SD Outlook: The cartel has been in control so far in 2018, but that could all be about to change. Here’s why…
We put out some good analysis of the current government shutdown, and we included what it looked like for gold & silver the last time the government shut down (October 2013).
The perspective in that article centers around looking at what could happen to gold & silver.
What wasn’t covered was the action in the VIX the last time the government shutdown.
So we’ve dug up that chart for our SD Outlook:
Well, look at that.
VIX spiked on the government shutdown, and as the shutdown continued and neared it’s end, the VIX dropped back down to where it was when it started.
How do you know that there are no real markets anymore until the governments and central bankers finally lose their grips?
Well, the VIX farce of 2018 of course:
We have fundamental “uncertainty” with the government of the world’s largest economy, yet the VIX is poised to drop (at least in the pre-market).
Which bring us to gold & silver.
Overnight there was some movement in either direction to bring the metals back to unch:
Interestingly, on Sunday evening, and overnight, notice that range we have been talking about in silver.
The cartel seems to be wanting a range of $.10 to either side of $17.
Are their dials really that fine tuned right now?
It’s almost as if there is risk to the cartel if silver closes above $17.10 when options expire this week, but there is also risk to the cartel if silver closes below $16.90.
We can see just how tight the range is getting on the daily:
If that is the case, and considering the wild 6.83% swing move in silver during the last government shutdown, we could see wild swings intra-day in the next couple of days, with market closes putting silver very close to the $17 range, but as we get closer to options expiration we could see the range tighten up again.
We will have a better sense by the time Wednesday rolls around and we give our Midweek Update, but for now, any
attacks dips could be bought here because silver is still basically right at the cost of production, and as stackers we’re getting the added bonus of not dore bars, those rough, cast bars from the mines of minimal refining and low purity, but actual bars, coins and rounds.
The gold to silver ratio is still favoring silver:
Although it is too early to tell if it’s reached a short term top or not.
Gold is finding support around $1330:
One thing to look out for with gold is that if this current government shutdown is a repeat of 2013, then gold, like silver, could end up with the hammer today.
If that’s the case, we would want to see support hold up at $1320.
And with the SEC and the CFTC in “shutdown” mode, it must be assumed that the cartel will be given a free pass on any flash crashes or paper dumps.
The problem is that as the everything bubble just keeps growing and growing, it is hard now for even the mainstream investor to not see gold & silver as value investments these days.
That’s one of the reasons why the gold chart above shows the lows from a year back. That’s right: $1182.
In the grand scheme of things, gold has held it’s own, especially in light of the stock market and cryptocurrency bubbles.
Platinum is running hot:
Platinum hasn’t been this “overbought” in quite some time.
A pullback would be expected by now.
Palladium is consolidating:
It would be nice to see the consolidation stay above whole number support at $1100, but the technicals are working their way towards nice neutral positioning.
Copper still seems to be headed down to test the 50-day moving average:
Copper has continually tested the 50-day, and once if breaks through to the downside, expect all the “end is near” for copper calls.
Crude is looking like it could be making a trip down the the 50-day moving average as well:
The technicals do give the signals that crude is rolling over, plus there’s that huge commercial short position going on.
So we’ll have to wait and see as the week unfolds.
The dollar looks set to open below Friday’s close:
Although the dollar didn’t take a dump, the dollar is about the only thing performing as what would be expected with the continuance of the U.S. government in doubt. At least in theory anyway.
There is just no way the shutdown can spell good news for the dollar. Who would be calling a dollar “relief rally” here?
So here’s a thought: The shutdown could be just the cover the ESF and the Fed need to get the greenback down to an 80-handle.
Regardless, when the government re-opens and kicks the can yet again, the dollar is signaling the next leg is down, not up. The question is how far and how fast, but nobody knows the answer to those questions.
The yield on the ten year note is like a media magnet right now and the talk of many financial analysts:
Though most are waiting until yields get above 3% before calling a trend change.
On the fundamental front this week we have:
- U.S. Government Shutdown
- Turkey invading Syria
- South Korea/North Korea straining warmongering neo-con efforts
- China not happy with the U.S. when it comes not just to trade, but now also with U.S. Navy provocations
- Russia stacking gold and making it known
- Potential delayed economic data releases due to the shutdown that could confuse the HFTs
But wouldn’t you know, gold, silver and the VIX are signaling blue skies as far as the eye can see.
If the VIX spikes, however, those blue skies could turn into storm clouds.
Or if the dollar drops, those blue skies could also turn into storm clouds.
– Half Dollar