SD Outlook: The outlook is good for gold & silver during this first full week of 2019. Well, kind-of full week. Here are the details…
Many people are enjoying the fresh start that a new year brings with it.
Early January is a time for reflecting on what went well last year, it is a time for setting goals for the year ahead, and quite possibly above all else, it is a time for getting a reality check on the present.
So let’s do that.
Let’s get a quick reality check on the economy, the markets, politics and geo-politics, and let’s follow the KISS principle.
The fundamentals for the economy are very weak.
For example, we have a housing bubble that is popping and we have retailers that are struggling (i.e. Apple). Making matters worse, we have a “partial” federal government shutdown which can hide some of this weakness in the economy. How convenient the government will not be reporting neither factory orders nor trade data this week:
The economy could literally be collapsing right now, but the “delay” in economic reporting could temporarily hide or mask the collapse. All this will do is add to the “shock-n-awe” factor for when the sheeple are ultimately blind-sided.
The technicals in the market are signaling multiple coming paradigm shifts.
That is to say, the daily 500 to 1000 point swings in the Dow, the crash in the price of crude oil, and gold & silver refusing to budge here are all indicators that stocks are on their way down, a massive crash in the financial markets is coming, and gold & silver are on their way up.
There is a lot of political uncertainty on a national level.
From a newly sworn-in House of Representatives that has gone full “professional” wrestling to the government shutdown and spat over the building the wall, the US government is long on incapacity, waste, and short-sightedness, and the US government is short on its ability to function, having any financial common sense, or planning anything beyond lunch.
There is a lot of political uncertainty on an international level.
From problems in the EU among member nations, to the ongoing trade war with China, to the tensions in the Middle East, there many powder-kegs on an international level that seem to be intentionally looking for a spark.
As we can see, when we take the time to perform a quick reality check of the present, the potential of having a black swan swoop down and seemingly take everybody by surprise is very high, and as I said before, we are at the point where literally anything could set off the market crash and the economic collapse.
Therefore, the reality is that the state of all of these things, the economy, the markets, politics and geo-politics, provides an environment in which gold & silver can thrive.
So let’s see if silver can continue to outperform gold this week:
I think silver will continue to outperform gold.
In fact, I think we will be 60s on the gold-to-silver ratio very soon, and people will kick themselves for not taking advantage of the arbitrage play which we have been harping about for the better part of a year now.
It is easy to talk about doing something.
It is much harder to actually do something, and those who acted will be rewarded for their efforts.
Now I’m not saying when silver gets into the 60s that I plan on sellin’ my very humble and modest stack.
In my opinion, the number of ounces of silver it takes to buy one single ounce of gold will be heading much, much lower than simply the 60s.
Silver looks like it might spend a couple of days consolidating between $15.80 to $15.85:
It would actually be a good thing if silver consolidated here for a couple of days.
Two reasons. First, it will help out with that overheating RSI, and, secondly, and more importantly, consolidating at $15.85 is a good place to consolidate in order to make that push towards breaching $16.
Could silver breach $16 by the end of the week?
I think silver can.
Like silver, gold also looks like it wants to consolidate here:
Consolidation right about now would be a good thing for gold too.
For the same reasons as for silver, consolidating here would help cool gold’s RSI, and consolidation at $1290 would make for a good forward operating base to attack $1300.
Is this the week gold finally breaks above $1300?
I think gold will.
Palladium has been on fire:
We had another record high put in at 5:26 a.m. EST just today.
Platinum is wasting no time in doing battle with its 50-day moving average:
Platinum has plenty of room to run before running out of steam.
Even if you’re not into the base metals, copper will be interesting to watch this week:
Last week copper put in that double-bottom, and I’m looking for copper to recover.
If copper recovers, then the base metal could begin taking aim at its 50-day moving average.
Speaking of recovering, crude oil looks on its way to recovery:
Last week I talked about the inverse head-n-shoulders pattern on crude oil’s daily chart, and for now I think that is how the move will play out.
If the chart pattern does hold, we could be back into the $70s very soon, quite possibly as soon as this Spring.
For the US stock market, the technicals look just awful for the Nasdaq:
The tech heavy major index has 4 lower-lows and quite possibly now a 4th lower-high if the index turns down again.
The VIX looks set to open right on its 50-day moving average:
If the stock market is going to keep selling-off, which I think it will, then the VIX will start surging again.
Which is why I think there is more short-term pressure for lower rates:
We will be hearing more about rates this week, especially on Wednesday at 2:00 p.m. EST when we get the minutes from the December FOMC meeting.
The dollar index firmly has a 95-handle:
Notice too that the dollar was weak last week, even with the stock market strength.
That’s not a good sign for the dollar, which is set to open well below its 50-day moving average.
Which is why I think the decline in the dollar begins this week.
If the decline in the dollar begins this week, that will really help our cause for breaching $1300 in gold and $16 in silver.
Regardless of when we breach $1300 and $16, what matters is how we breach those levels.
We must do it with authority.
We must do it in a move that screams “break-out”.
Which very well may be that upside surprise I’m looking for in silver.
The upside surprise that has proved illusive for some time.
Though now it’s closer than ever.
– 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.