SD Outlook: If last week was difficult for gold & silver, it just became even more so. Here’s the details…
There’s difficulty on the fundamental front.
On Wednesday, we get double-smash potential:
We have the May FOMC Announcement (no press conference this month), and we have the private sector jobs report (ADP).
If the Fed is hawkish and actually hikes, that is definitely not priced into the markets, and although gold & silver rise in price in a rising rate environment, the ESF and the Fed would use the cover of their hawkishness to smash the metals.
Interestingly, CME Group has even increased the probability of a rate hike, even if only slightly:
That’s just one measure for probability of rate hikes, other agencies have their own measures.
While most analysts and financial pundits are ready to write of May as a “hold”, we’ll just have to see. The question would be, is this Fed under Powell any different than the Fed under Yellen?
We’ll come closer to answering that question Wednesday at 2:00 p.m. EST.
As far as the ADP jobs report, well, it sets the stage for the official April BLS Jobs Report on Friday:
We’ll see just how awesome the government tells us everything is, conveniently before the open.
And, for good measure, call it a second double-smash potential, if anything sits uneasy with the markets, and I’m talking about the equities markets here, then NY Fed Head Dudley will be engaging in some good old-fashioned jawboning in the afternoon on Friday to sweet talk the markets into the close on the week.
Does this mean we’ve got ourselves a double-double-smash potential this week?
Dudley is the outgoing NY Fed Head (to be replace by Williams of San Fran), so who knows, maybe he’ll throw a curve-ball into the markets in a C.Y.A scenario?
I’m not counting on it.
The first rule of Fed Club is you never talk bad about Fed Club.
Bottom line on the fundamental front: The scheduled of economic events are not on our side, but the side of the manipulators, however, with politics and geo-politics flaring up again, that is the big unknown this week.
Of particular interest:
- Developing border news (illegal immigrant caravan jumping fence in California seeking amnesty)
- Just how buddy-buddy things really are with North Korea
- A disintegrating situation in dealing with Iran and escalating tensions between Iran and Israel
- Escalating trade wars, not just between the U.S. and China this time but the U.S. and Europe
So where the pressure could come, right on que, and as scheduled, but there is certainly the possibility of a political or geo-political black swan.
But I’m not looking for great strength in the metals this week, but I hope I’m wrong.
For the superstitious out there, let me re-phrase it so it could go in our favor: I’m looking for weakness in the metals this week and I’ll probably be right.
That should set us up for a rally.
Back on track.
When I talk about weakness this week, I’m talking about the technicals.
Now, you might be thinking “technicals don’t matter Half Dollar, because the markets are manipulated”.
Yes and no.
When I ran a soup kitchen, I made up a term – “Subtle Manipulation”. My goal was to get the volunteers to cook what I wanted, but to think it was their idea, so they would feel like they had more of a stake, some freedom of choice, and free-flow of ideas. This was very important given the difficult part of maintaining a soup kitchen serving 3 meals per day, 365 days per year.
In other words, If I wanted the volunteers to cook a specific meal because I had something that needed to be used up, I would make a couple suggestions, and they would run with it, thinking it was their own ideas.
Well, the same goes for the charts and the technicals.
We know that in the grand scheme of things, the charts don’t matter until the suppression ends, but we also know that the manipulators use the charts so that the traders, money manager and institutions et. al. that are actually in the paper markets run with it, as if they know what to do because the charts are telling them to do it.
That was most likely a convoluted explanation, so let me rephrase it: If the cartel needs silver to get smashed back down below its 50-day moving average, keep hitting the sell button until a nasty bearish candle is formed, in addition to smashing it below the 200-day moving average.
That’s the subtle manipulation.
All the traders out there think they see silver is going to drop below its 50-day moving average, so they sell in anticipation of the move. That’s the intended result of the subtle manipulation.
This is different than the overt manipulation, but understand that not all manipulation is used all the time to muster the desired results.
That was a long winded way of saying “charts matter”, in the capacity they are used for.
So let’s dive into those charts.
