SD Midweek: Inflation runs hot yet gold is down $20 from overnight lows and silver gets beat-down too. This won’t last. Here’s why…
This won’t hold.
It’s just the disgusting, pre-market smashing we face time and time again.
One day the cartel will lose control.
And that day will taste so sweet.
Today it has the taste of blood from being punched in the face.
Inflation data just hit the tape.
Inflation is running “hot”.
As in, prices are rising faster than expected.
But hold on – prices are running hotter than expected, except for gold & silver.
You can’t make that stuff up.
The more the cartel kicks a chained dog, however, the more the dog is going to get angry, and sooner or later, without warning, the cartel will go to kick, but the dog will lash out first and bite.
For now, yet again we take it on the chin with data that is gold & silver bullish.
Here’s a look at rising prices according to the U.S. Ministry of Propaganda:
Oops. Sorry. I loaded the wrong chart. Go figure – I put up the only chart of falling prices, cause, you know, why in the world would gold rise in price when inflation is finally showing up?
Here’s the thing:
Gold & silver are money. Gold & silver have many roles.
One of the roles of gold & silver is called being a “hedge against inflation”.
That means that since dollars buy less due to price inflation, those dollars can be converted into gold & silver, which is ultra-liquid, like a savings account, and because gold and silver rise in price as inflation picks up, if that gold and silver need to be converted back into dollars to make some other purchase, the purchasing power of those dollars are preserved.
So for gold and silver to drop like a sack of potatoes as inflation picks up, well, that’s cartel price suppression.
It’s even worse than that. It’s attempting to suppress the natural laws of economics.
So it won’t last.
Look at the inflation numbers:
Headline is at 2.1%.
That’s stuff like iPhones, washing machines, clothing, etc.
Core is at 1.8%. The
liars statisticians take out things like food and gas prices because they are too “volatile”.
But here’s a thought:
We know oil prices have been rising since last June, and oil is a major cost in the production of gold & silver, so simply based on the cost of production, gold and silver have to be rising in price because you can only sell at a loss and make it up on volume for so long.
Which is why this can’t last.
But for now, lean into it and take on the chin.
The beatings will continue until we have the last laugh.
Silver has really been beaten lately.
The gold to silver ratio is still quite high:
Silver is looking near the end of its cartel forced flush:
If we have indeed bottomed, then let’s look for resistance at $17, and let’s hope to break-out above it with authority. That pesky $17 price has been the cartel’s line in the sand for what seems like forever.
On the other hand, if we have not seen the short-term bottom in silver, then that chart is going to look very bearish.
because after pivoting several days ago, if silver turns to the downside, that would put in a new short-term lower-high and a lower-low and that would signal the trend is down.
In that case, the trend would not be our friend.
Interestingly, as the days have gone by in this early part of 2018, I have asked if we have seen the last of the 15-handle?
So far so good, although if they succeed in smashing silver below whole number support, they basically have the next five days to do it starting this evening when the Chinese markets are closed.
We’ll know soon enough.
Gold did not tag its 50-day:
Again, we are not out of the clear due to the world’s largest consumer of gold closing shop starting this evening and continuing until next Wednesday as they celebrate the Lunar New Year.
But recent history has shown that the metals have either held up or performed nicely during the Lunar New Year celebrations.
The point is that the outlook is bullish. We know we are close to this short term bottom, but we also do not know if the cartel has a smashing up their sleeves to throw a wrench in the bullish sentiment.
Palladium, after all, looks like the worst is behind it:
Of course, palladium actually entered an official “correction” of more than 10%, and the technicals were screaming “oversold”.
Platinum even looks to be turning the corner:
Platinum came down, but did not tag its 50-day, like gold.
So the outlook overall is mixed. Two of the four precious metals are below their 50-day, two are above their 50-day, the technicals are beginning to look bullish, and we know we’re close to the end of this flush.
Helping the bullish cause is the dollar:
On Monday we said it looked like the bounce was over, and coming into Wednesday, it is looking so more than ever.
The yield on the 10-year is still above 2.8%:
The big question is what happens when the yield moves above 2.9%?
Will a yield above 2.9% lead to another sell off in the stock market?
How fast will the yield move from 2.9% to 3.0%?
The VIX is nowhere near it’s 2017 “rest-in-peace” levels:
If the dollar starts dropping or if yields start spiking again, then we could see further spikes in the VIX.
The stock market seems to be supported right now:
Who let it fall in the first place?
Was it a warning, payback, or an attack on President Trump as some, including your’s truly have speculated?
After last week’s turmoil, things seem as if they’re right back to where they were before the turmoil with the “correction” behind us.
And what were those things?
- A falling dollar
- Rising yields
- Maximum complacency
Which is exactly why things could get very interesting by the end of the week.
– 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.