SD Midweek: Gold & silver continue to churn here, but there are plenty of reasons to think we may finally get that upside surprise. Here’s an update…
Every time the metals look like they want to break-out, they get pressured right back into submission. The churn continues, and it continues to weigh on investor sentiment.
Case in point:
The overnight and morning action up until shortly after 8:00 a.m. EST looks like we’re going to see the Niagara Falls of Gold & Silver.
Is the cartel expecting a bid in the metals today, and therefore the cartel needs to smash the metals to a lower starting point?
When we zoom-out slightly, we can see the pressure, especially in gold:
Gold was making a legit run at $1250 yesterday, but shortly after the market officially opened, gold was walked down. All. Day. Long.
Here’s why it’s an agonizing churn: The cartel isn’t giving us any gifts to add to our stacks, with silver, say, at sub-$14, and with gold, say, at sub-$1200, but the cartel is also not giving us any reason to get excited about the price action. Now don’t get me wrong – gold and silver are still very undervalued here, and this is as good a place to add to that stack as any, especially since premium creep is a real thing.
That said, Gold has basically been a few bucks to either side of $1230, and silver has been between $14.50 and $14.75.
As such, the gold to silver ratio is right where it was last week:
And the week before that. And the week before that. And the week before that. The ratio has bounced between 80 and 85 ever since mid-August.
Like I said last Friday, gold and silver are simply marking time. Or they are hamsters running in their wheels. Take your pick, but no matter which one you choose, that is exactly what the metals are doing.
Even though we have churned for more than two months, after basically fading lower all year long, I am still looking for a surprise to the upside that will catch everybody off guard.
There are just too many fundamental factors right now that would be positive for gold & silver, and sooner or later, the fundamentals will matter.
In no particular order, “gold and silver friendly” fundamentals would be:
- Geo-political tensions in the Middle-East
- Political tension in Washington
- Unexpected or disruptive results in the mid-term elections
- A stock market that looks like it wants to head lower more than it wants to rally
- The everything bubble starting to pop, including the housing bubble and the auto bubble
- Skyrocketing debt and deficit spending, both for individuals, governments, and foreign governments
- The world in fiat currency crises and with plummeting sock markets even more so that in the US
- The de-dollarization of nations by selling US Treasuries and buying gold
- Palladium is on fire providing more evidence of real-time physical supply shortages
There are more fundamental factors than that, but that’s the thing about this slow churn – it’s meant to break our spirits, so I’ll just stop right there (even though my spirit is far from broken).
When we zoom out to the standard daily chart, the reality is that gold doesn’t look too bad:
We are seeing the 50-day moving average starting to make that all important turn, and gold looks like it wants to run here, and on the technicals, gold has the room to run.
Silver’s daily chart doesn’t look too bad either:
Yes we have been churning, but the trend is clear, and the trend is up.
Platinum is stuck in a sideways channel:
It makes sense that platinum is moving that way since the precious metals are marking time.
Palladium, on the other hand, is an entirely different story, and a reason to get excited.
Just yesterday, palladium hit a brand new, all-time record high:
It is hard to see it on the historical chart above, but it’s there.
Here’s a better view with this weekly chart:
I have been saying to look for palladium to run, and wow has it ran!
Of course, we have been talking about problems in the palladium market. Recently, I did an expose discussing a palladium shortage. Of course, all the haters and trolls came out and said I was an idiot, but I’ve been called much worse, so It’s cool. I get it. The palladium proof is in the pudding, and the pudding is the price action that just saw a surge to all-time highs.
Why is palladium’s surge “good for gold”.
Well, what we could be witnessing are the physical precious metals markets breaking, and specifically I’m referring to the London and New York pricing mechanisms (a.k.a frauds). If actual physical demand is pushing the price of palladium higher, just how close are we to seeing shortages in the physical gold & silver markets?
OK, “Hey Half Dollar, everybody knows there is no shortage of gold. It’s just a matter of price!”.
