SD Outlook: Gold & silver surged higher last night, but the move is far from over. The move has really only just begun…
Gold & silver began to move higher in price on Sunday night.
In fact, gold broke-out to multi-year highs:
In addition to multi-year highs, we’re now right up against some pretty nasty resistance on the weekly chart shown above.
I covered the reasons why gold & silver surged when the markets re-opened on Sunday evening in this post, and this time the surge in price had to do with the trade war.
To review, gold & silver have been reacting a lot to President Trump lately, for three main reasons:
- President Trump’s constant flip-flopping and back-n-forth from being a “strong dollar guy” to a “weak dollar guy”.
- President Trump’s attacks against the Fed.
- President Trump’s constant flip-flopping and escalation/de-escalation of the trade war, against China in particular.
On Friday, President Trump escalated the trade war, big time, in a series of Tweets:
President Trump did not stop there, however.
After the markets closed on Friday, he said this via his personal Twitter account:
Of course that happened after the markets closed.
This type of stuff always happens like that.
The question is, what is Trump saying about the trade war today, Monday, August 26th, 2019?
Well, it’s pre-market, of course, and here is what President Trump is saying:
Absolutely amazing, isn’t it?
President Trump, after calling Xi Public Enemy No. 1, or 1st Loser, on Friday, is now all lovey-dovey with Xi.
In other words, President Trump is de-escalating the Trade War as I type Monday morning, pre-opening bell.
Let’s recap the trade war flip-flopping by Trump in just this month:
- New tariffs announced by Trump on 08-01-2019
- Tariffs delayed by Trump on 08-13-2019
- Delayed tariffs cancelled, additional tariffs announced by Trump on 08-23-2019
- Trump de-escalates trade war three days later on 08-26-19
That may look like a lot of flip-flopping, but there is still a full week left in the “markets”, and we don’t even begin September action in the markets until next week, so the question is, how many more bullets will be added to the bulleted-list above before the Friday Wrap?
I will do my very best to stay on top of the flip-flopping to get an accurate count.
Will there be additional factors which could cause Trump escalate/de-escalate yet again?
There sure could be, including movement in the major US stock market indices.
Furthermore, we get trade data on Thursday:
We also get the Fed’s “favorite” inflation data point, PCE, on Friday.
Needless to say, this may be the last unofficial week of summer due to the Labor Day holiday next Monday, but this week should be far from boring.
To the contrary, especially as it relates to Trump’s Tweets and the trade war.
When it comes to Trump’s big three – attacking the Fed, US dollar flip-flopping & trade war escalation/de-escalation – it seems like for now the one to be on the look-out for is Trump’s trade war rhetoric, but I would not be surprised one bit if the stock market starts moving one way or another (I think it will be to the downside) and we end up getting one heck of a circus because President Trump is actively engaging all three of the big three, at the same time, all week long.
The gold-to-silver ratio looks poised to make its next leg-down:
We could be in the low-80s by the end of the week after all that talk about likely going over 100 just last month, but even where the ratio is now, and even if we get into the low-80s, in my opinion, the ratio is still telling the humble stacker to purchase silver over gold.
Personally, anytime the ratio is over 70 and definitely over 75, I’d allocate all of my monthly dollar-cost-averaging purchase towards silver.
I think silver could break-out this week:
We pretty much went straight from $15.50 to $17, and I see no reason to think we couldn’t now move from $17 to $18.50 in similar, dramatic fashion.
Does this mean I think the smash risk is behind us?
For the moment, I do think that.
That said, we’re coming up on a holiday shortened week for Labor Day next week, so it will be a good indicator of the cartel’s current ability to smash.
I’d be looking for any possible hits coming on Friday, which, in addition to being able to use the inflation data as cover for the smash (didn’t you know that no matter what the data says, it’s always “bad for gold”?), will be a desperate momentum play to get the momentum going to the downside for the global markets.
You see, the rest of the world celebrates Labor Day on May 1st, so global markets will be open on Monday, including China, Germany and England.
Remember: The cartel always prefers to smash gold & silver prices, and the cartel always makes more fraudulent, corrupt debt-based fiat profits by smashing as opposed to letting price rise.
There will, however, come a point in time where it doesn’t matter what the cartel prefers because the cartel won’t be able to do anything about it, which is another way of saying the cartel does seem to be losing control of the gold & silver “markets”, and one day they will lose complete control and natural market forces will finally take over.
I think we are very close to that day.
Gold could be breaking-out here too:
One would think gold has quite the resistance in front of it, and sure, on the very first chart above, gold’s weekly chart, we do have one serious quagmire between $1600 and $1800, but if the cartel is losing control?
Remember: Gold is at all time highs in many currencies, and I’m not talking about the failed nation-in-turmoil currencies such as Venezuela or Turkey, but rather, premier currencies of the first world, such as in the British pound, which also just happens to be an IMF SDR basket currency.
Palladium is still in its sideways channel:
Palladium is in a structural supply deficit, and it appears palladium is marking time as the world comes to terms with fundamental factors exerting themselves onto the “markets”.
Savvy, deep-pocketed investors understand what platinum is telling them:
For the most part, platinum has been immune to Trump’s big three – (1) the dollar, (2) the Fed, and (3) the trade wars. but the more gold moves to the upside without the precious metal platinum following suit, the more explosive platinum’s move will be.
I don’t know about you, but the price of crude oil has been turbo-charging my stacking efforts for some time.
Paying $3.25 for gasoline at the pump instead of $5.25 means I can add one ounce of silver to my stack roughly every 8-10 gallons of gasoline.
Both cheap gas and cheap silver will not last much longer.
Copper is plunging to start the week:
We have a fiat currency crisis, not in the making, but already here, so I don’t think copper stays down for too long because as the recession kicks-in and the dollar begins to be devalued at an even faster pace, I think poorer nations and nations with easy access to copper will stockpile the base metal as a way of getting out of their US dollars and into something real.
In other words, copper, like silver, is dirt cheap right now.
The stock market sure does look bearish right now:
We came down to tag the 200-day moving average on Friday, and at this point, I’m not looking for several tests of the major moving average, but rather, I’m looking to plunge through it.
If that happens, get ready for even more market-related Trump Tweets.
That said, I’m not convinced this latest spike in the VIX is all that we’re going to see:
I’m not looking for a calm before the storm here, but rather, I think it will be like those nasty thunderstorms with tornadoes that appear from out-of-nowhere and cause immense damage.
Mother nature baby!
While I would have liked to see more of a move higher in yield, it looks like the 10-year is poised to continue rallying:
When investors rush for the “safety” of the US bond market, this, theoretically, and I say “theoretically” because the ESF can ruin even the best of theories for a while, this flight to safety drives up the price of the bond which drives down yield since the yield and price move the inverse of each other.
President Trump probably wants to keep the dollar on the down-low this week:
I say that because there may be an ESF intervention to begin walking the dollar down.
Recall from last week what President Trump said about the dollar:
It sure is a good thing he will work “brilliantly” with the “very strong dollar” (His words, not mine)!
What’s the bottom line as we find ourselves here this beautiful last-Monday of August?
I really don’t want to keep writing about Trump, but he’s Micro-Manager in Chief.
There is a major problem with that, however, in regards to the “markets”.
The more he meddles, the more he needs to meddle some more.
I say this often, but now is a good time to say it yet again.
Government can only ever do one of two things.
It can get in the way or get out of the way.
Trump is part of the US government.
So I have an important question.
Is he getting out of the way?
Or getting in the way?
I think the latter.
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.