SD Midweek: Big set-ups right now in gold & silver. The window of opportunity is closing fast. Here’s why..
Here’s an inflation statistic that doesn’t get observed that much, but it goes to show just how much everything costs way more than it did just a few years ago.
We adopted a puppy from the shelter around Christmas 2011. The cost of adoption was $65. That included the shots, chip and sterilization. Fast forward to around Christmas 2017 and now the cost of adoption is $100.
We see this all around. Everything we spend our debt-based fiat currency (a.k.a. US dollars) on is going up in price.
And then there’s gold and silver.
Since the price smash on Monday, silver has resisted further beatings:
And while the move looks to be on the upside it sure does look to be fading the move, meaning the silver price would be going lower than when it began the move off of the smash low.
If the silver price falls below $16.71, we could be in trouble:
That would paint the chart with a trend change on the bearish side.
But then again, it may get there, and it would be a good thing. This chart shows why:
Silver is being set-up on the chart for a big move up. On Monday’s whack-a-mole price smash, the volume was the highest since the recent lows of $15.14 in July.
Furthermore, open interest is coming down (green line overlaid with the volume bars). There is plenty of opportunity for open interest to come down even more because the markets are closed on Thanksgiving, which is tomorrow, November 23rd.
Happy Thanksgiving by the way.
And not only that, but the cartel will love to smash on Black Friday (11/24) because other than the die hards, nobody will be focused on the markets.
So there is a two point take-away here:
- The cartel will indeed try to smash and get their open interest down, and they will have the market holiday and Black Friday distraction to assist them.
- Wherever the price ends up, the flush will most likely be complete, and silver can resume its march higher.
This needs repeating: The window of opportunity may be closing and fast because this latest flush cycle is nearly complete and most likely will be by the end of this week
And the GSR is signlaling “buy silver” right now:
From Friday to Monday the move was huge.
And since the swings are massive, it’s like the GSR is having severe convulsion. It wouldn’t be like this naturally, and it shows the fact that the cartel is attacking with every opportunity they can.
There is another reason the precious metals may be set up for a nice move higher:
That’s the dollar against the Japanese yen.
When it’s rising, the price of gold and silver are falling (as the carry trade is used as one of the main mechanisms to manipulate the metals).
When USD/JPY is falling, the price of gold & silver are rising.
The very day it bottomed at 107 (meaning the yen had just finished strengthening against the dollar) is when gold made it’s intra-day high of $1362.
And it’s falling again as seen over the last couple weeks of trading action.
Once USD/JPY really starts moving down, the precious metals will begin rising. And since the flush-out is nearly complete, a falling USD/JPY will only add jet-fuel to the gold & silver rocket.
Speaking of gold, the yellow metal has held up better since the Monday smash:
But then again, it is safe to say, as Bill Murphy says, that it is silver (and not gold) that’s the cartel’s Achilles Heel.
Because many people view silver as the “poor man’s gold”. Of course, we know it is not, but that’s the perception. And where one ounce of gold is out of the reach for many, or as a person would rather have 75 ounces of precious metal instead of just 1 for the same price, once the metals start breaking-out, silver will break harder and faster that gold to the upside just like it does to the downside.
So it’s normal for gold to be holding up better that silver.
On the daily we can see the stability:
But better yet, we see by the green open-interest line laid over the volume bars, that this flush is nearly complete.
Just like with silver, once the flush in gold is complete, we can move up in price on our next leg-higher.
Also the same as with silver, expect pressure for the rest of the week as the cartel will look to flush out as much as they can, because they will, of course, need all that paper gold at the ready to bomb the market with naked shorts again as the price rises.
But by that point we should already be at our next price level higher.
It is important to know: We don’t know what the price will be when the flush is complete, but regardless, gold and silver are cheap here.
Is it worth waiting for a drop to $16.71 in silver and $1260 in gold to make a purchase? We don’t know if it will go that low, or if it will go even lower, but ultimately, we all know what has to happen to the prices of gold & silver, and south is not the direction it’s marching.
Sure, gold & silver may be temporarily lost on their way to higher ground, but they will, sooner or later, point north and start heading in the right direction.
Platinum had nasty move down on the Monday smash:
Interestingly, platinum is riding a rising support line, a line which holds and connects perfectly with three higher lows (assuming Monday’s smash holds).
Palladium has a nice support line of it’s own:
The open interest is also in a healthy drop which, just like with the other three precious metals, will help support the next move up in price.
Copper isn’t buying the rampant Chinese grandmothers speculating meme:
Sarcasm on: Would somebody please tell copper it’s not supposed to be in a bull market! Sarcasm off.
Copper is a classic case of climbing the wall of worry. In fact, the copper price is up for the last three days.
Crude just broke through $58:
Save a little extra for gas to anybody who plans on travelling this holiday season.
Crude is also an example of climbing the wall of worry.
That’s the same wall we climbed with gold & silver in 2016.
The yield on the 10 year is still in wait and see:
The Fed is so far behind the curve that there’s no way to gracefully raise interest rates. When the bond bubble bursts, it’s going to be Paul Volcker style rate hikes.
But until that happens, real interest rates in the United States and pretty much the whole world for that matter are already negative, and gold and silver have been held down for so long and they have so much pent up energy that it doesn’t matter which way the yield moves, because gold and silver will have their time regardless of the Fed and their “massive” rate hikes which would still average under 1.5% if they hike in December.
A 1.5% Fed Funds Rate is worse than an insult at this point. It’s more like they are spitting in our faces and laughing as the spit slides down our cheeks and chins.
Also supporting the case for the window closing is the “fear” in the market:
As the cartel has effectively beaten down the VIX over the past four days (to prop the stock market), even with every geo-political tension going on in the world, they have managed to bring the VIX under 10 yet again.
There really is no place for the VIX to go but up, and the gold price and silver price feed off of a rising VIX.
Finally, today’s stock market bubble is brought to you by the S&P 500:
Not to worry. Yesterday it was made great again.
Summary: We may see further price to the downside as the flush is not yet complete and the cartel has the market holiday and celebrating Americans on their side as cover, but once the flush is complete, the destination is most likely the next move higher.
– Half Dollar