SD Friday Wrap: Amidst the chaos, gold and silver have held their own. It may not have been pretty, but a win is a win. Here’s the details…
Editor’s Note: This Friday Wrap was written in the early afternoon before the Dow decided to puke another 400+ points.
There’s so much going on in the markets right now that it’s hard to decide exactly where to start.
Since this was Fed Head Powell’s debut MSM Love Fest, Let’s start with the dollar, interest rates, and the stock market.
First with the dollar: Notice how the dollar was not a flight to quality or safety this week:
The stock market puked up 700 points yesterday, but there was no rush to seek any “safety” in the greenback.
Could it be that there’s just too many fundamental factors weighing on the dollar right now?
Oh, such as:
- Dollar was already coming off a 3-year bull run
- US National debt is exploding
- Tax cuts could cause even larger deficits
- There is no semblance of fiscal responsibility left anymore
- The Trade Wars have begun
- The Petroyuan cometh
Those are just the first five or six fundamental factors that come to mind right away.
Turning to interest rates, it’s possible we did see a minor flight to perceived “safety” in the bond market:
Now don’t get me wrong, I don’t think the dollar or the U.S. Treasury Market is safe, but there are still hundreds of millions of investors that do not understand they will be left holding the bag, and because of that, they think the first line in safety is the bond market.
They will learn in time, but for now, a “flight to safety” could explain why the rate on the 10-Year Note appeared to be breaking out on FOMC Wednesday, but with the complete and total Dow barf-o-rama on Thursday, rates are right back in the middle of the range of 2.8% – 2.9%.
Staying on the 10-year daily chart above, I would like to point your attention to the Monday after the December 2017 rate hike. I understand past performance is not indicative of future something or other, but the yield on the 10-year followed a similar post-hike fade lower this week as it did last December.
We could be set up to see rates start moving higher come Monday, just in time for the supposed launch of the Petroyuan.
Moving on to the stock market, check out the Dow:
Again, I’m not saying that come Monday, we’re going to see things play out like the Monday after the December rate hike, but if history rhymes, judging by the post-FOMC yield action in the bond market, and the FOMC day after drop in stocks, followed by a Friday rally (sound familiar), come Monday the stock market could fade or worse (worse if you’re a stock market bull that is, which I am not).
And if support at 24,000 doesn’t hold, that chart is going to look very, very bearish.
As should be the case, volatility is on the rise:
The Moving Averages Convergence – Divergence (MACD, the bottom technical indicator) is turning up again, and the spike yesterday was notable.
Of course, there is every reason that volatility should be on the rise and not on the decline, so we might be witnessing the start of another ramp up.
The commodities, however, are sending mixed signals.
Dr Copper’s cold has turned into a full-blown flu:
We’re now below the 200-day moving average in price as the base metal has fallen six of the last seven days. If the copper price falls much farther, we’ll be reaching a seriously oversold condition similar to conditions back to, you guessed it, a short time before the December 2017 FOMC rate hike.
Crude, on the other hand, is not waiting around for anybody’s signals:
Over a week ago, I was saying crude looked primed to break-out above it’s resistance of the 50-day moving average, and sure enough, crude has put in a solid week, and is now back above $65.
That’s the thing about these markets right now: Everybody wants to believe that America is great, the global economy is booming and the U.S. government in particular is going to do all this great stuff.
But looking at the reality on the charts shows a much different picture, even in the world of highly manipulated markets where the ESF and Fed roam tick by tick.
Platinum looks like we could be in a slow but sure bullish consolidation:
Yet we saw how that worked out last time: With a break-out fake-out.
It’s hard to stay bullish on platinum because it has performed so poorly, but at one point, there will be no more sellers left and that will mean there are more buyers than sellers, and we all know what happens when there’s more buyers in a market than sellers – prices go higher.
For now, platinum appears to be not at the point of exhaustion of sellers.
Platinum’s cousin Palladium is in a marginally better position:
To all the cartel agents, shills & trolls that lurk our website, you already know this, but let me spell it out anyway:
You want to really crush sentiment in the precious metals? Smash palladium below its 200-day moving average.
Bitcoin spent some time with a 7-handle this week and by no means has broken its downtrend:
And you may be wondering why the heck I stuck the Bitcoin chart in at this point in the Friday Wrap?
