Precious metals on sale Monday. Here’s the latest fundamental and technical analysis for the week ahead.
Coming off the thread of nuclear Armageddon last week, it appears that everything is now fine and dandy. Last night we said that the dollar, gold, and silver were going to have to finish their lunch date, then go their separate ways. Go their separate ways they did. We knew either gold and silver were going to continue to break out, or they would break down. Overnight the metals faded lower all night after peaking around 11:00 p.m. EST. The silver price is fighting to hold $17 right now. The gold price traded as low as $1285. The dollar wouldn’t be called spectacular, but the dollar is around 93.35 right now. We will just have to see how things unfold throughout the day to get an indication of what the markets are thinking.
And it will be hard to come by the drivers today. We have some US treasury auctions, but not much technical market data until Tuesday when we get an across the board check-up on technical market vital signs. Tuesday we get:
- Retail Sales
- Empire State Mfg Survey
- Import Export Prices
- Business Inventories
- Housing Market Index
On Wednesday, we get some more good technical data with Housing Starts and the EIA Petroleum Status Report. Thursday we get Jobless Claims, Philadelphia Fed Business Outlook, and Industrial Production. Finishing off the week we get Consumer Sentiment and Baker-Hughes Rig Count.
Once again, the Fed will be looking to steer the markets just as we see what direction they are headed. Fed activity and any effects on the market pick up on Wednesday with the release of the FOMC minutes, then on Thursday we have a one-two punch of Kaplan and Kashkari speeches, and of friday Kaplan comes in as the closer for the final Fed speech that also includes Q & A from participants in Dallas, Texas.
This looks like one of those weeks where the Fed will be in the driver’s seat, and they even have a two-day market lead time before we see what condition they are in to drive. It was a sad weekend as events turned violent in Virginia, and tensions were through the roof last week. We’ll just have to see what the markets are thinking today.
If we want something from gold and silver, we want gold to make a run at $1300 this week. Unfortunately gold is starting from a lower spot, as it is having a hard time holding $1285 right now. Silver, well, let’s just try to hold $17. Silver will wake-up when it’s ready, but right now, that $16.90 to $17 range is crucial. We really need the 50-day to start turning up and making a run at crossing the 200-day, but that hurdle is a ways away, and if there is not a break-out coming off of a strong week like last week, we really want to just consolidate and hold here.
The dollar, gold and silver were all lined up and ready to bust the gates when the markets opened. Sunday afternoon, this is how they sat before the gate was opened:
Well, the slow grind up from Friday, we learn, has now turned into a fade in the metals:
Something to consider. Recall that the metals only really got hit once last week. As there is no major moving news coming today, and nothing super critical coming out on the week, we need to be on the look-out for any smashing and bombing of the metals, because they will be met with little resistance unless something geo-political storms the scene again over the next couple of days.
The bottom line is this: If you have been trying to time your purchase, now is the time. We would certainly recommend dollar-cost averaging in slowly, adding little by little each month up to the desired amount of metal you feel comfortable with, and that way, you can smooth over the ebbs and flows of the market. This week, however, can look to be one of those where silver at $17 may be quickly coming to an end. Same for gold. Anything between $1250 and $1300 may soon become a distant memory once school is back in force and we turn the season. These are the last of the good times, and may products are readily available, from American Gold Eagles to Mexican Silver Libertads, and from private rounds to 90% constitutional silver coins, this is the time to be a buyer when premiums are low, price is low, and choice in product is plentiful.
Crude and copper are at critical junctures as well. We can see on the chart that contrary to what we said last week, the bull flag in crude did not produce results to the upside, and WTI is now fading. Copper, looks like the consolidation over the last few days is putting in a bull flag of its own. Seems like crude will either catch up to copper, or copper will start a fade and catch down to crude:
Crude and copper matter. The price action in Dr Copper and black gold matter because a major cost of mining is the cost of fuel. With copper, not only is there the cost to mine based on the price of fuel, but most of the silver that is mined in the world comes as a byproduct of other base metal mining operations, such as copper. It is therefore important to understand how crude and copper have an impact on gold and silver prices and available supply.
Finishing out this week, we can reiterate what we said last night. Is the dollar finishing up a dead cat bounce, or does this cat still have some lives left? From the high in January at 103.82, to the low coming in just recently at 92.54, there is no denying the bearish trend is in tact, and not much has changed at all since the whole “infrastructure spend” hype which, now more than half a year into 2017 has turned out to be just that – hype.
We leave you with this. Not sure I’d be a buyer of bitcoin at over $4,000:
That thing looks beyond parabolic.
One thing is for certain, and that is gold and silver are barely getting started. There is a nice little sale for goldbugs and silverbugs in the precious metals today. Not sure how long that can last, because they surly understand that “quantities are limited” and this is one of those “limited time only” deals. So enjoy it, and keep stacking while the stacking’s good!