SD Friday Wrap: With Gold down slightly and with silver up on the week, these are just the waves we have been waiting for…
Today started out like all BLS Jobs Report Fridays. As the Nonfarms Payrolls Report was released, gold had an exceptionally rough time:
$2,605,900,000 worth of paper gold traded within just four minutes (20,600 contracts).
That was not the first hit, however:
Gold got a second helping of smashed potatoes when the markets officially opened.
Silver had the same hit in the morning as the first negative jobs number in seven years was released:
The second helping was also served shortly after the markets opened:
However that all changed as the morning went on. By the time it was all over, and while it may be hard to believe, silver was actually up on the week:
How convenient that both the ADP and the BLS jobs numbers hit he tape a full hour before the markets open. This gives the cartel plenty of time to see test the waters. In silver, those waters were tested, but even though it has not been easy to watch all week long, silver has actually held up rather nicely, all things considered:
Sure, we dipped into the $16.50s a few times this week. No, I was not able to time the exact bottom. Timing exact bottoms and tops is not the best strategy, because it rarely works out to be so exact. Yet this week with silver, any day this week was a good day to buy. Silver has traded in the $16.50 to $17 range all week, mostly on the lower side of that range, and on the daily, that is one heck of a bullish engulfing candle which is signalling strength going into next week.
Why wouldn’t there be a massive surge in the silver price? Silver started the most recent downtrend on September 8th, and after three weeks of grueling losses, here is silver on the weekly looking perky:
We have been watching the GSR for over a week now, and sure enough, silver is starting to come back down as we expected it to:
All things considered, who would have thought we would hold up so nicely on the week? I sure didn’t. I was looking for a trip down to $16. For a brief period this morning we dipped into all the way down to $16.34, but the dip was very short lived. There is certainly an overwhelming amount of physical silver demand in the lower $16s, and the cartel knows it. Perhaps that is the reason why silver held on so, systematically, all week long. The dials and gauges may be working well now, but we shall see for how long.
Gold did not far as well as silver on the week:
This is no reason to get alarmed, however. It is actually very healthy. We have been looking for gold to catch down to silver, and we have been looking for silver to catch-up to gold, and this week, we got both. Gold was slightly down and silver was slightly up.
All of these factors show that while on the surface, the precious metals have been performing weak on the price action, they are, for all intents and purposes, setting up for a massive rally. It is almost too textbook to be true.
The dollar has continued to show signs of strength, however, but notice the subtle difference:
We speculated that the dollar would test the 94 resistance level, and sure enough it did. One way to look at the dollar is in relation to precious metals. It is rather interesting, that as the dollar has continued in the most recent rally, what we would consider a bear rally, gold has only traded slightly lower, and silver is actually up on the week.
The yield on the 10-year Treasury Note punched through 2.4% today for a couple of minutes. Notice the divergence the dollar and yields, however. On the chart above of DXY and TNX, yields even gaped up. We shall see if this is the start of something new, or the end of something long overdue. The overdue would refer to a massive surge in yield, as well as a serious drop in the value of the dollar, both working to offset each other. In other words, as the dollar weakens and continually loses value, interest rates will be forced up higher, much higher.
To say great shocks are coming in FX and the debt markets is putting it lightly.
But wouldn’t you know, for now, everything is awesome:
Now, take into consideration that we just has the worst mass shooting, ever, in the “modern era” as the MSM likes to put it, President Trump is ratcheting down and turning up the pressure on “Rocket Man”, Catalonia is saying they are going to declare independence from Spain on Monday, the U.S. economy just officially lost jobs for the first time in 7 years, Puerto Rico is wreaking havoc on the budget and Puerto Rico’s ability to pay it’s debt, let alone cover damages estimated at more than the entire GDP of the island, yet still, the Dow is up 440 points since last week.
Fear, however, looks to be waking up:
Just as the silver candle today is looking very, very bullish, that VIX candle is looking like it is signaling that the fear trade is on.
Here’s a question: How can the cartel manage to suppress gold and silver prices, at the same time they are able to maintain the illusion of a strong dollar, they can prop the stock markets, they can quell any “fear” in the markets, and they can arrive at employment nirvana?
That was rhetorical, but If I were answering it, I would say that they can’t. If they were able to keep gold and silver at bay all week because China was closed, then next week they just may have to direct fire elsewhere in the markets, and this could mean that they have to let gold and silver prices rise. We shall see.
If platinum is any indication, however, it does look like the precious metals have found their short term bottom here:
Platinum is up ever so slightly on the week, and that is a good thing. Recall that platinum has officially been in a correction, and we needed to stop the bleeding and stabilize the patient. It looks like the markets have done just that.
Even if copper and crude are sending mixed signals:
Copper has clawed it’s way back above $3.00, yet crude has fallen under $50 as we thought it would. From mid-June and on, however, it is hard to make the case that prices are not going higher. Prices for Dr Copper and Black Gold may have diverged this week, but, at least on the daily chart, the trend is clear. Once the dollar weakens even more, the trend will be absolutely clear. Higher prices for two of the most basic and essential of materials in all things.
Translation: Get ready to pay more for everything, from those Oreos in NY which must be trucked in from Mexico due to outsourcing, to the cost to wire a house during the construction phase. The next commodities bull market is getting it’s footing.
With gold down slightly on the week and with silver up on the week, now come the waves that we have been waiting for.
But she’s not going to wait for you, so grab you’re board and get in already…