SD Friday Wrap: We knew it would be rough, so let’s do some triage. It may look bad, but here’s why this week is really just a flesh wound…
Last Wednesday I said this:
I would have liked to see one nice flush under $1280, call it to $1275, to really flush out and shake out the longs, but if we’re going to rally this week, I’ll take where we are as the starting point, because if not, then we’ll most likely see that flushing to $1275 next week as the cartel will have both economic data points and the shortened holiday week on its side.
The question is, was today’s flush to $1293 enough?
I don’t think so.
And now the cartel has that all important thing called “momentum” on its side in the short term.
Gold tried to break-out above the 200-day for three days in a row, but alas, gold has clearly failed today:
Gold looks to be rolling here, and geez, I just want to get it over with already, and a flush to $1275 to shake out the weak hands should certainly end it.
Side note: People get frustrated, and do I, and understandably so. Frustrated investors say, “when gold gets back up to $XXXX.XX (pick a number where one bought at between late 2011 and now), I’m gonna sell my stack cause I’ll break even or limit my losses because I just want out”.
So here’s the question: Are there any of those frustrated people even left who haven’t yet capitulated?
It’s rhetorical, it doesn’t need answered, but my point is, there just isn’t waves and waves of capitulation with massive gold selling. There is only the steady barrage of cartel forced selling by their carpet bombing of the market at in the middle of the night or early in the morning before the market officially opens or during key data dumps like today’s super-duper BLS Jobs Report.
Call it nothing more than attempting to fine-tune the price to have the options expire where the cartel needs them to.
Andrew Maguire estimated the cartel needed gold below $1325 today.
It looks more like what the cartel really needed was a close below $1300.
So here we sit, halfway though the year, and gold is below $1300.
Great time if you’re a buyer!
But the message I want to get across today as we finish yet another difficult week is this: We are still in a bull market since 2015, and the bull run, for all intents and purposes, is barely getting started.
On the weekly chart, for example, we see that in the mid to long-term, the trend is up:
In fact, that’s over 24% up since bottoming, and if you count from the late 2016 smash forward, there is a clear pattern of three higher-lows, three higher-highs, and assuming a rally in the near future, a fourth higher-low and a fourth higher-high will be painted on that chart.
I’ve coined a new term (pun and no pun intended) –
Behold, “the sideways channel of pure agony”:
And check that out – It’s silver’s weekly chart!
I drew the “sideways channel of pure agony” on the weekly to show just how long we’ve been in this broad range (shown by the blue lines) of $16.20 to $16.80, and right now we’re in the tight range of $16.40 to $16.60.
That’s what we’re dealing with, but this shall pass in time, and when it does, it will pass in our favor.
On the daily, we can zoom in and see silver really grinding it out here:
We’re below both moving averages, and I didn’t draw it, because It’s still within the range, but the daily is painting a series of now three higher-lows with the two higher-high over the last several weeks of daily action.
The technical analysts would say that’s bullish.
But, I get it, were stuck, for now, and we’re ending the day and week to the downside.
But let’s not lose track of the bigger picture.
And part of that is the gold to silver ratio:
Sure, we’ve come up a little over the last week, but the trend is in place, and once the metals really start rallying, I’m looking for the ratio to drop into the 60s in a hurry.
And for those who like the technicals out there, how does that chart of the number of ounces of silver it takes to buy one single ounce of gold not look bullish for silver?
It’s totally a top that my 11 year old son could point out. And he’s not even paid his own tuition to the markets yet.
I said this in another post today, which may or may not have been read by those reading this post, but it deserves repeating, because if we’re going to focus on the big picture for a moment than here’s a five course meal of some food for thought:
- Gold & silver are in bull trends since bottoming in December, 2015. Sure, since late 2016 they’ve been generally down in price, especially silver, but since bottoming in 2015, gold is up over 24% and silver is up over 20%.
- Fundamental matter. Fundamentals will assert themselves sooner or later.
- Precious metals price suppression cannot go on forever. The market manipulations seem like they can, but while paper and digital fiat is infinite, real, phsycial metal is not.
- Peak gold and peak silver are real. Combine that with an increasing cost of production, and the floor for the price of metals must rise.
- Inflation is real and inflation is here and now. There’s a reason gold and silver are also known as “a hedge against inflation”.
You see, nothing fundamentally has changed, other than the cartel’s sheer and utter manic desperation to cap price against what are increasingly harder and harder odds of maintaining.
For now, they are winning.
For long, they won’t.
Palladium is up on the day:
See how those trends are starting to work on the charts?
If we get a rally and continued momentum in palladium, we could be looking good in no-time.
Platinum, on the other hand, is not faring very well:
Platinum is struggling to regain the 50-day, and the precious metal that’s 10 to 30 times more rare than gold looks to be rolling over if this momentum continues into next week.