Silver has a triple punch of subtle manipulation saying it’s going lower:
Overnight and into the morning we have a nasty bearish candle forming below the 50-day moving average, the RSI is losing strength as the white metal is sold off, and the MACD is in the early stages of a bearish divergence.
See what I mean about subtle manipulation?
With those three factors on the daily chart above, I’m looking for weakness in silver, at least to start the week.
Gold formed a “bearish engulfing” candle overnight and into the morning:
We really want gold to stay and close above $1310. A close below $1310 would put us testing the resistance at $1300.
Like silver, the same technicals are showing the same signs in gold, albeit, gold’s MACD has been diverging for more days than silver’s has, so we very well may see gold turn up before silver.
If that happens, look for a move higher in the gold to silver ratio:
I would expect a test of 81 – 82 if gold recovers first, of if both metals keep falling together, with silver taking the brunt of the beating to try and knock some of the sentiment out of gold, since gold has held up better than silver.
But remember – out of everything in the entire world, the government fears silver the most.
The government fears the people, and silver is the money of the people.
Now it may look like for the time being, the people fear the government, but part of that is denying the people their right and just money and substituting it with a debased, devaluing debt-based fiat that keeps the people falling farther and farther behind.
Back on track.
Pop Quiz Time.
What is that called on platinum’s daily chart:
That’s called a “death cross”, and as the name implies, it’s very bearish. The 50-day moving average has fallen below the 200-day moving average.
See why I’m looking for continued weakness in the metals this week?
We have a Fed that will paint their gold un-friendly picture on Wednesday, we have a cartel that loves to smash on Jobs Friday, and we have charts that are just plain ugly.
Even 2017’s MVM can’t catch a break:
Palladium is set to open down and far enough away from it’s 200-day moving average that, you guessed it, signals more weakness ahead.
Palladium is also about to have a bearish divergence on the MACD.
There is not enough sugar to coat the outlook for the metals this week: It’s worse than sour and bitter – It’s downright putrid because it’s precious metals price suppression and market manipulation.
But that is what we have to deal with, for what looks to be the start of the week anyway with a double shot of pressure on Friday.
Moving on the the dollar, we can see that the dollar is very close to the end of its run:
The dollar is ready to start screaming “overbought”, and for the metals, that is a good thing. In fact, the dollar has rallied, but the metals haven’t broken down per se, they’ve just muddled along in that agonizing sideways channel.
But once the dollar starts falling again, we would expect the rally in the metals to begin in earnest.
The yield on the 10-year shows when something is at an extreme level on the Relative Strength Index:
Granted, if rates are going to be rising here, then the RSI will tend to run on the high side, because rates have been artificially suppressed (and still are) for so long.
Speaking of suppressed:
The VIX is set to open with a 15-handle.
There are three main forces that feed the entire economy, and if the cartel gets it right, they can have continued effect.
Suppress volatility, buy the U.S. equities index, and suppress gold & silver prices.
As we start this week, they’re right on track to do all of that with all three.
Granted, they’re going to have to print more fiat than they might have otherwise liked to print just to hold up the stock market:
Because there are not many people, aside from the MSM propagandists, the government and the Fed, that think the U.S. stock market is healthy.
We’ll wrap up this week with the commodities.
Copper is standing fast overnight and into this morning:
Copper is standing fast right at the 200-day moving average, however. I wouldn’t expect much out of copper to start the week.
Crude has really been its own animal all year:
Interestingly, in light of the dollar strength over the last several weeks, crude has basically consolidated, which in my opinion is in anticipation of the next leg-up.
Which is basically where all of the markets are right now.
Readying to reverse course and make their next moves.
Ready for next leg-up:
Ready for next leg-down
- US dollar
- stock market
- bond prices (meaning rising yields)
As we start the week, it appears a continuation of the last several weeks.
Which means that all of these indicators will become even more extreme, putting us that much closer to the trend changes.
And while this week seems a continuation of the same for now, the changes may have already begun by the time we close on Friday.
– 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.