SD Outlook: While gold & silver have gone nowhere lately, there are several reasons to think they could really get moving this week. Here’s why…
The economy takes a backseat to politics this week. At least early on it does. Tomorrow we have ‘the most important mid-term elections, ever”, and as such, it is likely that all eyes and ears are focused on the elections.
It’s not that this week would be a nothing-burger week in the economy, however.
This is actually a Fed FOMC Meeting, which starts on Wednesday:
The week before the “live meetings”, the Fed generally does not make any public statements, but not this time. This is not a “live” meeting. This is a “lesser” meeting, and checking the FOMC FedWatch over at CME Group shows over a 92% chance of the Fed holding on interest rates.
The statement for the two-day meeting comes out a 2:00 p.m. EST on Thursday:
There will only be the release of the statement on Thursday with no press conference afterwards. Notice on Friday, we still get important economic data releases, so It’s like I said, it is not as this week is insignificant on the economic calendar.
There are plenty of data points and plenty of Fed jawboning.
But it all takes a backseat to the elections, to which the coverage is already in full force with mentions of early voting in which it is being reported that the Republicans are holding the lead in key “battleground” states.
Of course, that provides cover for a little pre-market pressure on gold & silver:
Possibly a “sell the rumor, buy the news” type of week. If that does end up being the case, I would be looking for weakness, possibly through Wednesday, with strong price action into the end of the week.
One scroll down the President’s Twitter feed shows nothing but campaigning for the Republicans.
Curiously, on the geo-political front, today is the day that new sanctions begin on Iran. Interesting how that kind of will take a backseat in the mainstream media to the elections.
How convenient, right?
Moving on to the markets, we see the multi-day effort to save the DOW last week:
With the absence of a false flag over the weekend, and the absence of a stock market crash last week, the next 24 – 48 hours are, in my opinion, critical.
Not being invested in the paper markets, I’m on the sidelines looking on with curiosity.
The dollar has shown strength overnight:
Which makes sense.
If there is this “red wave”, then the mainstream thinking, even though it is wrong, will be that the republicans are fiscal hawks, which would be good for the dollar, because hey, they’ll shore up the budget. Or the reasoning could go like this: They will get on board with President Trump’s trade wars and infrastructure projects, both which would be interpreted (again, wrongly) as good for the dollar.
Or, it could simply be Stevie’s got his favorite Johnny Fat Fingers in there giving a mini-boost to the dollar to plant the collective seed in the American psyche that the republicans are in fact winning the mid-term elections. A sort of self-fulfilling prophecy, aided by a manipulated greenback.
Either way, I still think the next major move in the dollar is down, not up.
Every time the yield on the 10-Year Note has gone above 3.2%, there have been problems.
And need I remind everybody where yield surged to on Friday?
Yield surged above 3.2%:
If yield surges again today, that can’t be good for the stock market. Especially if yield takes out the 3.248% recent high.
I don’t think so, however.
Here’s what I think: I think the market manipulators on Team ESF are going to attempt to control today and tomorrow’s market action with a sort of “goldilocks” feel to it.
Which means, in no particular order:
- Stock market slightly up
- Dollar slightly up
- Yields slightly down
- Volatility not spiking
- Gold and silver down
- Commodities an afterthought
The VIX would then stay near 20, where it is now, or fall somewhat:
Low volatility so the establishment Republican talking points can be made over the next two days with nothing but ease.
Crude oil was under $63 a barrel this morning:
The President will surely look to take the credit for single-handedly bringing down the price of crude.
Copper has also fallen overnight and into the morning:
But it’s like I said – the commodities are an afterthought. Team ESF has much more important markets to tend to. No offense to any copper traders or wiring harness manufacturers out there.
Palladium has actually shown some strength overnight:
Palladium could be surging to a new, all-time high in short order.
Even platinum showed slight strength overnight:
That bottoming process looks rather bullish in my opinion.
Recall the gold to silver ratio is still elevated:
StockCharts gold to silver ratio was broken this morning. Hopefully it will be back up for the Midweek Update. For those wanting to look at interesting aspects of the ratio, such as moving averages, specific years, specific time-frames, etc, I do recommend the StockCharts GSR.
We see the pressure early on in the week on Gold & silver.
Here’s gold’s overnight action:
Granted, that chart was created before the pressure just before 8:00 a.m. EST, so the yellow metal was actually brought down below $1230.
Silver’s chart also shows overnight weakness:
And again, that chart was created before the 8:00 a.m. pressure, where silver was taken down below $14.60.
Let’s circle back to the mid-term elections.
I’ll start it off with a question: Are the mid-term elections really about the people running in the elections, as in the candidates themselves, or are they really about President Trump?
I ask that because we all know that everybody will be gauging the success of the President by what happens in the elections. If there is a red wave, the President will get the credit. If there is a blue wave, that will be a clear indication of having gone over the peak in my Peak Trump theory.
Like I said earlier, I am kind of rooting for a red wave.
It will be “put up or shut up” time for all of this swamp draining.
If there is no swamp draining, if there is no “lock her up”, if there are no mass arrests and unsealed indictments bringing military tribunals to GITMO, and all this other stuff we’re told is coming, only that we have to sit back, wait, and “trust the plan”, if there are none of those things, then we will know it was all a sham, a scam and a fraud all along, and once again, We the People will get the short end of the stick.
My gut tells me that’s the outcome we’re going to get.
I hope I’m proven wrong, but I doubt it.
In hopes of being proven wrong, I hope there is a red wave.
As an added bonus, if there is a red wave, we may even get another window of opportunity to add to that stack like last week.
A red wave would be dollar and stock market positive, and gold negative. Again, this is in the eyes of the mainstream, even though they are wrong. That market action (drop in gold & silver) could then be followed-up with a hawkish Fed statement on Thursday, which would be used as cover to further smash the metals. The question then becomes which is more preferable for the cartel, a “sell the rumor, buy the news” of the mid-term elections, or a combo “sell the mid-term elections, sell the FOMC”?
The reason why the cartel must make a choice is because they may want to save some dry powder (in the form of paper gold), and thus not smash into the FOMC.
Regardless of how it seems, there is a limit to the amount of paper that floods the market.
This week, if there is this Red Wave, we can only assume that in short order we will get all of the things we were promised by Candidate Trump, but have yet to materialize, and I’m specifically referring to the Swamp Draining and the taking out of the Deep State.
It’s “Put up or Shut up” month.
– 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.