But again, let’s look at the big picture: Palladium and platinum are precious metals, and if gold & silver are going to rally, then so are the other two precious metals.
And the fundamentals are in place for them to rally too, albeit for slightly different reasons. See this post on the recent declaration of palladium and platinum as the backdrop for why the fundamentals are in our favor.
The bottom line: Palladium (along with platinum) was just named a mineral “critical to national security and the economy”.
I won’t get into the details of the declaration, but basically, as I said before:
When you have “a supply chain vulnerable to disruption”, that is code for “expect spiking prices”.
It could almost be thought of as what happens to bottled water whenever a hurricane blows through a major area.
The supply chain of bottled water is disrupted, and what happens to the cost of bottled water? Well, the free market kicks in and the price surges. That said, there would be a premium built into the price of the metal in advance of any supply chain disruption.
Another thing that could happen with palladium and platinum is that manufacturers choose to purchase and stockpile additional metal, which creates more demand and takes supply off the market, and that is also supportive of higher prices.
Crude oil is currently riding its 50-day moving average as I had forecast:
I get it, “but Half Dollar, that’s crude plunging below its 50-day moving average, not riding it”.
Well, kind of. That’s why I zoomed out a little – to show that crude has plunged below the average before, and recently too, only to ride the average, so I’m not yet concerned at this point.
I also zoomed out to make sure that we all understand that $42.05 is still the low within the last 52-weeks. That means that even with this latest pull-back, we’re still significantly higher than where we were before.
Market Jargon 101:
- A drop in price of less than 5% is called a “dip”
- A drop in price of less than 10% is called a “pull-back”
- A drop in price of less than 20% is called a “correction”
- A drop in price of 20% or more is called a “bear market”
Since crude oil has dropped 7.11% since its recent multi-year high of $72.90, that’s why I said “pull-back”.
Copper is at the high end of the range we’ve been following for a few weeks now:
Will the move over the last three days give copper the follow-through it needs to break out of the sideways channel of $3.05 to $3.10?
If the dollar starts to roll, then copper certainly could break out of its channel.
So let’s go there.
The roll in the dollar looks like it could have started on Wednesday, when all of the sudden Italy was “fixed”:
As for the pop today, well, I’m putting that one on the President.
See for yourself:
Looking forward to seeing the employment numbers at 8:30 this morning.
— Donald J. Trump (@realDonaldTrump) June 1, 2018
Remember, President Trump keeps talking about how America is great again, and how America is “open for business”, and basically how “everything is awesome”, and since the CIA controlled global MSM propaganda machine paints the picture that America is the greatest nation since, well, ever, then the natural move in the dollar based off of a super-duper jobs report, which was hinted at in advance by our President, is up.
But we do know that President Trump ultimately wants a weaker dollar, especially if he is going to launch a trade war on four fronts.
So we’ll just have to see how the dollar performs next week, and we still don’t know if there is any internal strife between the ESF and the Fed when it comes to where they want the dollar to be.
Yeah, “but Half Dollar, the Fed says its not in the business to prop or drop the dollar”!
Yeah, and I’ve got an elevator pass in a one story building to sell you.
The President’s Tweet also helped the stock market:
Are we seeing a light reprieve, or will next week be the (harmful to stock bulls) plunge below the 50-day moving average charm?
We can look to the VIX for clues:
Between the Italy crisis that wasn’t (who are we kidding, it’s just another kick of the can, and Italians are good soccer players so I’m sure they can kick the can a long way) and an “everything is awesome” BLS Jobs Report, we can see the VIX is once again making a b-line to drop to 12 or lower again.
The yield on the 10-Year Note nearly got above 2.9% today:
Of course, it’s interest rate crunch time now, since we’re in June and less than two weeks away from Fed Head Powell’s MSM Love Fest Part III, also known as the June 13th, 2018 FOMC Statement and Press Conference.
The CME Group is putting the chance of a rate hike in June at over 91% Probability:
But that may be changing real soon.
As in over 100% probability since some participants will likely be calling for a 50 basis point hike.
Because, just look at how bullish the Fed has become on the economy:
Nearly 5% GDP for Q2 of 2018?
What a complete and total farce.
Because government and Fed statistics are now so completely removed from the reality of the real economy, that regardless of how one argues it, if arguing with those types of official statistics, then the point is moot.
The math is no good.
And while for now everything seems to be so awesome, that in and of itself may be the black swan everybody is looking for.
Because if something abruptly breaks, then the math, just like the COMEX, will blow up in their faces.
And that’s both a mathematical fact and a mathematical certainty.
And I’m not even a mathematician.
But then again, common sense beats out junk math all day long.
– 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.