SD Outlook: Gold & silver could be at risk of losing $1300 and $16 respectively. Here’s why…
Picking up where we left off last Friday, we can see that everything is awesome in the mainstream.
The Nasdaq hit an all-time high on Friday:
So while the Dow and the S&P are still banging around their 50-day moving averages, it appears that certain parts of the stock market are not phased by tariffs, geo-politics and a hot job market that all but assures a rate hike next week.
We can see that while Monday may be off to a slow start, Tuesday through Friday have plenty of opportunities for the manipulators to show us just how awesome everything is:
Hard data, soft data, inflation data, retail sales data, employment data, industrial production data, and housing market data oh my.
It’s just a
liar’s statistician’s dream this week.
In fact there are market moving data releases every day starting on Tuesday precisely at 8:30 a.m. EST, and as everybody here knows, that’s one full hour before the markets even officially open.
Translation: Look for pre-market smashes and the cartel taking advantage of the thinly traded markets to blow through the stops and smash gold & silver prices.
Here’s the logic.
The market is near certain that the Fed will raise rates next week. All of the data points we get this week will only serve the purpose of solidifying that reality. The mainstream thinking is that rate hikes are bad for gold & silver. Rate hikes are not bad for gold & silver. Gold & silver are hedges against inflation and rise accordingly.
Furthermore, Anybody who is not in the 1% or living and/or serving in corrupt Washington knows that inflation is running hotter than, for example, the benchmark interest rate on the 10-year Treasury Note. This means that when factoring for inflation, real yields are negative. A negative real yield is good for gold because it the yellow metal serves as wealth preservation.
So no matter what happens next week, it’s good for gold & silver.
It is possible we won’t get a blow-out number like last week’s jobs number in the data releases this week.
To keep the markets “guessing” the Fed and try to add some semblance of a market working on it’s own, the ESF and the Fed like to move markets to show there are some human forces behind what is mostly computerized, algorithmic trading in high frequency.
But generally speaking, yeah, it’s all systems go this week and going into next week’s hike.
What does this mean for gold & silver?
We know that in the end, hike or no hike is good for gold & silver, but assuming “hike” for the 21st FOMC, with what the mainstream sheeple actually believe, we could see increased selling pressure on gold & silver this week.
This is what we call “sell the rumor, buy the news”. In other words, gold and silver will be “sold” into mid next week on the rumor of a Fed rate hike, but once the rate hike passes, gold and silver will then be bought.
That is my working assumption right now. There’s just too many opportunities for the cartel to continue to crush sentiment, even if there isn’t much more downside potential. They never let an opportunity go to waste do they? And they never let price rise until they absolutely have to.
So for now, the cartel is in control.
But I do think that the cartel could even succeed in smashing gold & silver below whole number support because ($1300 & $16) it really is a stacked deck in the cartel’s favor until we get through mid-next week.
There is one saving caveat. If, for some reason, the cartel is not going to hike, the data that comes out would be absolutely horrible, and gold & silver could feed off of the pause/uncertainty.
But with so many opportunities to smash this week, I seriously doubt the cartel will do anything but smash.
Additionally, the smashes will be on auto-pilot with no Fed Head speeches to mess up any market signaling. All the more reason I think we’re going to see continued pressure for the rest of this week and into the rate hike on March 21st.
Finally on the fundamental analysis, It is possible, however, that we see upward price movement in anticipation of all of this.
I cannot discount that, but if in general we’re talking about pricing in the rate hike, gold & silver traditionally would be sold.
Overnight, the dollar wasn’t strong:
Friday it bounced off of the 50-day and it looks to be rolling over.
Interestingly, the dollar was weak overnight, but so were the commodities.
Crude looks to be opening below Friday’s close:
Which is also below crude’s 50-day moving average.
Copper is also looking to open the week below last Friday’s close:
Again, not what you would expect on a weak dollar, but as that old cliche goes: it is what it is.
The gold to silver ratio has barely budged:
Call it either side of 80, which is where we’ve been since the end of January.
Gold is stuck spending more time below its 50-day:
A nasty bearish candle has been forming since the markets opened overnight.
To be forewarned, if the cartel puts pressure on gold all week and into the Fed rate hike, don’t be surprised to see a trip down to the 200-day moving average, which would put gold under whole number support and near $1290.
Yeah, I know, talking $1200s here in March of 2018. The only saving grace will literally save us, and that is, if gold and silver are this cheap and this hated here as we enter the Spring, that’s exactly why I want to be a buyer. It’s both a contrarian and a value play.
Silver also is putting in a bearish engulfing candle:
It’s like I said, with the dollar not strong, this would be counter-intuitive, but obviously, the cartel know that this is the break-out year for the metals, so they’re going to keep them as low for as long as possible. For those already in position, it’s been painful to watch. I mean, at the most primitive of analysis – “inflation” is the word of early 2018 yet silver is down 2.5% on the year. Amazing.
Palladium looks like it’s forming a double-bottom on its correction:
I don’t like the 50-day turning down so let’s hope it actually is just a double-bottom. The technicals show that palladium has a ton of room to run higher, but if gold & silver are getting pressured this week, it’s possible palladium paints a lower-low on the chart.
We’ll cross that bridge if and when we get to it.
Platinum is trying to stay above its 200-day:
But again, notice the theme: The dollar has been weak overnight, but so have the commodities and so have the precious metals.
Of course, playing into this is the VIX which looks like it will gap lower into the open:
My 10-handle VIX call is not looking all that ridiculous after-all.
The yield on the 10-year is still in that sideways channel:
If the Fed is raising next week, we should see the yield on the 10-year breaking out towards and then above the dreaded 3.0% level. So late next week should be very interesting, and if the break-out happens this week, then we could see some fireworks in the markets as well.
For now, however, let’s not get our hopes up. The break-out is coming, and I have been wrong for the last couple of weeks after nailing several calls in a row.
So let’s hope I’m wrong again, because I’m looking for continued pressure into mid-next week. Fundamentally I think we’ll see a “sell the rumor, buy the news”, and that means we could lose whole number support, both for gold & silver.
Let’s hope I’m wrong, because that would mean the break-out came in anticipation of next week.
Time will tell.
– Half Dollar