SD Midweek: Things are actually looking up for gold and silver, but there’s a catch. Here’s the details…
I’m cautiously bullish.
I’m guardedly optimistic.
I’m well aware the winds could shift and the tide could turn against us at any moment.
That’s how it’s been lately.
That said, so far my call of the bottom has held up.
Have we made a lot of progress?
But we’ve stopped the bleeding and now gold and silver are stable.
Later on you’ll see that it’s pretty much safe to say that gold and silver are flashing “buy” signals.
But like I said, cautious and guarded.
While President Trump halted the dollar rally, and, by extension, put in the bottom for gold and silver, we’re still at Peak Trump.
But don’t take Ol’ Half Dollar’s word for it.
Just yesterday, well, this:
Our Country is doing GREAT. Best financial numbers on the Planet. Great to have USA WINNING AGAIN!
— Donald J. Trump (@realDonaldTrump) July 24, 2018
Not only does America have the greatest economy, ever, but now we have the best financial numbers, on the entire planet!
How ’bout that!
I’m not sure how a public debt of $21,000,000,000,000 and hundreds of trillions of debt-based fiat currency Federal Reserve Notes more in unfunded liabilities counts as the best financial numbers on the planet, especially when you consider the country of Liechtenstein has zero debt and large reserves, and I have never thought that we have done better economically since the 2016 elections, but then again, I don’t want to be called a President Trump hater either.
Which I think we all need to be.
But I digress.
Just remember that while we are at Peak Trump, we are going to have continued pressure on gold & silver.
Speaking of Peak Trump, statistically speaking, we may very well get the “official” peak this Friday:
And just how high is that peak?
Well, according to the Atlanta Fed, It’s right at 4.5% GDP:
We’ll know at 8:30 a.m. EST on Friday, so be prepared for a possible smashing in gold and silver.
It will be interesting, however, especially since the President has publicly called for the Fed to not raise rates, and he doubled-down on that call, but if we get an “everything is awesome” GDP number (not really, but that’s the spin the MSM and the President will put on it), then what excuse would the Fed have to not raise rates?
They wouldn’t have any.
And if the economy is so awesome, where does the President get the excuse to say to not raise rates?
That’s what monetary policy does when the economy is booming – it raises rates.
Diverting your attention to the events calendar above one more time, it is also of interest to note that tomorrow, Thursday, in the pre-market, at 8:30 a.m. EST, we get our monthly trade deficit numbers.
If the number widens from last month, which it certainly could as the Chinese Yuan has fallen against the dollar recently, then this will give the President more fuel for his trade war fire.
It will be additionally interesting to see how tomorrow pans out because the President already approved an emergency stimulus to farmers hurt by the trade deficit.
I get it, I feel for the farmers, and a spike in farmer suicides and problems with mental health are real, but, we’re also avoiding the elephant in the room entirely in that HFT algorithmic trading is also partly to blame for declining terrible prices and price erratic swings in commodities, false break-outs, break-downs, and simply, false hope.
You see, when we financialize everything, down to front-running and the skimming of profits with thousands of trades per second, all done on programmed computer algorithms, we’re bound to have screwed up markets.
And that’s exactly what we have.
I’m not saying that the impact of tariffs are not real, but I’m also saying that our “markets” and those who push them are also in part the chief culprits for the out-of-whack balances with just about everything that can be bought or sold.
Yet nobody ever brings that up, at least not on Wall Street or in Washington where there is the power to do something about it.
That would MAGA.
Because when you financialize everything and make money just because, on the easy from nothing, that’s not great.
You see, real wealth, real money, real greatness can only be planted and harvested, mined and melted, or manufactured.
HFT algorithmic trading is in part ruining the markets.
But I digress.
No need to go off on a rant or a tangent.
Since we have the best financial numbers on the planet, it’s no surprise one stock market hit a record high yesterday:
Again, I attribute that record high in the Nasdaq to my theory of Peak Trump.
Additionally attributed to Peak Trump is complete and total complacency in the market:
However, we are coming up on the season where things get very interesting in markets – the Fall.
Will there be a fall this year?
No pun intended.
It depends how fast Peak Trump gets unwound.
Seeing as how everybody has the attention span of a gold fish nowadays, I can see it getting unwound rather quickly.
On Monday morning I talked about the coiled spring that which are interest rates on the 10-Year Note.
Since then, we might be seeing a break-out in yield:
It will be very interesting to see where the yield finishes on the week.
We see where the President put a stop to the dollar rally:
I was one of the first people to come out and say the top for the dollar was in:
— SilverDoctors.com (@SilverDoctors) July 20, 2018
So far that call is holding.
For in-depth analysis on how I came up to that conclusion, which is in-part based on a flip-flop by the President since his statement in Davos, that not many people are talking about, see this post.
Copper has fallen so much that a bounce was expected:
The question is why did copper drop so much in the first place?
Remember, from the high print at the very end of 2017 to the bottom, copper had fallen nearly but not exactly 20%.
Is copper acting as a precursor for market turmoil to come?
It might very well be.
Think about this – there has been chatter about businesses stocking up on goods in anticipation of the trade wars and tariffs.
It stands to reason that there would have been increasing demand for copper in anticipation of possible price spikes if businesses were truly stocking up.
Therefore, loading up the the base metal should have put a bid in the futures market at the time, in real time, should it have not?
Again, in my opinion, the economy is weaker, not stronger, so it stands to reason the demand for raw materials, while more expensive because of trade wars, yes, and inflation in general, yes, but the demand is simply not there.
The wild card would be the Belt & Road initiative and the power shift to the East.
Granted, China has a whole host of internal economic problems they’re dealing with at the moment, so we’ll see how things pan out.
Crude oil is still battling its 50-day moving average:
I mention from time to time that my call has been for $80 oil by year’s end.
And I still think that will be the case, especially since the tough talk on Iran is picking up again.
I think it was Monday morning when I asked if palladium would lead the charge higher in price?
Palladium is more than sixty bucks off of the lows:
But palladium is the perfect example of why I’m cautiously bullish.
Looking at that chart above shows numerous false break-outs.
Although I do think the bottom is in (especially for gold & silver).
Platinum is also moving higher in price here:
But looking at platinum’s chart and one can understand why I’m guardedly optimistic.
The precious metals have a lot of work cut out for them.
The gold to silver ratio is still in my range:
Yeah, I get it, it ever so slightly popped its head above 80, but it didn’t close above 80, and again, if this is the rally, I’m looking for silver to finally begin to lead against gold, which means the ratio will be coming down, not going higher.
One thing is certain, however, and that is the range at nearly 80 is still a gift that favors silver right now, assuming the ratio starts coming down.
Gold is in the process of flashing a technical “buy” signal:
It’s about time.
But I’m not holding my breath either.
Notice the bottom the President put in gold?
Silver is not quite flashing the “buy” signal:
But I think it’s safe to say that the “buy” signal will flash soon, if not after today’s trading action.
Bullish and optimistic.
Cautious and guarded.
– 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.