Gold & Silver Are In Need Of A Pit Stop As The Precious Car Is Overheating

SD Friday Wrap: This precious car has performed well since mid-December, so a pit-stop at this point is both needed and bullish…

It’s not often I want the metals to pull back.

But there’s no denying it: This move is pretty much at the point of overheating, and we are in desperate need of a natural pull-back, a pit-stop if you will.

If the price action keeps charging higher, all the easier it will be for the cartel to smack the metals back down even farther than the cartel would otherwise be able to.

The first case in point can be seen with gold:

Gold signaled “overbought” on Tuesday, the first trading day of the year.

Then yesterday, Thursday, the yellow metal re-affirmed it has become “overbought”.

The good news is that we have witnessed a strong rally coming off of the mid-December lows.

But the move is beginning to look exhausted on the chart.

What we should be rooting for here in gold is a nice, natural and healthy pullback in price.

Otherwise, the cartel is going to force the pullback and they might just smack the price down to the 50-day moving average for good measure.

Ouch.

I’d much rather have a natural pullback to $1300-$1305 rather than get smacked down to $1280.

Besides, the co-mingling of the 50-day and the 200-day down at that price level is not for the faint of heart.

Silver’s move looks to be overheating too:

While the RSI is not screaming “overbought” like it is in gold, but silver is still near the end of its most recent run, and a natural pullback would be great, otherwise we are left to the heavy handed pullback of the cartel.

We have been looking at the $17.25 and $17.50 levels of resistance for many days now, and by no means are we able to call $17.25 support. I would say we are still battling with resistance, and with the 200-day moving average right near $17, until we break-out above $17.50 with authority, it is going to be a painful time to watch the price action of the white metal.

The stalled out GSR highlights the predicament the metals find themselves in right now:

The GSR is riding the 50-day moving average, and while it does not look like a trend change and a trip back up to 80 on the gold to silver ratio, it does look like a difficult few days ahead of us from here.

Platinum is showing the same signs as gold & silver:

And even if platinum continues to charge higher, it will be facing stout resistance at $980.

I get it: We’re all bulls here, but we need to be realistic about all of this.

With platinum, it would also be bullish to see a nice pullback, a dip if you will, so that it can face the resistance level fresh, from the early stages of a rally and not at the end of a run.

Even ‘precious metal of the year’ palladium is signaling “overbought”:

Palladium, like gold, broke through extreme territory on the RSI, and re-affirmed the “overbought” signal just yesterday as it broke $1100 and put in a new all-time high.

To sum up the precious metals: It would be great to see a healthy dip, which would also be a great buying opportunity to add to that stack.

If we don’t see a natural dip in the precious metals next week, the cartel will surely force it, sooner or later, and a cartel forced wash-rinse-repeat cycle could end up being more drawn out than otherwise would have, and that would have a negative impact on sentiment.

Copper shows what happens when something becomes “overbought”, of which the result is a pullback in price:

Copper has fallen for days, beginning with the last trading day of 2017.

Sure, copper ended $.025 up on Thursday, so we could call that “flat” at best, but the point is that when things become “overbought”, there is profit taking by the speculators, and the bulls are waiting on the sidelines to buy the dip.

That’s just how markets work.

But that’s one of the many ways we know we are in a bull market: Buying on the dips.

Crude has been on a tear since mid-June, and it is starting it’s own pullback as well:

See the theme here?

Right now everything is cool. There’s no reason to panic, but rather, there is every reason to be optimistic about price (bringing it back to the metals).

We just need the metals to have a natural little pullback here, that’s all.

Yes, I want silver to be closer to in price to $20 than to $17, but nothing moves either straight up or straight down, and since mid-December, the precious metals have basically moved straight up.

Even the dollar looks to be setting up for a bounce here:

Which makes sense.

Where the metals are “overbought” right now, we can see that the dollar is “oversold” right now.

Has anything changed with the overall trend of the U.S. dollar? No.

Most likely the trend will resume to the downside after either sideways consolidation, or a bounce, which would bring the technical indicators back in line.

The yield on the 10-year Note sure does look to be forming in the new range we first signaled at the end of last year:

After having spent months in the 2.3 to 2.4% range, the yield over the past few weeks has been in the 2.4 – 2.5% range.

While the metals have rallied, the VIX never got the message that there was anything that would make people have the audacity to hedge with some gold or silver:

While I’m not looking for complacency in the market to last all year like it did in 2017, complacency sure did ring in the new year along with all the other continuations of 2017 farce.

Which brings us to our stock market (bubble) chart, but in preparation for that chart, time for a pop quiz:

How many times can President Trump cheer-lead the stock market in 24 hours?

Don’t worry, it’s rhetorical. Everyone’s a winner whether you said four or not.

So without further cheer-leading ado –

Fist, we’ll excuse the lack of basic market knowledge:

He is, after all, “a real estate guy”, so why would he think that a market “crashes” higher?

He let Fox Business do the talking for him in this one:

Until he finally started some talking of his own here:

And here:

So now that it’s time to see the chart, it’s probably anti-climactic:

But then again, so is this:

If that Bitcoin chart is putting in a lower-high, and if those Bitcoiners learn charting and technical analysis, look-out below!

Speaking of look-outs, be on the look-out for a Sunday Night Smash.

Best we’re aware and prepared.

Stack accordingly…

– 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.

Paul’s free book Gold & Silver 2.0: Tales from the Crypto can be found in the usual places like Amazon, Apple iBooks & Google Play, or online at PaulEberhart.com. Paul’s Twitter is @Paul_Eberhart.

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