SD Friday Wrap: You thought I’d say what? Gross. Here’s what just went down in gold & silver this week (Spoiler Alert: not much in terms of price)…
Editor’s Note: If you haven’t already checked out this new theory I floated earlier today, which has already nearly been debunked by AK, it really is an interesting theory on the Deep State’s plan to take down the alternative media, and I’m not just saying that because I wrote it.
Today is one of those days when I’m feeling goofy.
I apologize in advance.
In all actuality, I think I’m mentally preparing myself for the dreaded trip to the mall tomorrow, in which I will try my best to smile, and I will try my best to look like I’m having fun as I accompany my family on one of the most American of sports – Back-to-school shopping.
Side note: I keep saying this, and it seems so unlikely now, but what I see coming to the U.S. is a factor of ten.
As in a bottle of ranch will not cost $3.50 but $35, a pair of tennis shoes will not cost $150 but $1,500, and a plane ticket will not cost $1,300 but $13,000.
That’s what is coming.
And that is why I harp on gold and silver as inflation hedges all the time.
They are the original inflation hedges.
And quite frankly, the only inflation hedges during the most dreaded forms of inflation – hyperinflation.
Why did I make that side note?
My 13 year old has a pair of $180 Air Jordan’s on the shopping list (apparently they make them for girls now too).
And that’s just one of the pairs of shoes that are on her “list”.
And when did a knapsack, excuse me, book-bag, ah, pardon, a backpack (it’s hard to keep up on the politically correct term these days, so no offense to “knaps” or “books”, but, nevertheless, I find “back” kind of offensive, but I could care less what others think about my feelings, so it’s all good, and see what I mean by feeling “goofy”, I mean, it’s taken hold of me today, so OK, enough of this parenthesis writing because this has been way too long for that to look good, no matter how much I think I can break all the rules in grammar) become something that one buys every single year?
I had the same backpack throughout all of high school, you know, back when it was cool to only wear it over only one shoulder, and I also had the same backpack through college, which also survived two years in Mexico and several years after college as well.
Every. Single. Year.
My son is much easier to shop for.
He’s like me: Let mom (wifey) pick it out and call it a day.
Not that my son’s list isn’t any cheaper.
He’s got a father-and-son custom built back-to-school beastly gaming computer on his list.
So if I seem goofy, it’s my subconscious mind preparing me for my least favorite place to go in the entire world to spend 100x more than I should on back-to-school clothes, and likely other stuff that I don’t yet know my kids have in store for me, pun and no pun intended.
Geez my kids are spoiled.
But this isn’t “This Week In Parenting”, it’s the “SD Friday Wrap”, so let’s dive into the markets, shall we?
Let’s start with the obvious: I blew another call.
I could make an excuse and say, “but my call held for three weeks”, but you know what they that excuses are like, so I won’t.
Let’s just say I blew my US dollar call.
I really thought President Trump forced the top in the dollar.
I was clearly wrong:
Interestingly, my “President Trump by extension” call for the bottom in gold and silver has held, as you will see later on.
But I have a question about the dollar: Will today’s surge cause the President to come out with the “weak dollar” talk again?
Remember, he came out swinging against the price of oil, some time passed by, and he came out swinging against the price of oil again, so it’s far from a long-shot that he would come out and try to talk down the dollar.
Time to switch from goofy to cynical for a moment.
Check out the drop in the yield on the 10-Year Note:
You see, when people make the “flight to safety”, they rush into the “safety” of US Treasuries, like the 10-Year Note.
More buyers in the market bids up the price for the bonds, and interest rates, moving opposite price, come down.
Here’s the cynical part – Are investors fleeing into the bond market because the stock market has come under pressure along with multiple nations in the midst of a full-blown currency crisis, now including Turkey, or is the pressure in the stock market and the fiat currency crisis developing in the periphery simply giving the cover for the ESF and the Fed to come in and buy bonds to move interest rates lower?
Just something to think about.
I don’t know.
I’m not allowed in the basement of the NY Fed, so I don’t get to see the buttons they push and the levers they pull, but that doesn’t mean I won’t be cynical either.
I noted pressure in the stock market.
We see that the stock market is at risk of not tagging new all-time highs:
Even if it doesn’t hit new all-time highs, that is one massive double-top.
Does it roll here, or does it have another surge left in it?
