The week started out with a bang in the wee hours of Monday morning (i.e. somebody dumped a whole lotta gold)…
As if on queue, at precisely 4:00 a.m. EST, gold price fell (i.e. somebody dumped a whole lotta gold) from its relatively stable mid $1250s all the way down to the upper $1230s in pre-market action. A smashing like that would usually be enough to force the long specs out of their positions, but alas, whackings like these just don’t have their staying power like they used to. By the end of the day Monday, gold had managed to work it’s way back up into the mid $1240s. Gold then held steady on Tuesday, and as of the time of this writing, 1:30 p.m. EST Wednesday, June 28th, gold is again fighting it out between $1250 and $1255.
Silver prices have fared much better. Also subject to the early Monday morning pre-market smack-down, silver has performed like the scrappy underdog it is known for. The white metal has not only erased all of it’s losses from Monday, but also here on Wednesday, silver is looking to break out above short-term resistance at $16.75. There may be minor short-term resistance at $16.80, but as soon as we get a close above that level, we are right back to squaring-up against $17 and looking to recover all of the losses since mid-June.
The quick recovery this week in the metals is surely not what our central planners had in mind. Unable to break the metals on the technical charts with some serious one-minute selling pressure in off-hour trading, our fearless central bankers at the Fed went on what could be called the “Summer 2017 World Tour of Fundamental Analysis”. Ahh yes, the fundamentals. When all else fails, bring out the broad stroke. Besides, fundamentally speaking, the Fed couldn’t have investors moving their hard earned dollars into the safe haven assets of gold bullion and silver bullion now, could they? In fact, not only is there no such need to even consider such an investment, but the economy is doing so well that In her own confident analysis of the financial markets, Fed Chairwoman Janet Yellen, speaking to a group at the British Academy in London, went as far to say that a financial crisis “will not be in our lifetimes”. You too can see the nice little clip of her carefully crafted words courtesy of the Wall Street Journal’s YouTube channel right here: https://www.youtube.com/watch?v=w-K90aa77ls.
(hint, skip to the :45 second mark if more than two and a half minutes of Fedspeak is too unbearable).
Can you imagine that? Financially speaking, we have nothing to worry about for as long as we live! I have never heard of such a wider stroke with a paintbrush until I heard that particular one, because, after all, If we will never have anything to worry about, when it comes to finances, like ever, then we just might as well go out and sell our stack right?
Of course not. I wouldn’t bet my lifetime on it. Nobody can predict what the economy will be like next month let alone for our entire lives. One thing is for certain, and that is that the national debt only goes one way, and that is up. Well, I guess there are two things for certain, and that is that the value of our dollar will only go down. It is, afterall, the stated objective of the Fed in their quest to achieve a rate of inflation of 2%. If the debt only rises and the dollar only goes down in value, how is that the formula for prosperity with a lifetime guarantee?
Besides, it stands to reason that the technical chart work on gold and silver had to be followed up with some good old fashioned jaw-boning. This week the markets have been in full-on summer amusement park mode, with swings in everything from the yield on the 10-year Note (10 basis points up) to wild rollercoasters on the ultra-speculative cryptocurrencies, with some of them down over in wild intraday swings of 25% in a single day, even when fresh off of last week’s flash crash. (Ethereum). Today alone the Dow is in the midst of a 150 point swing off the lows. Needless to say, the markets have been anything but summer doldrums, so it stands to reason that the powers that be are making every effort to assure that the metals are.
Then there’s the US dollar. The greenback has been on a steady decline all year, and this week is no different. In fact, it is not too far-fetched to say the dollar could close below 96 on the dollar index. While generally inversely correlated with the price of gold and silver, that is to say, as the dollar goes up in value, the price of the metals goes down, that is not to say, however, that the central banking best effort is made to ensure that as the dollar goes down, the price of the metals does not pop too much. This was evident yesterday as the dollar was down big time on Tuesday, falling from 97 to 96 over the course of the day, yet gold and silver were merely holding steady. If we close Wednesday with a 95 handle on the dollar index, then we could be looking to rally in gold and silver for the rest of the week.
In fact, it is hard to imagine a sluggish finish to the week. We seem to have momentum here. Today or tomorrow would be great times to pick up some metal during this latest attack dip. The cartel needs to save their firepower for next week. They will need to muster all the fight they can to keep gold and silver in check. Sure, more data points are coming and thus, more opportunities to attack price, with things such as the final revision to Q1 GDP, weekly jobless claims, and other regular data releases, but next week the cartel will try another offensive against price as they move into a holiday-shortened trading week for the Fourth of July, topped off with the June Nonfarm Payrolls Report on Friday. The question is, just how much firepower do they have left after putting up two serious fights this week and not able to hold? My guess is not much. They need serious backup, but Europe, London and Japan are all out of ammo as well.
So take advantage of this window of opportunity while we are given it. The good times of metal being this cheap won’t last forever, and when you take advantage of our limited time offers, your stack can go on a nice little growth spurt. If the week sets up and finishes strong, today would be a great time to lock in a price for some physical, or tomorrow, but we do know this: They will keep price down until they can’t, and while Janet Yellen herself seems to think there would be no need, ever, in any of our lifetimes, to be wise and prudent and invest in some physical, tangible assets for an uncertain future, we are proud to stack to the contrary.