Silver’s Got A Twin? Now Gold Looks Fine Too And Everybody (Including The Jealous Cartel) Knows It!

SD Friday Wrap: Gold finishes with a gain for the week. A nice looking bottom is forming on gold’s chart, and the technicals aren’t too shabby either…

First this:

That’s President Trump boasting about the S&P 500.

Let’s make sure we are looking at the same chart:

Yikes!

That doesn’t look good.

But what about all those small to medium sized US-centric businesses that are “immune” from the trade wars:

Double yikes!

Here’s a question: Is the US really this isolated bastion of economic bliss while the entire global economy is imploding in front of our very eyes?

I don’t think so.

Many people say the President is owning the stock market, and the jobs reports, and all the other “the best economy, ever” stuff so that when it all comes crashing down, he can say, “see, I made America great again, but if it wasn’t for the Fed who has ruined everything!”. I have never really bought into that theory, but even if it is true, the Fed has struck back.

How so?

Well, Fed Head Jerome Powell said this on Wednesday:

“There’s no reason to think this cycle can’t continue for quite some time, effectively indefinitely,”

Wow.

That’s about as bold a statement as “best economy, ever”.

So what do we have here? We have a Fed Head that is taking a page out of the President’s play book, assuming the blame game tactic is actually a page in that playbook, and now we see that when it all comes crashing down Powell can say, “see, the Fed has worked very hard since the global financial crisis to get this great economy and have these great markets, with low unemployment, and price stability, and by the President’s actions he has ruined everything!”.

Now think about this: Who’s side is the congress and the MSM on, the President’s side or the Fed’s side?

If you think the Mainstream media works against President Trump, then it should be blatantly obvious that the Fed will win the blame game.

Then what?

I don’t know.

I’m asking.

Frankly, I haven’t gone through the mental exercises, the thought experiment if you will, but I will say this – Every Trump supporter is so sure that the November mid-term elections are a wrap for the Republicans, and while I tend to agree, what about 2020, especially if the Fed wins the blame game when the economy comes crashing down?

Nobody is pricing in a Trump loss in 2020.

But I digress.

Back on track.

Again my call this week was half right and half wrong.

I gladly admit when I’m wrong, and since I don’t believe in excuses (or participation trophies), the bottom line?

I was wrong on my call.

That said, every analyst, expert, investor, pundit and trader was looking for downside price action in gold & silver this week, and I said it would be tough, but that I was looking for a surprise to the upside this week.

Call it going against the grain of those who go against the grain.

A contrarian’s contrarian.

Here’s the gain we saw in gold this week:

That is a fine looking bottom forming on the weekly chart. The technicals are shaping up nicely too. Gold is actually looking pretty good right now.

Zooming in, however, we can see the beatings and just how much the cartel is scared of gold breaking-out above its 50-day moving average:

What a sham!

And if you think that’s a sham, wait until we get to silver.

At any rate, the cartel is only delaying the inevitable.  We will get above the 50-day moving average, and even with the rejections, we’re still right there in spitting distance. Here’s the thing: The cartel thinks it is the big man on the court slam-dunking all over the place when really the cartel just playing basketball against a little person.

Hey, “You callin’ me a midget Half Dollar?”.

No.

What I am saying is that it’s too easy to strong-arm the markets when you can just whip up paper into existence, both fiat currency and gold contracts, and use that paper to manipulate the markets. I mean, if we had unlimited fiat currency and unlimited paper gold contracts at our disposal, we could dominate the gold market too.

For now, it’s like that old cliche “it is what it is”.

Oh yes it is.

Silver’s weekly chart shows how I blew my call:

That said, the technicals on silver’s weekly chart are starting to turn bullish.

But like I said, if the denial at the 50-day moving average was a sham in gold, look at the number they did on silver:

Total sham!

OK, “Hey Half Dollar, this high speed trader guy who sells a newsletter says that since silver has failed to break-out above the 50-day moving average that this means silver is heading lower!”.

Uh, OK.

I’m glad I don’t subscribe to newsletters.

You see, I still think the bottom is in, both in terms of physical ounces of gold or silver in hand, and also in terms of the spot price.

Again, my reasons are fundamental, and I’ll restate them here for any new readers:

  • Gold has bottomed because the gold price is taking into account a perfect world, perfect politics and perfect geo-politics. In other words, the economy is booming and there is peace and love as far as the eye can see or the plane can fly.
  • Silver has bottomed because the price of crude oil is putting a floor under the white metal. Crude oil is a major input in the production of silver, and crude oil is $25 higher in price than a barrel cost last year, and I shall remind everybody that the silver price was over $17 when crude was $25 cheaper.

Since we’re on the topic of crude oil, check out this 3-day chart covering five years:

It doesn’t take a trader to see there’s no real resistance for the price of crude oil until the upper $90s or perhaps even into the double aughts.

Get ready for higher prices at the pump, too.

We can gauge the health of the economy by looking at Dr. Copper:

Earlier this week I had mentioned how copper had not yet come down to test the support of the 50-day moving average. The way things stand right now, it looks like copper is either consolidating at $2.80, or coming down to test the support.

We’ll know soon enough.

Palladium’s chart continues to look nice and bullish:

I have been talking about palladium needing a nice little pull-back, and that is exactly what we are seeing on the chart. With palladium, however, whether one stacks palladium or not, we need to keep our eyes on it.

OK, “Hey Half Dollar, why do we need to keep our eyes on palladium?”.

Good question.

Check out my investigative article discussing the global palladium shortage that we are seeing in real-time. The palladium market could really get moving here. Could palladium even catch-up and overtake gold in terms of price in the near-term?

Don’t worry, the question is rhetorical, and it is food for thought, but it just goes to show just how unloved gold and silver are right now, which, to any self-respecting contrarian or value investor, is exactly why gold and silver are looking pretty fine right now.

Platinum even looks like it could be in a bullish consolidation here:

The more days that come and go, the harder and harder it is going to be for all of those technical analysts to say, “the bottom ain’t in yet, and Half Dollar ain’t qualified to do no stinkin’ technical analysis anyway with his two-bit self-taught trading and investment ejucation.”.

That’s cool.

I can take the heat.

Shifting gears, because I also like to drive my beater like a bat out of, well, you know, let’s shift gears.

And let me say this in all caps, not because I’m yelling, but because it is very important: THE MARKETS ARE IN UTTER TURMOIL RIGHT NOW.

Seriously.

There is something going on in these markets, and what is going on doesn’t look good at all. So here’s a question: Was the plunge in gold & silver prices in mid-August and then again in early-September the equivalent of the 2008 “crash” in gold & silver prices?

If the answer is yes, then it could mean we are on the cusp of the mother of stock market crashes itself. And by default, October isn’t kind to the stock market. Just go ask 1929, 1987 or 2008. I’m sure I’m missing a few dates in which October hasn’t been kind to the market, but not only would it not surprise me one bit if we add 2018 to the list of unkind years, but it would surprise me if we did not add 2018 to the list of October crashes.

That said, I’ve already thrown-up two of the major US stock indices, so let’s look at the other two main indices.

Sometimes I just like writing the word “indices”.

‘Indices”.

Ok,

I’ll stop now.

Indi-

I almost couldn’t help myself there.

Back on track.

On one of their tracks, pun and no pun intended, the Beastie Boys once sang, “I’ve seen better days than this one”.

In hindsight, perhaps that was a prophetic vision for the Nasdaq circa October, 2018?

Because we can clearly see the Nasdaq has seen better days that this one:

 

While bouncing off of the support of the 50-day moving average multiple times since late June, the tech heavy NDX plunged through its 50-day moving average today and never recovered.

So let’s see here: We have an S&P 500 that looks sickly. We have a Russell 2000 that is puking its guts out. And we have a Nasdaq that looks like the bottom could fall out at any moment. The picture is not pretty for stocks. Other wise known as “equities”.

What about the Dow?

Before I get to the chart of the Dow, a tiny rant. Actually, it’s not a rant. It’s actually a mini-lesson in which I intend to give some valuable information to people who might not know this.

Here’s what happens: Everybody likes to compare gold to the stock market, and when most people talk about the stock market, they are talking about the Dow Jones Industrial Average (a.k.a. the Dow).

Here’s the thing: You cannot compare the stock market to gold any more than you can compare laser-tag to actual combat.

Actually, that analogy isn’t good.

Here’s a better one: You cannot compare the stock market to gold any more than you can compare a wet tee-shirt contest at a skanky bar to getting shot in the chest point-blank with a shotgun.

Sorry for the visual, but you see, that is exactly how it is: One is a joke and one is all too serious. Said differently, one is the fad of the day and one is oh so permanent.

So why can’t you compare the stock market to gold?

First of all, gold has been around for thousands of years, and the Dow has only been around since the turn of the 19th Century.

That’s not the reason, however.

The main reason is that one ounce of .999 fine gold is and always will be one ounce of .999 fine gold. In all of time and in all of places, one ounce of .999 fine gold is one ounce of .999 fine gold is one ounce of .999 fine gold.

The Dow, on the other hand, which is not 5,000 but only 122 years old, does not even have the same companies listed on it as when the Dow began back in 1896. That’s right, not a single original company.

And that’s the point. You can’t compare something that changes all the time with something that is permanent.

Back on track.

Let’s have a look the Dow:

Sure, the Dow, the pinnacle of all the US Indices, has held up better than the others, but that is one nasty looking double top there on decreasing volume.

In other words, the outlook is not good.

This is why we see the VIX actually getting perky:

The question is whether that is just a two day spike, and we go back to peak complacency, or is this the start of something more, well, volatile?

If the stock market indices are going to come crashing down, the answer would be this is just the start of the coming spike in volatility.

We’ll see.

I have been calling for a relief rally in the dollar, and we got it:

I think the dollar is topping out here, but that’s not to say we couldn’t see a technical double-top at 97. I don’t share the view the dollar is going to keep on strengthening. I mean, we know President Trump wants a weaker dollar (at least that was his last stance on the greenback), and since the President has the Exchange Stabilization Fund at his disposal, he could simply whip up some currency out of thin air (nothing new), and flood the international currency markets with it (to weaken the dollar).

The same goes for that “dollar shortage” out there.

Dollar shortage dollar schmortage.

And if you’re in to wearing tin foil for headgear at times, ask yourself when was the last time that you saw fresh $20s spewing from an ATM?

Could it be that, dare I say, pallets, duffel bags, and crates of $20s and $100s are already being whipped up and flooded around the world to pay for bribes here, influence there, and all sorts of sundry what-nots?

I don’t know.

I’m asking.

Of course, the biggest news of the week was not in the stock market, the commodities, or the precious metals. Rather, the big news of the week was in the bond market.

Just check out the spike in yield on the 10-Year Note::

Wow.

That’s impressive.

I have been (correctly) calling for a move higher in the yield on the 10-Year Note, only I thought it wouldn’t come so soon. This is all part of the whole “UTTER TURMOIL” I was writing about earlier. Needless to say, it will be very interesting watching the bond market next week.

So let’s see here. To summarize we have:

  • Gold & silver that have bottomed if we are talking about actual physical ounces in hand
  • Stock markets on the brink of a terrible disaster
  • A bond market that is blowing-up

What is one to do?

Hmmm…

We can consult the gold to silver ratio:

The ratio is telling us that what we should be doing is buying silver!

That’s what I would do.

Heck, that is what I have been doing, and with guerrilla warfare tactics –

I switched from ham to bologna this week, I swapped out the orange juice for the orange drink this week, and I have been peeing outside with my dog.

That’s right – I have shifted into full-on penny pinching mode.

Because I know that gold & silver prices won’t stay like this for long.

And a penny saved is an ounce earned.

Or something like that.

Stack accordingly…

– 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.

Paul’s free book Gold & Silver 2.0: Tales from the Crypto can be found in the usual places like Amazon, Apple iBooks & Google Play, or online at PaulEberhart.com. Paul’s Twitter is @Paul_Eberhart.

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