course of one minute, like we have seen time and time again, but the selling pressure was still constant:
And we are far from out of the clear here with three full trading days left and two major potholes to avoid.
Those potholes come in the form of the FOMC meeting today and the January Jobs Report on Friday.
The gold to silver ratio shows the pressure we’ve felt so far this week as the GSR moved back up above 79:
Silver has been on complete and total lock down, and it’s almost requiring 80 ounces of silver to buy one single ounce of gold.
Call it one huge, protracted, topping process right on the cusp of working its way back down.
Speaking of silver, we need to assume the cartel has their sights on the red-dotted 200-day moving average:
Interestingly, the silver chart price action is starting to look a lot like last summer when we had the run up to put in the highs last September, so we’ll have to see.
Regardless, the 200-day isn’t too far away right now, and since silver has gone no where over the last three weeks, the cartel can start to flatten the 50-day as well with nothing more than sideways price action.
But make no mistake about it. The 50-day is closing in on the 200-day, and a “golden cross” in silver on the daily will be very bullish. It’s only a matter of time.
Gold has held on to support at $1340:
We’ll have to see how the yellow metal finishes the week, but there are two ways to correct in price: Over time or over price.
The cartel can usually bring on the pain either way they choose, which is basically however they’re profiting most from their nefarious schemes. The cartel can play the waiting game, because they can print up unlimited paper gold whereas traders do not have unlimited trading accounts, or they can simply brute force attack the correction with a massive paper dump and blow through the stops.
An example of the waiting game would be the sideways action in gold from last October through November, ultimately bottoming out the day before the FOMC in December. Examples of correcting over price are mid-April, early-June and early-September on the chart.
Looking at the other two precious metals, we can see we are nowhere near out of the clear on this latest forced cartel corrective action, but support lines are holding, and net net, things don’t look all that bad.
Palladium is just now finally reaching its 50-day:
That moving average has held as support for over a year, and there’s no reason to think it will not hold as support this time around.
And platinum has found whole number support at $1000:
If platinum can’t hold as $1,000 the next support line would be at the $980 price level.
Copper is riding its 50-day:
Which is also exactly what we have been expecting.
You see, none of this is alarming, it’s just the “markets” working themselves out with the bigger picture in mind: the new commodities bull market and price inflation.
Crude is showing its begun the long awaited pullback now too:
If crude pulls back to its 50-day moving average, we’re still taking about $60 oil. What stands to be seen is if we’re going to get a full on correction of 10%, or if we’re just getting a “dip”.
On Monday we stated the VIX was looking like it could be going higher:
It’s actually spiked over the last two days, and if there is some sort of “policy error”, such as something the markets don’t like with today’s FOMC statement, or a Friday BLS Jobs Report that is not taken very well, we may not be done with the surge in volatility yet.
This volatility is shown by the rare and elusive “drop” in the stock market:
However, the stock market is the Fed’s baby, and since today is Fed Love-Fest day, it would be unwise to think it’s not going to bounce today, at least up until the release of the statement at 2:00 p.m. EST.
The bond market looks to finally be selling off:
If you get too many sellers at once, then yields will start surging. And now that President Trump wants a $1,500,000,000,000 infrastructure spend, we need to consider even more selling coming into the treasury market.
Which partially explains why the dollar looks to be ready for its next leg lower:
Yet there was never really a “dead cat bounce” in the dollar. So far it’s been nothing more than a brief pause.
Finally, If you bought Bitcoin earlier this month above $16,000 and sold yesterday for under $10,000:
That was a painful 37.5% lesson in what stores of value are not.
Bottom line: Be prepared for wild swings in the markets today, especially with gold & silver, which could include some good old-fashioned cartel monkey hammering, and especially be prepared for volatility with the release of the FOMC Statement at 2:00 p.m. EST. Remember – the knee-jerk reaction is not always the ultimate direction of the move, so if there’s a big spike or big drop in the price of gold & silver, let the knee-jerk work itself out.
– Half Dollar