And the metals are wearing jet-packs
An SD Exclusive
Aside from the steady stream of both hard and soft data this week, we can start with a calendar of events, and see if something immediately stands out:
In what my otherwise seem like an inconsequential week from the Fed, we might say “not so fast”. Just in case there is any good old-fashioned jawboning needed, we round out the week with dual Fed speeches on Monday and Friday. Indeed, a juggler can only keep the balls in the air for so long. Sooner or later, even if a mistake is never made, muscle energy will deplete and all those balls will come falling to the floor.
There is a major problem. These aren’t ordinary juggling balls, they are real estate, stock market, and bond market swords lit on fire, and our central bank performer is standing on a rolling balancing board of Jobs data which is more unstable by the day, even over the weekend, and even after the vitamin boost given last Friday in the form of Nonfarm Payrolls.
In other fundamental news we reported on the surge in Q2 physical bar and coin demand coming from the East, and the Europeans quietly “adding” to their paper gold ETF stack, and now several reports this week will give us a glimpse of how things are faring throughout the globe. As we progress through the week, we will be keeping an eye out for:
- German Industrial Production
- Chinese Import/Export Data and Balance of Trade Report
- Canadian and UK Real Estate Reports
- Russian Central Bank Reserves Report
- French, German, Italian, and Spanish Consumer Price Index (CPI) Reports
All those data points will give us a look at manufacturing, trade, real estate, central bank activity, and inflation across Europe.
Silver is in a pickle. It is sweet-n-sour, and we’re about to find out how it tastes. The white metal is smack dab in the middle of the 50-day moving average, and the support line which just a couple of weeks ago was stubbornly holding as staunch resistance. For price action in silver, we really want silver to climb back up and get above the 50-day. We also want that moving average to turn up. If silver moves down towards the support line at around $16, we should be rooting for a tap and then decisive rebound off of it. Recall that silver has not been riding either of the bullish wedge support or resistance lines for any period, but as we reported last week on decreasing mine supply, silver miners getting crushed, and increased industrial demand, things really are in our favor for a rally out of the summer and into the fall.
Gold is weathering the storm better than silver has been. Gold is solidly above its 50-day moving average, and the yellow metal can run as indicators are not flashing “overbought”, and in fact the relative strength has come down to a mid-range that gives gold some much needed slack to the upside.
Crude oil (WTI) may indeed be the catalyst needed for higher gold and silver prices. Everybody is stuck looking at the stock market, cryptos, the bond market and a US dollar crisis as the black swan to thrust the metals higher, but it might helps at times to zoom out and look at the big picture.
That’s a ten-year monthly on black gold. It is very important to notice that over time, as while everybody is focused on OPEC, competitive fracking at $50, and N. Korean commodities sanctions, crude has been carving out a bottom and now, there are two higher-lows and one higher-high formed on the monthly. If crude closes August or September with a second higher-high, from a long term perspective, many people will acknowledge that the slow flowing chart changed directions and thus crude is moving higher. A cyclical turn and crude bull market confirmation would be the black swan that really comes from the blindside. The silver miners are back to losing money again, as evidenced in the brutal performance of last week. This week we get earnings from several other miners, so we will see if in fact the losses are contained to just a couple miners with mines in Mexico, or if the losses are more widespread. Higher oil costs and worsening miner performance would force metal prices up just on their own, so while crude will probably be choppy as it has been of late, let’s just see how the month closes for a better indicator.
The US dollar is a whole lot of dud. In what was received by the MSM as a stellar jobs report, notice that the dollar faded the move on the 3 minute chart. For reference, not the precious metals smashing right at the release of the report. This is exactly why all those Fed speeches are crucial this week for the “markets”. If needed to talk the dollar up, or down, we will get an indication as early as a one-two punch today.
We highlighted the Maestro’s dire warning on the bond market, so we won’t pull up the chart, and that leaves us with this one chart, which speaks for itself.