SD Outlook: Everybody seems so sure of the US economy & markets, but beyond the talking points there are serious problems…
Everybody is so sure of the US economy & markets just as we arrive at a very important week.
On Wednesday, the Fed concludes its 2-day FOMC meeting, which is when the Fed decides what the markets need for interest rates from now until the Fed’s next meeting.
The Fed knows best!
And too bad if you don’t like it, because it’s a matter of the Fed’s public policy to suppress interest rates and suppress them 24/7.
Everybody is so sure, for now, that the Fed’s current manipulation of interest rates will hold steady (probability from CME Group):
Furthermore, it’s pretty safe to say that over the course of the past month, a Fed “hold” on interest rates has become fully priced-in to the markets.
Additionally, there are no real market moving events from now until the Fed concludes its 2-day meeting on Wednesday at 2:00 p.m. EST, so it’s not like the Fed is still undecided because of some data release.
The calendar does get interesting, however, as we move from mid-week through Friday:
We get inflation data and retail sales data, and remember, just ignore the fact that Black Friday as we know it is over, and focus on those booming online sales!
One thing that sticks out to me is 2019 has been one of those years when more and more internet e-commerce companies came on board with collecting sales tax over the internet, so I’m wondering just how much of the “booming online sales” narrative has to do with simply collecting sales tax?
Perhaps somebody can call-in to our live-stream today at 11:00 a.m. EST and break it down for us?
I think the question is valid, and I’m hard pressed for the time to research it right now.
That said, eBay only started collecting sales tax in 2019, so if “total online sales” include sales tax collected, if online sales are claimed to be, say, up 8.0%, year-over-year, are retail sales really up year-over-year, are sales flat, or, are retail sales even declining when we combine flat online sales with declining brick-and-mortar sales?
In other words, if internet sales are up because of online sales tax collection, are internet sales really up?
OK, “Hey Half Dollar, what’s your overall point today?”.
My overall point is that everybody’s so sure in their beliefs right now, and the belief is that the global economy may be slowing down, but the US is generally doing okay.
In other words, everything, on the surface, is all too predictable right now, and because of that, it seems to me like something unpredictable in the markets or economy is about to happen.
The gold-to-silver ratio has spiked above 89:
The GSR is suggesting that we could see more weakness in silver, compared to gold, before this is all over.
I really do hope they smash silver down to a 15-handle:
It is truly amazing that
idiots people are paying $120,000 for bananas duct-taped to walls, and yet we’re talking about the possibility of $15 silver in late 2019.
Gold continues to hold up much better than silver:
The wash-out may indeed come this week, and it if does, I think we could see a v-bottom down to $1400, followed by a sharp recovery.
Palladium continues to do its own thing to start the week:
We’re quickly approaching “extremely overbought” territory, and I’ve been expecting a pullback any day now.
A pullback in palladium would be uber-healthy right now if it coincided with gold, silver and platinum playing catch-up.
Platinum’s had a rough time of it lately, but the bottom hasn’t fallen out of platinum like with silver:
Platinum’s technicals are signaling platinum could move much lower before becoming “extremely oversold”.
The “correction” in the precious metals will end soon, however, if crude oil keeps climbing:
We could be talking about $60 oil by the end of the week.
OK, “Hey Half Dollar, why do you say the correction will be over in gold & silver if crude oil keeps climbing?”.
Because it takes a lot of oil to get gold & silver from in the ground to available on the market, so, theoretically, as input costs rise, cost of production rises.
There is another reason too, and that has to do with one of the many properties of gold & silver: Hedges against inflation.
You see, crude oil is the life-blood of the economy, and if the costs of crude oil are rising, all the while the Fed, and all central banks for that matter, are forcefully debasing the currency, then some investors will look to counter the rising prices with something that keeps up, and that something is gold & silver.
I’d like to see copper perform a textbook bounce off of its 200-day moving average:
Copper is telling us inflation is coming, or, if you’re like me and you understand that inflation is much higher than the government, central banks, and their apologists and enablers claim, then price inflation is about to get much worse.
Hopefully we’re entering the “melt-up” phase now in the US stock market:
Because the sooner the Deep State Globalists bring down the system, the sooner they lose control of the demolition.
Besides, the sooner they bring down the system, the sooner we can actually make progress in moving back towards honest money – gold & silver.
Of course, if we get that melt-up top in the stock market, they’re going to need to squash the VIX:
I’m just not too sure it happens before the Wednesday, however.
Why is that?
Because the “market participants” will be looking for clues as the the Fed’s next move, and the markets will begin to price in that anticipation, and looking for the clues will be found in the FOMC Statement as well as Powell’s press conference, especially in regards to and how he comes off as either dovish or hawkish.
We know which way yield on the 10-Year Note must go:
The debt, however, is unsustainable, so while the pressure is to the downside, one day the bond market will blow spectacularly.
The dollar is perched right on its 200-day moving average to start the week:
Notice how fast the 50-day moving average is turning down and signaling a death cross!
I think 2020 is setting-up to be the year of the decline in the value of the US dollar.
Which means maximum pain will be felt come the 2020 presidential election.
Bottom line as we find ourselves here this beautiful December Monday?
Everything seems all too predictable in the economy and markets.
And we haven’t really had a “market shock” in some time.
This week should start off slow in the markets.
But from Wednesday through Friday?
And everything too predictable?
Could we see fireworks?
Or a black swan?
I think we can.
– 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.