I have no clue why I just did that. It made no sense. But that’s my point. These markets haven’t made sense for quite some time.
Call it a prolonged momentary lapse of reason.
Moving on to gold & silver, let’s start with two fundamental factors.
First, what is the price action of First Majestic trying to tell us?
Looks to be carving out a bottom to me, and if gold & silver are going to rally, we’re going to need the miners to rally and rally strong.
Are we there yet?
I think the rally in gold & silver started this week.
I’ve been wrong on my timing for weeks, but before the trading action on Monday, my call was for the rally to start this week.
We’ll know by next week if I was right.
Regardless, and the second fundamental point, the gold-to-silver ratio is still affording precious metals stackers a wonderful opportunity:
Amazingly, as we wind down the first quarter of 2018, silver is still sitting here at sixteen bucks, and it takes over 80 ounces of silver to buy just one single ounce of gold.
To put this into perspective, Judas betrayed Jesus Christ for 15 ounces of silver. Said differently, Judas betrayed Jesus Christ for basically $250.
I don’t think so.
Silver is sitting here in the first quarter of 2018 because of a little thing we call precious metals price suppression.
There is nothing real about the silver price other than there’s still plenty of silver to bring to market at more or less the cost of production. There will come a time when it’s no longer possible to bring $16, $17, $20, $50 (or pick a dollar price) silver to market.
But for now, it is possible, and as such, we can get eighty ounces of silver for the cost of one single ounce of gold.
Speaking of gold, we’re right back at $1350:
I’d like to take a little different approach to understanding sentiment today.
It has to do with this Tweet:
I am short Gold. 1308 taken out we go to 1225 https://t.co/iG13IXew8f
— Peter Brandt (@PeterLBrandt) March 20, 2018
Peter Brandt, gold price suppression denier and “market wizard” says the yellow metal is going to $1225.
My point is that guys like Brandt still have clout, so when the marginal gold buyer, or the marginal gold trader hears something like that, they run away from gold as fast as they can. Now, I think Brandt is a has-been, but then again, I’m not a trading insider either. But Brandt is up there with people like Jeffrey Christian. That is to say, gold price suppression deniers with influence who the sheeple listen to and take their word as gospel.
That said, when ole Half Dollar says “the rally has begun”, I get called colorful sundry names in the comments, but when Brandt says “Gold is going to $1225”, by golly, he’s a freakin’ genius.
Such is the life of a stacker and Silverbug: We’re mostly in the wrong, painfully long in the wrong, until one day, we’re really, really right.
So much so that the world has changed and we’ve found ourselves on the right side of history when it changes.
I didn’t stack in 2000, so I missed the first run, so I don’t know what it’s like to live that life changing tectonic shift in global finance, but believe me, I’m not missing the next shift, and I hope you don’t either.
But I digress – I’ve gone off on a tangent all because gold’s rally this week is bittersweet: Big volume over the last three days so we can be sure the cartel is simply feeding the rally with their fraudulent paper.
On the weekly, however, we can see that the overall trend is in tack, as it has been for years:
That’s actually a pretty impressive candle this week. We’ll see if my rally call holds.
Sooner or later I’m going to be right. Might as well be now.
Moving on to silver: That’s been the real pain trade, or pain stack.
I guess, though, it’s all about perspective. If you are just starting out, the more you learn the more you stack, and the more you stack the more it becomes a matter of ounces, and if you’re just starting out, you are right at the turn and have been given a gift horse with these artificially low prices.
So putting silver into a visual, what does all that look like?
Well, the gift horse looks like this:
Flat-lined for nearly two years.
We’re up on the week, and although we’re still stuck in that pesky, “tighter than OJ’s black gloves in a Los Angeles courtroom” range of $16.40 – $16.60, we could finally be starting the rally we’ve all been agonizingly waiting for.
All the signs are pointing to an imminent rally, so next week will be very interesting to say the least. Between political or geo-political tensions that could develop over the weekend, the possible launch of the Petroyuan come Monday, and then a holiday shortened trading week, there really could be some serious fireworks next week.
For now, it’s baby steps.
We’ve got some pressing concerns that need taken care of:
We’ve really got to get silver back above the 50-day moving average, and then get that average pointing up again, with the end goal of putting in a “golden cross”.
Continuing the rally next week will take care of that in a hurry.
– 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.