Well, if nations, institutions and investors need to raise cash in a hurry, if they take their cash out of the stock market, they will be taking profits, and if converting those stock market profits, in dollars, from dollars and into weaker currencies, those same nations, institutions and investors will also be making some bank on the currency play, so it may be harder to surge to new all-time highs than most people think right now.
Of course, it doesn’t help the stock market bulls when the VIX is up over 15% on the day:
That said, a print slightly above 13 is hardly the definition of “volatile”. Even in today’s market, I think we would need to see above 20 before the volatility Chicken Littles storm onto the scene again.
I called the “bear flag / bear wedge” in gold a few weeks back, though I never drew it on the charts, but sure enough, we dropped in price as would be indicative of the chart pattern playing out.
Well, I’m still not drawing it, but it sure looks like the same flag/wedge is now forming on the copper chart:
People have recently been saying that calling it “Dr Copper” is outmoded, and maybe it is, but copper has already come under serious pressure, and if the price starts crashing again, from this $2.80 level, I would be getting very concerned if I were a stock market bull, or if I were a bull on the economy in general.
Crude oil is swinging more than riding, but it is still swinging around its 50-day moving average:
The turmoil in the oil market may only be just beginning, and, speaking about geo-political tensions here, in part because of sanctions and in part because of the trade wars, we could have a lot of pricing in to do if supply becomes disrupted, or even if supply becomes in doubt.
And this is during a time of relative “peace”, so throw in some missile strikes in the Middle East at best, or a renewed proxy war in the Middle East at worst, and we could see the price of oil really spike.
Platinum has its work cut out for it as it has for quite some time:
Platinum really needs to put in a higher-high to go along with that higher-low.
Palladium is still clinging to whole number support:
If palladium can’t hold here, another trip back down to $850 is certainly in play, and if that happens, the palladium chart will begin to look very bearish.
Pop Quiz: Where’s the gold to silver ratio?
- Above 80
- Below 78
- Between 78 and 80 and exactly where Half Dollar said it would stay for the last several weeks now
- None of the above
- All of the above
If you chose “c” you’re exactly right:
If you did not choose “c”, that’s okay, because I will get in trouble if I don’t give everybody a participation trophy.
The ratio is between 78 and 80, exactly where I said it would stay until the rally began, but interestingly, withing the tight range, it does look like it’s topping out here.
This leave us with the very anti-climatic gold and silver charts.
First, see if you can notice something going on with gold:
Now, I’m only speaking for myself here, and most people would say I’m an amateur at best.
Actually, most would say I’m a semi-amateur, but I don’t want to start going by that nickname again – I’d much rather stick to Half Dollar thank you very much.
Or Pauly, but only when I’m slinging pizzas.
But, it seems to me that every time gold hits $1,212, a massive buy order comes in, on volume, and buys up some of the yellow metal.
I’d have to look more into the tick-by-tick to see if this is the case, to look at volume over time, which being out-of-the-loop the last several days, I admit that I have not been into the tick-by-tick in that way lately, but on the daily it sure looks like there’s a bid at $1,212.
As far as what I’m seeing on the silver daily, it’s not as clear:
It’s more like a sweet spot for the bid, call it $15.25 to $15.30.
And look at what’s forming on the chart.
Dare I say it?
The Sideways Channel of Pure Agony 2.0?
So coming back full circle to the title of this SD Friday Wrap, is it time to back up the truck?
It’s hard to say.
It looks like downside is limited here, especially in gold if in fact somebody is hitting the bid at $1,212, either as an entry point, or to keep gold above $1,210, and for now, the “by extension” President Trump forced bottoms in gold and silver have held.
But the top did not hold in the dollar.
The question is, what happens over the weekend, and will any of it spark the President to talk down the dollar?
Remember, a couple of years back, Turkey had a Coup that began on a Friday evening and was miraculously over by Monday morning and the opening of the markets.
That said, if there is further strengthening in the dollar, based in part on the continued crashing of the emerging market currencies, then we may finally get that final push down in gold and silver, which would have both of the precious metals testing whole number support, and at that point, for me, I would “back up the truck”.
But what I really think is that downside is limited, and as such, it’s more of a continued dollar cost average at these low prices, with more aggressive purchases if price is indicating the rally is actually on.
Finally, while there are the Docs, I’m not a doctor myself, but I will say this: Eat salad.
It helps avoid the JB Hunt you don’t want.
– 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.