It is a matter of price.
I guess I should have said it like this: Just how close are we to seeing actual shortages of physical metal at these prices?
The cartel knows the answer to my question, but they will not be announcing or answering it. And it is not even like the cartel has to completely run out of metal. Stockpiles could just get low enough to the point where the cartel is forced to let price rise. Which is another reason why I think we could see a surprise to the upside, and very soon. I mean, peak to trough, palladium was down nearly 27.50% between January 12, 2018 and August 16th, 2018, and now the precious metal is not just at 52-week highs, but all-time highs!
See how things can turn on a dime and really get moving?
An upside surprise would not surprise this stacker one bit.
Crude oil bulls must be nervous right about now:
Crude oil is down almost 13% from its recent highs, and after the Saudi’s threatened the US with $400 oil, the price has really plummeted. I’m not yet concerned, however. Sure, if price keeps plunging the chart will be set-up very bearish, but crude oil has been climbing the ultimate wall of worry for the last year, with wild swings in price over short periods of time.
That said, I have been saying fundamentally, the price of crude oil is putting a floor under the precious metals, especially silver, so if crude dropped into the mid-$50s, I would reconsider my call of the bottom in silver, and have a new call that silver could possibly be headed to retest those lows of three years ago.
So we’ll have to see what happens with crude oil over the next several trading days and even weeks.
Copper has been fading:
If there is a physical shortage of palladium, which there is, and if there is also a shortage of silver, which we don’t know just yet, then the cartel will need to bid up the price of copper to get the miners motivated to explore more, mine more, and bring more metal to market because most of the silver production in the world comes as a bi-product of base metal mining like copper.
On Monday I posed the question if the Globalists/Deep State were planning on crashing the stock market into the mid-term elections to therefore blame President Trump and make him look bad?.
It may be a little too early for an all out-crash, with the mid-terms now 13 days away, so the plummeting stock market may have been moving down, too far, and too fast, but I zoomed-in on the Dow Jones Industrial Average just to show the lunacy of the stock market.
Check out this miracle save from yesterday:
That is a major gap-down at the open, with the lows of the day being 500+ points down, but miraculously, the Dow charged higher all day long, and it even closed positive on the day.
What a farce.
The Heartbeat of America Index, however, was not treated as kindly by the cartel:
The Russel 2000 is now in the red for the year.
The VIX looks like it wants to spike again:
The fear index looks set to open above 20 today.
The yield on the 10-Year Note is now banging around 3.1% and 3.2%:
The trend looks like yield is headed lower, and if the stock market keeps dropping, one would assume yields would head lower because investors would (wrongly) look to make a flight to safety by moving out of stocks and into bonds, and as such, that move would bid up the price of the bond, which would lower the yield on the bond (well, “note” in the case of the 10-Year). Bond prices and interest rates move the opposite of each other.
Finally, dollar bulls will like the way the dollar looks on the daily chart:
Back when the dollar was topping out at 96.984, the President (5 days prior to the top on August 15th) was boasting about “our very strong dollar” on Twitter, and we know the President has flip-flopped back and forth from being a strong dollar guy to a weak dollar guy to a strong dollar guy again, that honestly, I’m not sure where the President stands right now, but if the dollar does somehow take out that high from back in mid-August, I would expect the President to mention the dollar or currency manipulation in one form or another.
The President is kind of boxed in right now, however, because the Treasury Department came out and did not label China as a currency manipulator earlier this month.
Bottom Line: Gold and silver are still churning, but like palladium, the price action in gold & silver could turn on a dime.
I am still expecting that upside surprise that nobody is calling for.
There are just too many fundamental forces at play that would ultimately bid-up the prices of gold & silver.
So even if it looks like we are going nowhere, we may not be going nowhere for long.
And we might just get above $15 in silver and $1250 in gold to close out the week.
That would be a good start in my book.
– 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.