Friday Wrap: Sure, they have succeeded in smashing price lower on the week, but gold & silver refuse to drop a handle! WE GET THE VICTORY, and that will bother them even more than today’s closing prices…
First this (queue Rocky theme song):
Gold ain’t having $1200 and silver says get that $16 outta here!
Both precious metals hold, and close on the day both higher and above the key whole numbers.
Last Friday we put out this very scary silver chart:
It turned out to not be that scary of a movie at all. It was more like your typical teen-age slasher flick.
Still, it was pretty disgusting to watch:
In the above chart, it is easy to see that more and more selling volume is needed to keep the silver price suppressed. So far, 2017 has been nothing more than a monkey-hammering on the weekly, but looking at the volume of the last few weeks, compared to the last price attack, and compared to the attack before that, it looks like the volume is ready to pick up even more from here, but the more paper that gets thrown at silver, the more they can only get sideways choppy price action.
Here’s what the volume looked like as they knocked exactly $1.00 off the price from the high to the low. The cartel was smashing the juice out of the hamburger all week long:
Let’s just do some quick math. Pick your premium, we’ll go with $.50 on some generic (even though SD Bullion had new generic rounds for $.39 over spot all week).
An investor who spends $1000 on physical silver:
$1000 spent with a spot price of $17.87, [1000 / (17.87 + .50)] could purchase 54.43 ounces of silver.
$1000 spent with a spot price of $16.87, [1000 / (16.87 + .50)] could purchase 57.57 ounces of silver.
An investor who bought the dip this week was able to buy 5.75% more silver thanks to the desperate silver price suppression.
The good news is that there is reason to be optimistic with the silver price moving forward. There are still two weeks left before the non-farm payrolls report, which Eric Sprott said are one of the two main price smashing events that the manipulators look forward too. We happen to agree with that. Since we’ve got a couple weeks until then, we could see a nice silver price rise over the next couple of weeks.
Either way, The take-downs dips just mean we can get more bang for our US debt based fiat currency buck.
Recall that for the month of August, the amount of paper gold trading was off the charts. It stands to reason that the cartel would be throwing a bunch of paper at gold too on FOMC day, and sure enough, they did not disappoint.
The volume in the gold smash post-FOMC was quite impressive:
If anybody wants to do the math on how much “gold” was “traded” post-FOMC, here’s a spoiler: It was $3,287,500,000 in paper gold.
Gold continues to look worrisome. We have been rooting for the silver price to catch-up to the gold price, but more and more, it’s looking like the gold price could pull-back to the silver price on the analog in terms of performance and closing of the divergence.
Especially with this little bad omen:
All year long, if the gold price has stayed above the 50-day moving average (end of January and again in early August), price has recovered. But, and it’s a big but, if the gold price falls below the 50-day, we have gone lower before recovering in price.
Of course, we could totally blow that call, but here’s a close up of the 50-day to see just how critical that blue line is:
The gold cartel sees this exact same line, and they know what the significance of it is. In the short term, a break down in price would be more of the same old frustrating stuff, but, it is good news for us as this is a line in the sand for the cartel, and they don’t really know if they want to cross it.
If gold comes down in price to converge with silver on this latest price smash:
Then when price recovers, silver is poised to outpace gold on the upside. That is the problem the cartel has right now. Said differently, they can win the short term battle for the 50-day, and they can push the gold price temporarily lower, but they will back themselves into a corner because they will have set-up silver for the lead on the next move.
Ahh, the beauty of being backed into a corner. Not team Gold & Silver Community, but team Precious Metals Price Suppression. They are backed into a corner. They can’t win the long-term no matter what they try, and if they push gold down to silver, will they then simply send both metals even lower? They may be full of hubris, but their vaults are not full of gold and silver.
Most likely playing the short game on the gold price, by smashing the percentage move to fall down to silver, this would set-up their only move left on this chess-board if they are to keep the precious metals prices down. If their move is then to smash the price of both metals with the intentions of keeping silver from taking the lead, they seriously risk blowing up the physical market because there is a price where buyers will storm into the retail coin market with a fury. This is a fury from which the cartel may never recover.
The question is, what’s that price in silver? $16.50? $15.50? What about gold? $1275? $1225?
This is why we get the moral victory this week. It’s not about getting a trophy for second place either. We get the moral victory because we know the cartel has no chance of winning this race. They are out of gas, the engine is smoking, and they just blew a tire, just at the time we’re fresh out of a pit-stop.
The dollar looks to be running out of steam if this channel going back over the last three months is any indication:
Notice how we drew that resistance line. It is very generous. in reality, the drop could be even more imminent if we had lowered the line to very short term tops back in mid-August and then just a couple weeks ago in early September.
Regardless, as has been the case all year, the trend has not been full of sharp declines in the dollar, but rather, just a slow-grind down. This is indicative of a bear market, meaning the dollar could weaken from here. In bear markets, the sharp moves are to the upside (assuming we’re not talking about an all-out crash, which is not out of the realm of possibility either). Conversely, when the sharp moves are to the downside, such as with gold and silver since bottoming at the end of 2015, that is the generally viewed as a tell-tale technical chart pattern of a bull market.
The yield on the US Treasury 10-Year Note has risen for 10 of the last 11 days:
On top of that, the yield is starting to roll over and fall, even though yield may be closing higher at the end of the day. If you’re looking for higher yields, that’s not a good sign. As Yellen succeeded in flattening yield curve post-FOMC, and as the Fed decided to hold on interest rates, for now, the only go-to tool is once again to “jawboning” because they have only “talked” about “balance sheet normalization”, but the Fed has literally done nothing. Treasury yields are not buying the “interest rate hiking cycle” meme.
Crude oil continues to show that it is slowly but surely rising after bottoming in early 2016:
We are only beginning to see the effects of all the natural disasters and how it relates to the price of oil, and the various oil derived ground level products such as diesel and gas. If demand has been stable to low for years, one can only imagine demand would have to go up.
Just like a car requires more fuel to start from a stop and get up to highway speed, once it’s up to speed it is more efficient and requires less fuel. Well, zooming out and thinking not about a car but about, say, an island like Puerto Rico, which has been thrust back into the 18th Century, on a fundamental and technical level, the island must get up to speed from a stand still. Now add in the rest of the Caribbean, Florida, parts of Georgia and South Carolina, Texas, Parts of Louisiana, Central Mexico, Southern Mexico, and any other place in North American that has been affected by Mother Nature, and we can clearly see that vast areas of developed, power grid requiring land must get up to speed from a stand still. Just like our car, all of those places are going to need more fuel to do it.
Copper seems to catch Mother Nature’s drift, and looks like to be signaling a reversal on the weekly:
For the copper bears out there, this is was not a good week. The price action on the chart is holding. As we talked about bull markets having scary pull-backs, copper certainly had one over the last couple of weeks. This week the price action was all over the board, but copper has closed up slightly on the week. Perhaps a bullish reversal is shaping up? Regardless, volume has been slowly picking up all year.
The iPhone 8 has nothing on the new American Palladium Eagle:
Now might be about the lowest price the Palladium Eagle will be, in a way that people kick themselves in the foot for not being gold or silver buyers back in the year 2000. That channel looks a lot like the US dollar channel with one striking difference: Palladium is riding into town on a bull!
Could palladium dip from here? Of course, but there is no mistaking it, this long-term super-cycle precious metals bull market is on!
Slow and steady wins the race, and palladium has already dipped outside of the channel, so it could start picking back up as early as next week.
Here’s the MSM approved question of the week:
— Chelsea Edwards (@abc7chelsea) September 22, 2017
The line is on that chart below. Just don’t look for them to ask what it means: