SD Outlook: On the surface, the markets look boring this week, but under the surface, there is plenty of propellant to get gold & silver moving…
On the surface, this week looks very boring from a market perspective.
Next week is the Fed’s 2-day January FOMC meeting, complete with Powell Presser, so this week the Fed is continuing its practice of “radio silence” in which the various Fed Heads will not be doing things such as going on CNBC to sweet-talk the markets.
There is also the government “shutdown” thingy which will add to the uneventful week. This week would have been light on economic releases and reports anyway, but with the shutdown, it will be even slower as reports such as the Durable Goods Orders which is scheduled to be released on Friday likely does not get released at all.
And if that weren’t sheer boredom enough, today is a Federal Holiday with limited market action, with some markets closed altogether.
But that is on the surface.
Under the surface?
Under the surface, there are so many things going on this week, that it would not surprise me one bit if something huge happens in the markets this week.
First off, it’s “Davos 2019” week.
Anybody remember what happened last time (or was it the time before last) at Davos?
That was the whole Stevie’s weak dollar Vs. President Trump’s strong dollar debacle.
Good thing the President and his posse are not going to Davos this year because I really think the markets are that delicate. Not that it matters much in the short-terrm anyway, because Stevie still has the Exchange Stabilization Fund at his disposal, but the potential for fireworks is there. Furthermore, lack of US attendance at Davos this year does not mean lack of commentary (a la Twitter).
Under the surface, the political climate in Washington is frigid, much like it’s current temperature, and with eyes and ears off of the Fed this week, one can only assume there will be more eyes and ears on the political theater coming out of our nation’s capitol, and as such, there is the risk of something huge happening.
I mean, just Saturday our President was out there tweeting about a “Stock Market Crash” again:
In fact, the political scene around much of the world is in an equal but different state of turmoil.
Our neighbors to the north and to the south are dealing with geo-political tensions and social tensions respectively. Brexit is, as I had said a week or so ago, quickly turning into Forgetabrexit. Additionally in Europe, there is the slowing German economy and Le Yellow Vests in France which add to the potential of a market surprise this week. And let’s not forget about the ongoing Middle East chaos including the latest out of Syria. Over the weekend, Israel was at it again slinging surface-to-surface missiles at Iranian targets in Syria, to which it appears Syria stuck back.
Only in 2019 do we have scenes such as vacationing skiers filming Surface-to-Surface missile intercepts overhead:
— החדשות (@NewsChannelIL) January 20, 2019
But hey, since the stock market is soon to make new record highs again (just see the President’s Tweet above if you don’t believe me), what’s a little regional geo-political hot war if we can still keep the lifts open and the hot chocolate on tap?
Which is exactly why I think we have the perfect storm for something big this week.
I think the pullback is nearly complete in the gold-to-silver ratio:
If it wasn’t so pathetic, it would be funny, wouldn’t it?
What would be funny?
The fact that ever since the day after Christmas “save”, so many underlyings have drawn 45-degree angles on their charts, including the gold-to-silver ratio.
The golden cross is visible on gold’s daily chart:
By the end of the week, even the haters are going to have to recognize that the outlook for gold is bullish.
Silver is at a very interesting point here:
On the one hand, you know the cartel is just chompin’ at the bit to keep on smashin’, but on the other hand, there could be a wave of buyers under $15 that could make a serious dent in physical supply.
Think about it for a second – The stock market is going back to record highs as the Fed, President Trump, and even Stevie all have the stock market’s back, or at least the mainstream narrative goes, so where is the value to be found for investing?
With palladium on fire, gold treading water and platinum trying to get its groove back, I think the value is in silver, and if the cartel smashes silver below $15?
I’d love to see that.
Palladium looks like it is going through a healthy pullback:
The strike in South Africa hasn’t even begun yet, and surely there would be a lagging effect the strike could have on available physical supply, so I think this next pullback and consolidation will really set the stage for another surge.
Here’s a look at platinum trying to get its groove back:
The South African strike affects platinum mining too, so again, the fundamentals for platinum are strong, even if it looks like a never-ending agonizing price decline.
Nothing lasts forever.
And that includes the decline in the price of platinum.
That also includes the decline in the price of copper:
We’re starting to hear the buzz-words and talking points about an “infrastructure spend”.
Anyone remember that?
President Trump was going to make our infrastructure like the best, ever!
Well, I remember it, and I think it is likely to happen, whether the infrastructure spend is under President Trump’s watch or not. I think the infrastructure spend, when it finally comes to fruition, will increase the demand for copper. Said differently, I never believed the “booming economy” narrative, and neither did copper as evidenced by copper’s long grind lower.
But Public Works 2.0?
Highly likely the price of copper gets the boost it needs.
Crude oil is above its 50-day moving average and looking to break-out:
I would have liked to see the shoulder painted a little better on the chart, and it still may become more of a traditional shoulder, but I think we will be in the upper-$70s again relatively soon, and the move will likely come as a surprise to many.
Time to look at those 45-degree angles.
Let’s start with the farce:
Actually, that’s not a 45-degree angle with the farce.
Because when you drop over 50% in only 17 days, that’s a total crash in the VIX.
We’re supposed breath a big sigh of relief in spite of all of the turmoil brewing under the surface?
(spoiler alert: the VIX is very easy to manipulate for the cartel).
Well, I’m not breathing any sighs of relief.
If something huge does happen this week, we could see the VIX spike right along with the event, and that would catch everybody who was lulled into max-complacency off guard, just as the globalists hit ’em with the shocker.
Here’s the stock market’s 45-degree angle:
What a complete joke the stock market has become.
Soon it will be a 90-degree angle.
As in vertical, you know, so we get to record highs and what not.
It’s kind of sad, really, that here we are, day after day, week after week, and year after year – just allowing all of the manipulations and rigging to continue unabated.
Wasn’t President Trump supposed to restore free markets and get rid of all the rigging?
Well, that’s how the alt-media narrative goes.
I do have my doubts.
Yield on the 10-year Note has got its own 45 degree angle:
If we have something huge happen this week, then I’d be looking for a rally in bonds, which would mean a drop in the yield on the 10-year note.
I think the dollar could turn and head lower this week:
The next time we turn, in my opinion, we would break-down decisively below 95, and that would be bearish.
What’s the bottom line for this week?
In the economy and in the markets, the mood is a weird mix of calm, boring, and slow, but under the surface, there are serious problems that could erupt to the surface.
If some political, geo-political or economic shocker does erupt to the surface, I think we could get the propellant that gold & silver desperately need to take out their whole number resistance levels.
Everything seems so boringly regimented this week, and certainly everybody is expecting gold & silver to pull-back significantly.
I’m just not so sure we trade sideways to slightly lower.
Too much nastiness wants to come to the surface.
And I think that something nasty will.
– 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.