SD Outlook: looks like were going lower, so buyers have great opportunity here. If you’re not a buyer right now, prepare for more pain. Here’s why…
Editor’s Note: There will not be a SD Midweek Update on Wednesday.
This is the week where both fundamentals and technical data dumps can have an effect on the cartel’s ability to smash the price of the metals.
Meaning they will be able to strong arm gold and silver with ease.
Let’s recap the fundamentals for the week.
On Wednesday the markets are closed for Fourth of July.
With markets closed on Wednesday, the cartel loves smashing around market holidays. Thanksgiving and Christmas are prime-time holidays for smashing too.
Something tells me that the latter half of the week will see an increase in people taking time off to spend with families or on vacations.
That said, there will likely be low trading volume this week, and recall that the cartel doesn’t need to dump as much paper to start the waterfall of selling, so we must assume they will not let the opportunity go to waste.
Additionally, on Thursday, we get the minutes from last month’s FOMC.
That is another trick the Fed manages to pull out of its sleeve each and every month. You see, they wait three weeks before releasing the minutes of the meeting. Obviously they could be released the very next day in the age of computing and telecommunications, but, and they won’t tell you this, but the Fed likes waiting three weeks before releasing the minutes because if the markets react to a Fed meeting in any bad way, well, they can just go in and doctor-up the minutes to convey a particular message.
For example, if the June FOMC was perhaps too “hawkish”, which is the consensus, especially when judging by the decline in the Dow in the days following the June rate hike.
So on Thursday when we get the June Fed FOMC minutes, there could be a “dovish” spin on them to help prop the markets back up.
Of course, this is assuming that is what the Fed wants.
In my opinion, they still want to keep the stock market propped-up, unless of course, they are trying to gently, which is impossible, release some air out of the bubble.
If that is the case, then the minutes would confirm a “hawkish” Fed.
And that’s just the main fundamental factors affecting gold & silver this week.
There’s still the technical data dumps we have to deal with.
Aside from Tuesday, which is a smash day anyway as the cartel re-works positions for the COT Report, and aside from the markets being closed on Wednesday, there’s important data dumps all week long.
The most important, and a key day the cartel loves to smash, is Friday when we get the BLS Jobs Report.
Bottom line – Both fundamentally and technically speaking, I think we are in for a rough time of it this week, and even more so that last week.
Nasdaq futures look to be opening lower to start the week:
One veteran trader said to be on guard for a decent stock market drop today as today is one of those Fed balance sheet unwind days.
The VIX does seem to support this analysis as we’re starting from near 17.50:
If the stock market does have a meaningful drop, we would look for volatility to increase from here.
We would also look for the yield on the U.S. 10-Year Note to continue its decline:
When stocks drop, currently, like Pavlovian dogs, traders are trained to seek the “safety” of the U.S. bond market.
More buyers than sellers increase the price of the bond, which reduces the yield. Price and yield in bonds have an inverse relationship.
So we’ll see, but it does look like the market, volatility and the bond market are all signaling some kind of drop in the works.
I’ve combined the base commodities chart today.
Here’s crude oil with a copper overlay:
I find it an interesting comparison, seeing has how copper had that massive surge, and an even more massive drop.
Will crude oil have a drop like that?
It could, but there’s some geo-political factors affecting the price of crude oil right now, namely, sanctions on Iran, the plummet of Venezuela’s production, OPEC at it with each other, and the wild card – President Trump, who we know thinks crude oil prices are too high.
Which may explain the bid in the dollar and rising crude oil prices – a little ESF intervention in the foreign currency markets to help alleviate higher prices for American Consumers at the pump.
So we’ll see.
For now, however, the dollar is consolidating somewhat:
The dollar seems to be taking cues from the fundamental outlook and is content for the time being bouncing around 94.50 and 95.50.
Last week I drew a bearish rising wedge on the dollar, looking for a target of 95.50. It will be interesting to see if that pans out over the next several days because a rising wedge, being bearish, in theory anyway, ends with a drop when there is no more room for candles because the days reach the point of the wedge (the end of the wedge pattern).
Palladium is right at support:
If the support holds, especially for the week, that would be bullish, because palladium led all year last year, and we could again be seeing palladium signaling the start of the rally.
Platinum, on the other hand, well, opening with another low in the overnight/morning session:
With eight series of lower-highs and lower-lows, there’s just no end in sight for platinum.
Platinum will turn, when the rest of the metals turn, but if the rest of the metals are headed lower this week, which I think they are, then the trend would continue.
If silver gets smashed here, we could see a little run higher in the gold to silver ratio:
I still don’t think were going to run back up the the mid-80s, and really, for the downtrend to remain in place we wouldn’t want to see the ratio go above 79.29.
OK, time for the good or bad news depending if you’re a buyer here.
I’ve been saying that I think this will be a pretty bad week, as in lower prices.
I’ve been consistent for three weeks now saying this one would be the worst.
I was also thinking we could get some sort of “fool’s hope” on Monday that maybe the bottom would be in.
Well, it looks like they’re just going to strong arm anyway.
Remember, the cartel has it in their vested interest to always smash.
So, here we are, and an hour before the market even opens officially, and BAM:
I still think it’s going to be one of those weeks.
Let’s start with the gold daily chart:
If support at $1243 doesn’t hold here, which I don’t think it will, then I would be looking for a downside target of $1225 support zone (blue line), or, even down to $1200.
The evidence is strong that gold will be lower to close out the week.
One of the problems, recall, is that last year there was very little consolidation, but rather, gold was either going up, or going down, so the support zones are weak, generally speaking.
Silver is in a slightly different boat than gold:
After enduring the sideways channel of pure agony for six months, the cartel finally managed to get silver to crack.
That said, there’s basically an air pocket down to $15.75.
Additionally, last July we had that spike low of $15.14, so we could have a spike low somewhere lower than $15.75 in a similar fashion.
Bottom Line: If you’re a buyer here, this is an awesome opportunity to buy metal near the cost of production.
Everything else in the world is only going up in price, yet gold and silver, because of active price suppression by the government and central bank, have gone down in price, and it’s creating this type of second chance opportunity to get in at crazy low prices.
I mean, silver sub-$16 in 2018?
When something is so hated, that it’s hated even more than so hated, well, that’s when I’m a buyer.
Call it contrarian investing.
Call it value investing.
I still think the rally begins next Monday.
The real question is from what price levels will the rally begin?
Could it be from $1225 gold and $15.75 or even $15.50 silver?
It could be.
– 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.