SD Midweek Update: Silver sure looks like it could break soon, and break hard. To the upside. Here are the details…
I think back to my days of working for a company that ran a call center.
This was just after the tech bubble burst in the early double-aughts.
One day corporate came in with good news!
They gathered all of us around to tell us that they weren’t cutting wages!
That was the good news!
And no, I’m not kidding.
Of course, good news is always followed by bad news, so then corporate pulled a little switch-a-roo on us, a little magic trick that, to my surprise, everybody fell for. The bad news was that our medical benefits were changing. Instead of no-cost healthcare with low copays and what not, we were going to now pay higher co-pays and higher out-of-pocket costs. Oh yeah, and the insurance was no longer offered at no cost, as the company decided to cover only a portion of the employee’s premium, with the employee responsible for paying the rest, conveniently deducted every two weeks from that humble bounty otherwise known as gross pay.
Dental changed too, and, following suit, we ended up paying more for dental (with less coverage)!
I raised my hand and asked corporate, “Isn’t having our medical premiums deducted from our paychecks, having higher out-of-pocket costs, and having to pay more for dental insurance pretty much the same thing as a pay cut?”.
To my surprise, I don’t even think the corporate presenters understood what I was asking.
It was moot.
It was not like posing some philosophical question with regards to the morality of deception over matters of money would have made any difference in the long run anyway.
Just shut up and pay my premiums.
OK, “Hey Half Dollar, we get it, you got a pay cut, but what does this have to do with late 2018?””.
I think it has to do with the border wall.
One of the things I have thought for a while is that the wall isn’t designed to keep people out, but rather, the wall is designed to keep people (Americans) in.
How, and why?
That’s above my pay grade.
At any rate, as it turns out, others have thought this out too, and for some time.
Just yesterday Ron Paul Tweeted out this little gem:
Walls Can Be VERY Dangerous… pic.twitter.com/CkOcl1nr4U
— Ron Paul (@RonPaul) December 11, 2018
I actually think Ron Paul’s solution is the better solution.
Think about it (the barbed wire and machine gun emplacements): It barely costs the government (we the people) anything, it is old-world, not “if it’s not broken it doesn’t have enough features” high-tech, and it would be effective.
But I digress.
My point is there are always two sides to the story, and more often than not, we’re being lied to.
When we hear about things that are “good for the economy”, or “good for national security”, or “good for America”, it is helpful to ask the question, “what if it’s bad?”, and then find out whether it is really good or not.
Silver had the audacity to breach $14.80 yesterday:
And since it took the cartel two punches, about an hour spaced apart, to take care of silver’s audacity, the cartel gave two more whacks before the day was done.
You know, just to make sure.
When I look at silver’s daily chart, I just can’t help but get bullish:
I can just see it, that if we get that move down in the dollar I’m looking for, silver has the potential to really break to the 200-day moving average in a hurry.
Just like silver is perched, poised, and getting into strike position, so too is the gold to silver ratio:
If silver breaks like I think it will, the gold to silver ratio is going to break-down in a hurry.
Why is that?
It has to do with gold.
If we assume the lows are in, which I do, and the rallies are imminent, then we can get one very early clue on the yellow metal’s chart.
That clue would be the two higher-highs on the daily:
We have the first high in late August, first higher-high in late October, and a now second higher-high in early December.
Remember – gold breaks-out first, and then silver follows, and now, not only has gold put in the very beginnings of bull trend, but it has the chance to take out the major moving average of the 200-day.
Therefore, if gold has already broke-out to the upside, and if silver’s chart is clearly shaped-up for a break-out, and if the dollar cracks, or perhaps even if it simply becomes obvious the dollar is topping out here, then silver is gonna break and it is gonna break hard.
Are we seeing the beginnings of the silver break-out this week:
That’s what I think any way.
Sure, that’s a lot of “if”s,
I get it.
But I think silver is gonna break, and break in the upside surprise I’ve been looking for.
Also remember this: Gold & silver have typically done very well post-December rate hike since the Fed began hiking the Fed Funds Rate again in December of 2015. That said, the next rate hike is presumably next Wednesday at 2:00 p.m. EST, so traders might front-run this trade.
My short-term outlook for silver is bullish.
Palladium looks like it could be putting in another record high soon:
So I think we still have some room to run.
After yesterday’s technical “doji”, platinum looks like it may have turned the corner:
I’m looking for an upside surprise in silver, yes, but if the metals soon do what I think they are going to do, the real upside surprise might very well be in the precious metal that’s even rarer than gold.
Copper is still just dancing around its 50-day:
For some time, copper has been about as predictable as the gold to silver ratio.
I still think the next major move in copper is higher, not lower.
Crude oil is still a tough one to call:
I have been saying this for a couple of weeks now, but if we’re forming a bear wedge or a bear flag on crude oil’s daily chart, that could be bad news for the bulls.
That said, if the dollar is topping, or going to break, which I think it will, then we could see crude oil pointing north in a hurry.
The death cross on the S&P 500 is more pronounced by the day:
The only major US stock market index which has not crossed is the Dow.
Will the Dow end up being the graph I use in my Friday Wrap?
Volatility is falling back toward 20:
I think the next bout of volatility is ahead of us, not behind us.
Thinking of a few fundamental reasons, particularly in politics and geo-politics, if these things even matter to the markets anymore, well, this:
- Russia has bombers in Venezuela
- France has EU marked armored personnel carriers to crush the protests and riots
- Brexit is a bloody mess
- Got that “divided house” thing going on, and it was in full display yesterday
- Oh yeah, Iran is testing something again
I could go on and on, but you get the point.
Just like there are serious problems in global markets, and in the global economy, there are major fundamental factors that could have a big impact on the markets.
If we soon find out that fundamentals matter, then the volatility is in front of us, not behind us.
Yield on the 10-Year Note is still below 2.9%:
Interestingly, we seem to be holding here.
The dollar sure looks tired to me:
We haven’t been able to maintain momentum and break-out to another high, and to me, it sure looks like we’re rolling.
There are so many dynamics in the economy, in the markets, in politics, and in geo-politics that while everybody is out Christmas shopping, and generally figuring out how they can work less and enjoy more, these markets might just end up surprising a lot of people.
And surprising gold & silver investors in a good way.
– 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.