SD Friday Wrap: Gold and silver finish the week with bullish momentum (plus a Dow call that’s as plausible as it is ridiculous). Here’s the details…
What a gut-wrenching, difficult week to get through, but very rewarding if you have made it thus far.
Last Friday gold and silver were looking “overbought” on the charts, so I decided to write that the metals might pull back in price, and that this would be healthy. It would be bullish.
I got chewed up and spit out in the comments like a poor bag of sunflower seeds on the side of a bombed out road In Iraq at 3.00 a.m.
But coming off of Sunday overnight and into Monday, the signals were still clear, so before the market opened on Monday morning I decided to double-down on the call and said that we could be looking at a pull back in the metals prices.
Still reeling from second-guessing myself I toned down the language somewhat, yet still, the chart was set-up. I was only saying what the chart was trying to tell us.
Sure enough, we saw the pullback in gold and silver on the charts:
Silver pulled back first as gold remained relatively flat on Monday, but on Tuesday and then again into Wednesday, both metals pulled back in price in what can generally be described as a healthy manner.
All things considered. Especially the constant watchful eye of Big Brother (a.k.a. the Cartel).
On Wednesday it looked like we could be nearing the end of the pullback, and two issues were specifically cited for why that could be: Effect and duration.
That is to say, as the cartel has been applying pressure on gold & silver, every time they either leaned on the metals, or smashed outright, the downward effect on price has been less and less effective, and the time it took gold and silver to recover in price has been shorter and shorter.
Today we caught a glimpse of just that.
At 8:30 a.m. EST, just as the dual data dump of Inflation (CPI) and Retail Sales reports hit the tape, gold and silver were dumped hard:
For many reasons, that chart above is not normal market activity. Well, it’s normal cartel smashing. The point is, above these words you are staring blatant market manipulation right in the face.
But as far as general markets go, that’s not normal.
See our section on precious metals price suppression to understand exactly why that is the heavy hand of the cartel trying to step in and move gold & silver (to the downside).
But true to our understanding that the cartel no longer has the commanding power that it once did, here late in the day on Friday, we see that gold and silver have not only fended off the smashing, but have rallied:
And as such, while the metals will be reaching overbought status down the line: This is dip-buying and very bullish for gold & silver:
Silver has not recovered all of the dip, but gold surged today and has recovered all.
Just check out that bullish candle in gold from today. Wow. Come on baby light my fire!
Since silver has lagged, an opportunity to do a little gold-to-silver ratio arbitrage is presenting itself:
Though the bounce may not last that long, especially if the metals rally in the rest of the world on Monday when U.S. markets are closed in observance for Martin Luther King Jr. Day.
Said differently, the metals are ending the week on a bullish note, and if they continue next week with the momentum they had to finish this week, we could see the metals surge yet again in price.
And then, let’s not forget that if China in fact goes live with the Shanghai yuan-priced oil contract next week, we could see even increased demand for gold and silver.
All and all, things are looking good.
I’m not even crossing my fingers when I say that. Oh now. I’ve got my hands clenched in fists and I’m ready to stand my ground as gold and silver are standing it right there with all of us.
On the silver weekly, even though the white metal is down, that’s a nice little pull back that serves to confirm the golden cross:
Looking at the silver weekly above, technical indicators are neutral right now, but notice the surge in volume, even for a down week.
Additionally, as silver has basically consolidated in price for the last one year plus, we can say that this is a bullish consolidation over a very long period of time. Just like the more a spring gets coiled, the more the pent-up energy needs to be released, and with both the everything bubble in full force, and with inflation thrust back onto the scene, which way is that pent-up energy going to move once it’s freed?
The gold weekly chart looks even more bullish:
Gold held up way better than silver over the past year, and although we have seen five straight weeks of gains, gold is bullish on the weekly because the yellow metal now squarely starting down the highs of last September when gold topped out at $1362.
The technicals are not quite as neutral as in silver, but also notice the increase in volume on the gold chart.
Hold on when this bull starts kicking.
The other two of the four precious metals are also showing bull strength.
Palladium is doing it’s thing:
Gold’s surge looks impressive today but palladium? Oh my.
Then there is platinum:
Platinum is up over 14% since bottoming in mid-December.
Of course, part of all this precious metals bullishness can be explained in terms of the bottom falling out on the US dollar:
The dollar just put in a fresh 52-week low today. I don’t understand how there are any dollar bulls left because that chart is all bear.
