SD Midweek: What in the heck is going on with gold and silver? Two words describe it, and they have nothing to do with the cartel or the charts…
So far, gold and silver are down on the week:
That’s one ugly chart.
Sunday night and Monday morning things were looking good, but at 6:45 a.m. in silver and at 7:30 a.m. in gold, the metals were worked lower.
All day long.
I have been wrong on the call for a rally, but there’s still three full trading days left, so we’ll see.
Something about counting hatching chickens?
It’s time to ask ourselves, what is going on with gold and silver, that they are still in the gutter?
I mean, aside from the cartel, being the ESF and the Fed intervening in all markets, 24/7?
And aside from anything “technical” in nature.
Well, let’s see here.
First off, we have this farce:
The VIX is doing one heck of a job at lulling the markets to sleep and reassuring everybody that there is nothing to fear.
Then we have this farce:
I’ve been calling for a sharp decline in the small caps, but six days ago, after what looked to be the start of the drop I was predicting, RUT has surged higher, and just yesterday put in another new all-time high on an intra-day basis.
Traders are hiding out in the Russell 2000 looking to ride out the trade wars with the Heartbeat of America Index as I like to call it.
And this after nearly a decade of gains with very little pullback:
So hiding out in the froth may not be the best of places to seek refuge, but that’s where it’s sought nonetheless.
So here’s a new term, and you heard it hear first.
I have figured out what is going on with the markets: I call it “Peak Trump”.
This is the Peak in confidence, appreciation, respect, patting on the back, giving of credit, and all of those things what are given right now to President Trump.
Because, you know, MAGA.
Peak Trump is what is going on with gold & silver.
You see, the leftists, liberals and socialists don’t have any money, so they are not investors.
No, “Not true Half Dollar, there’s ton of money in the leftist liberals, just look at places like San Francisco”.
Well, if you can’t keep used needles and human feces off of the streets because of rampant homelessness and vagrancy, and if you think that’s all part of a normal, healthy society, then OK, they have money.
But they’re not spending that money cleaning things up and making San Fran a safe place, and things are only getting worse there, so do they really have money?
Back to my point.
So the leftist, liberal and socialists don’t have any money, so they are not investors.
On the other hand, the conservatives, the Deplorables, and the hard working Americans who voted for Trump do have a little bit of money, and cling to retirement accounts, pensions, home equity, and have some money for investing.
And they think America has been made great again.
In less than 2 years mind you.
And because America is so great and the U.S. dollar is all of that and a box of Mexican made Oreo Cookies, those people with money to invest aren’t buying gold and silver.
So I call it, “Peak Trump”.
Confidence in the President is very high and strong, and he is indeed a smooth if not blunt Tweeter, so the people think everything is great in America.
I disagree, but I digress.
Will Peak Trump last until he is no longer the President?
I’m not sure.
Obama was a great gun salesman all throughout his time in office.
So maybe that means gold and silver will suffer the entire time President Trump is in office?
I doubt it, though.
The real question is can the Trump Administration continue to have Americans believing that he made America great again?
If there is a recession, or a stock market crash, or some other socio-economic problem that he can’t brush off with a outlandish Tweet, then we could see a rather quick descent from the peak.
But for now, yeah, it’s total complacency, bliss and ‘Merica all day long.
I’m trying to make the fundamental case for why gold and silver have been down in the gutter.
All year long.
Which so many people are trying to explain.
And it’s really plain and simple, and now clear for all to see: Peak Trump.
I mean, when we have the Greatest Economy, EVER, and we’re getting tough on immigration, and all these jobs are coming back, and all this money is coming back, what else would we have?
I could argue against all those things, but that’s not the point here, the point here is understanding that gold and silver are stuck in the muck because of Peak Trump.
With China crashing, the Turkish lira plunging, India in their cashless society basket-casedness, it’s hard to see the traditional stackers really able to add in meaningful ways to that stack, and that has compounded the problem and prolonged the fade lower all year.
The yield on the 10-year not has basically done nothing this week:
The yield is really building a long, drawn out consolidation, with some volatility, but yield is basically between the 2.8% to 2.9% range.
It will break one way or another, and the longer the rate just kind of piddles along here, the more dramatic the moves will be.
The dollar has bounced here after coming off recent highs:
Which is another reason the metals are slightly lower as we move into the mid-point of the week.
Crude oil is still in a period of consolidation:
It remains to be seen what impacts sanctions will have on Iran, and whether China and India will respect those sanctions or just keep buying oil from Iran.
It also remains to be seen what effect the collapse in oil production in Venezuela has on global supply, and if Saudi Arabia does in deed pump more to make up for the losses.
But copper is signaling that all is in fact not well in the economy:
Copper is basically crashing right now.
Is this a precursor of things to come in the broader markets?
We’ll see, but the drop has been dramatic to say the least.
Here’s a side thought –
Last winter, as in December 2017, in anticipation of the tax cuts, and into the first quarter, the cuts temporarily boosted spending.
Consumption that is.
Prior to that, last summer, between the hurricanes and the fires, lots and lots of houses, cars and other goods and products needed to be replaced.
And that provided a temporary boost in consumer spending as well as purchases for big ticket durable goods.
What is coming in the next several months that would mask over a weak economy, all things considered?
This is why we are hearing the President talk about “Phase II”, or “Round Two”, or whatever it was he called it, meaning another round of tax cuts that our children and our children’s children will have to pay back with interest.
But grasping for straws attempting to show life in the economy of America, will there be a true increase in consumer spending this time?
To maintain the illusion of MAGA?
Between higher priced goods because of tariffs, rising price inflation, stagnant wage growth, rising rates of interest increasing minimum payments due on debts, higher gas prices, and increasing taxes not at the Federal income tax level but through state and local governments and through fees for this or for that, which are essentially taxes, this temporary boost simply can’t create any more consumer spending on products and durable goods.
At best, Phase II would only help maintain current levels of consumption.
But I digress.
Two words: “Peak Trump”.
I’m always early, but I’m rarely wrong.
So the weakness has been felt in all precious metals after waking up Monday morning to a good start.
Palladium is in the lower end of its consolidation:
Palladium needs to work on gettin the 50-day moving average pointing up again.
Platinum hasn’t put in a new low:
And in all honesty, it’s actually looking good on that chart.
On Monday, I said for platinum to turn the corner and confirm the upward trend, we would need to see a pullback to make a higher-low on the chart.
With four days up and now two down over the last several trading days, I would say that’s enough days to argue that a higher-low is in (assuming the bottom doesn’t fall out again).
So this is the progress we need to see.
Would we like to see it under better circumstances?
Yes, but as that cliche goes, “it is what it is”.
The gold to silver ratio is still in the range exactly as I called:
The issue is that gold and silver are really about as low as they can go.
Can there be a flush out to $1200 – $1225 in gold and $15.50 in silver?
Sure, and I was hoping there would be, and we still may get it, but the low estimate in gold with $15.50 silver would keep the range in tact, and the higher estimate in gold with $15.50 silver would still see the GSR just above 79 yet still below 80, so I still think we’re not going back into the mid-80s on the GSR, at least until the bubble pops years down the line.
So I present the daily charts in gold and silver with a whole lot of nothingburger.
You can see the move Sunday night which was walked back down all day long on Monday.
I didn’t draw the Sideways Channel of Pure Agony because, well, we’re well below it, and I’m not sure what that would even be called.
So here we are, moving into the middle of July.
Did the rally begin this week?
We’ll know by the closing bell on Friday.
But for now, it’s two words: Peak Trump.
– 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.