Gold & Silver Break Down In Price As Short Term Bullishness Fades

SD Midweek Update: The last two days have been gut-wrenching, and bullishness in gold & silver has effectively been suppressed again…

First, the President is hard at work making sure that nobody forgets that everything is awesome:

Silver is down over 3% from Monday’s high:

Talk about an epic break-out fake out. Granted, a market has to be fairly traded to call it that, so it’s more like a break-out denied.

Gold is down just over 2% from Monday’s high:

As such, the gold-to-silver ratio has surged back above 76:

We have been witnessing a topping process right around 75 with the gold to silver ratio. If it gets out of control and breaks out above 80, physical silver would disappear from the marketplace in short order. This effectively puts a ceiling on the ratio because the cartel understands this, so they want to keep it high, but not too much.

Platinum and palladium have been under pressure as well:

After recovering yesterday, they appear to be headed lower again today.

Though copper and crude have not given in to the pressure, nor the dollar strength:

Both commodities are up since Monday, albeit, copper looks to be fading the move and WTI has just been flat out ugly, which it has been all year. Generally speaking, when the dollar is strengthening, copper and crude are moving down in price, and vice versa. Not his time, however, as the dollar has been in a bear rally.

But looking at the dollar when compared to the yen, this is not the sign we would like to see:

As USD/JPY is one of the carry trades of choice, a dollar strengthening against the yen could lead us to see further downside pressure on gold and silver. In fact, the yen has weakened considerably just yesterday. Further upside pressure could make the rest of the week hard to watch for gold and silver investors.

As far as the yield on the 10-year, yield is down from last week, but up since Monday:

With interest rates and balance unwinds signaled by the Fed, after a month or two of their direct market interest rate manipulation, we shall see if they are just jawboning on either rate or balance sheet. Jawboning is their policy tool of choice after all.

Interesting developments in the VIX:

Volatility sure does look to be waking up. If we are seeing the bottom in volatility, we are seeing the top in the stock market. And if there is one thing the gold and silver prices love, it’s uncertainty.

We wondered if the Dow would hit 23,000 by Friday:

We spoke to soon. We should have asked if it would hit it by Monday. President Trump is lovin’ it, and he’s spending his days watching the markets and cheer-leading  with Tweets on the daily.

Here is something to consider. Nothing has changed this year for the better. There has been no repeal and replace, no tax cuts, no infrastructure spend, no MAGA. There has been the stock market, and that’s it. And the Fed and the President are all-in on the markets.

What has there been so far this year? Increases in the number of bombs dropped by the US on military targets just last month, serious war treats against North Korea and now Iran. Trade wars and economic sanctions galore. Europe is a complete basket case. Terrorism is on the rise and now we have the worst mass shooting in history in the United States.

Yet everything is as cool as a cucumber.

And that is the problem. Sooner or later the moves in the markets will become shocking. For now, we all just have to hunker down and make it through to the other side. Silver under $17 is a gift, and so is gold sub-$1300.

Stack accordingly…

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