And when you combine a weak dollar with a rising price of oil:
There is a lot more move in gold, silver, the dollar, and in commodities, that could still be set to come.
That crude oil chart above is a weekly chart.
Notice that after breaking out above whole number resistance at $60, where is the resistance from here?
The massive fall from $100 (and especially $90) took place over just the last few months of 2014. There’s no reason to think it can’t rise just as fast with basically no overhead resistance from here to there.
And if the price of oil picks up, and if the dollar continues dropping, already bullish-looking gold and silver charts will get an even more fundamental boost than what looks good technically speaking.
Funny how nobody is talking about rampant Chinese grandmothers speculating with Dr Copper anymore:
Copper’s drop over the years was not as pronounced as crude oil. but once copper gets above the $3.40 mark, it sure looks like it won’t face further resistance until facing the most recent high of $3.79.
Of course, taking much of the spotlight this week was the bond market:
Which does look like it’s starting to break-out.
The yield on the 10-year has been on a tear since the day after the December FOMC, but here’s some things to keep in mind:
- The yield has still not taken out its 52-week highs.
- Since the massive surge on Tuesday, it looks to be fading the move.
- There is a lot of noise from bond bears as well as speculation on what China is or isn’t doing.
- We know the Fed will slash interest rates and even begin QE4 the next time the
market dropsU.S. enters “recession”.
Taking those things together, it is still my belief that the Fed cannot raise rates gracefully and normalize since normal has been skewed with increasing intensity with each passing decade, beginning in 1913 (when the Fed was created) and picking up speed especially since the turn of the millennium.
The point on the benchmark indicator for yield around the globe, the US 10-Year Treasury Note, is that we are either going to see many more surges in yield like we did on Tuesday, or, the Fed will fall further behind the curve and have to jack rates beyond mere 25 basis point “hikes” just to attempt to keep pace – assuming rates are to keep rising.
Of course, it’s no use trying to gauge anything in the marketplace if you’re looking to the VIX as your guide:
Every time it looks like the VIX may be perking up, well what do you know? The Fed just sells VIX (and buys index futures).
Seems like these charades will go on as long as it’s profitable for the Fed, Wall St, the global elite and the politicians that serve them.
But rest assured, as the ESF and the Fed need to be in every market for every hour of every day, they will make just as much money on the downside when they decide to pull the plug on it all.
IMHO, they don’t even need to pull the plug on it. They could simply back-off and let the markets implode on their own.
I’ve been let down on numerous occasions looking to forecast dates for crashes, but there is something to be said about the latest calculation of July 20th.
By the time mid-summer comes around, this farce could be much more farcical:
Today itself was another 225+ point farce.
Speaking of calculations and forecasts, let’s do one super simple 5th grad math calculation:
There’s approximately 131 trading days until July 20th. Assuming the Dow moves 100 points per day on average, that’s another 13,100 points in the Dow.
So if Marshall Swing is correct on his date, which I’m not holding my breath, though neither am I discounting, we will be at Dow 40,000 before mid-summer when they decide to pull the plug.
Now, Martin Armstrong has been out there calling for Dow 30,000, and it’s a wide known fact that markets can stay irrational longer than, well, I’ve got the blown trading account to prove it, but imagine with me, for just one second, that we actually hit Dow 30,000, and that’s not even the melt-up top.
The melt-up would be the another 10,000 en-route to Dow 40,000.
The global elite do like their numbers to have meaning.
And my calculation is based on a steady increase of 100 points per day.
Now I could be making a mistake and underestimating the manic euphoria that encompasses blow-off tops.
So we could pass Dow 30,000, head towards Dow 40,000, and only after Dow 40,000 would the manic blow-off top melt-up begin.
In other words, don’t look for “sell in May and go away” even though it will surely be touted and used as a scare tactic, but rather, surely if Dow is approaching 35,000 – 40,000 by May, the Dow could be on its way to making a final surge to 50,000 to usher in the crash.
Did I just call for Dow 50,000 by July 20th?
If this ship is going down come July, then yes I did.
But consider the call a bet for the nag. A long-shot. A deep, deep, deep out-of-the money call.
Good thing I don’t play around much in the markets, and good thing I’m a down-to-earth silverbug, otherwise I might have just fallen off my rocker.
Speaking of falling off the rocker, well, this:
Strange things are afoot at the Circle K.
– 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.