Monday Outlook: The storm clouds are once again forming overhead, but then again, they might just rain on the cartel’s parade. Here’s why…
Fundamentally speaking, this is one week that is perfect for anybody looking to smash the prices of gold & silver. By Wednesday, we will have the closed door FOMC with no press conference.
There will be a statement release at 2:00 p.m. EST:
Interestingly, the CME Group is only showing about a 1% chance of a rate hike:
And every MSM pundit is fully expecting the Fed to “hold” on 100-125 basis points.
But moving out to December is a whole different story:
Again, looking at CME Group’s probability, it seems there is 100% certainty of a rate “hike” in December. Not only that, but 4.3% even think we could be 50 basis points higher than where we are today on the Fed Funds Rate.
Once we get over the Feds ambiguously nothing-burger, we are not out of the clear:
Friday is one of the key times that the cartel likes to smash. This is because it is Non-farm payrolls Friday. It is the day the BLS Job Report is released showing the employment situation for the prior month. The report is released on the first Friday of the month. This Friday, we will see how many jobs were created in October, 2017. It will be interesting to see what the “statistics” show, because recall that just last week, we learned that the U.S. grew by a smashing 3% last quarter. If the U.S. is “growing”, one would assume that job creation would be impressive.
So fundamentally speaking, we must prepare for the nasty storm that is brewing yet again.
Though there is the possibility of a “policy error”. Two reasons being the President is expected to nominate the next Fed Chair and the House is supposed to release the tax plan.
Then of course there is JFK, North Korea, Russiagate, Russiagate the sequel, geo-politics, Catalonia, and a host of other powder kegs just waiting for a spark.
Though when we look at the charts, silver does not look good right now:
Two things immediately stick out on the chart. The cartel is desperately trying to turn that 50-day and smash it below the 200-day. That would be a “death cross” and a bearish sign. However, if the end goal is to get the specs to sell their longs so the commercials can cover their shots in this paper game, they better be careful with just how low they whack it because physical supply is always at risk.
And they do need to whack it, because secondly, open interest is not budging. See how cyclically, open interest jumps at the bottom of smashings and then slowly fades as the cartel issues unlimited fraudulent paper? Well, Open interest has not budged since even before the September 8th smashing.
This means one of two things. If open interest is not subsiding, it will fall in one of two ways. Most commonly, there has been a massive flush of the specs on downside price suppression. But seeing as how it has been so long since the flush, it is possible that we could be about to witness a short squeeze as the commercials cover their shorts.
If that happens, open interest would not be falling based on a falling price, but it would be falling based on a rising price as the commercial banks would have to “cover”, as in buy back, the futures contracts they sold short (contracts they just sold without actually having).
Obviously the commercials want to buy back their shorts at lower prices, as that is how the profit is made, and while the process is always the same for smashing price and covering the shorts, with all the potential catalysts for price spikes in the flight to safety, the cartel would certainly need to quell some of that open interest so they can issue new naked-short contracts.
Is this the week of an epic short squeeze?
There is no denying the minefield the cartel is currently blindly walking through.
The chart looks the same in gold:
Gold looks about ready to tap that 200-day on the daily. Recall how important that line is. Ever time we have, even on an intra-day basis, fell through the moving average, we have spend some time down below it.
For the same reason that we could see a short squeeze in silver, because of the flight to safety, we would see the same squeeze in gold.
The GSR is still straddling 75-76:
Although at over 75, it is still favoring silver, but movement this week could change things, so we’ll be watching the ratio.
Platinum continues to look downright awful:
The open has yet to drop off significantly, but that “death cross” on the chart could take care of that in little time.
Palladium is holding up the best of all the precious metals:
If palladium drops under the 50-day moving average, one could assume that the open interest would drop off. Now with the American Palladium Eagle, it will be interesting to see how the cartel attempts to paint the chart on the year’s stand-out performer.
Pretty soon consumers will be paying perhaps significantly more for just about everything:
Since we have been looking at the moving averages and open interest in the metals, we can do the same for crude oil, and it paints a bullish picture for the oil bulls. Open interest is not out of control, and there has been a “golden cross” on the daily where the 50-day broke through the 200-day to the upside.
Copper has been causing all sorts of problems for analysts, all year long:
Crude looks ready to come down to the 50-day moving average and the last time this happened, Dr Copper just rod the average for some time until the next up-leg.
On the dollar index, we pointed out the “head-and-shoulders” pattern on the DXY:
It looks to still be ready to move on up to 96, but the same with gold and silver, there is so much on the fundamental side that could change things on the quick.
Since the yield on the 10-year is in a “wait-and-see” mode, here’s a term over the long haul:
The Fed sure has done a good job of convincing everybody that interest rates are just slowly moving up. However, we have said before that it doesn’t seem likely that the Fed can just “gradually” normalize interest rates, especially with an economy firing on on all cylinders in a spectacular “recovery”.
And while the VIX was smashed under 10 last week, it looks to be waking up, yet again:
Finally, well, this:
It’s hard to see how it can just keep on charging higher since it has already been “overbought” as indicated by the Relative Strength Index (RSI), but then again, if there is going to be a “melt-up” or a “blow-off-top”, then look for a spike even higher on the RSI.
– Half Dollar