SD Friday Wrap: Here’s a hint – It’s where it was last week, and the week before, and the week before the week before. But there is good news…
Silver had the audacity to break-out of its $16.20 to $16.80 range this morning:
Not to fear!
The cartel has fingers at the ready to apply pressure on the steady.
And now we’re right back into the bump and grind action playing pinball between the tight range ($16.40 to $16.60) and the broad range ($16.20 to $16.80).
On second thought, it reminds me of when the bowling alley puts those bumpers in the gutter so the ball stays in the lane.
If you zoom out and look at silver’s weekly this becomes obvious:
Using this broader stroke, we can see the range is pretty much $16 to $17 for the better part of a year.
But I did say there is good news!
Behold the power of Mike D:
Did I say Mike D?
I meant to say behold the power of MAC-D:
I mean, sure, it’s not as cool as having a horsey named Paul Revere, but the Moving Averages Convergence Divergence (MACD) is turning bullish on the daily chart of silver above.
That’s a good thing.
It means we have momentum going into next week.
We’ll see if it holds.
My working theory is that the rally will not begin until Monday, May 21st, but hey, if we can keep up the momentum into next week, I’m all for the rally starting a week earlier than my forecast.
One thing is clear:
The gold to silver ratio is definitely rolling over.
That trend is clear as day, and it’s telling us that silver is about to get moving and outperform gold as silver does.
Speaking of gold, on the weekly chart, we can see that the bleeding has stopped (for now):
Granted, we’re not that far off of last week’s close at $1316, so I’m not counting any of these chickens until the closing bell, but I’m also not coming back into this post to edit any discrepancies, so we’ll just have to assume the bleeding has stopped.
The daily chart in gold shows some positives:
First, the technicals in gold are starting to look bullish. We’re off of the 200-day moving average, and we’re setting up to break-out above the 50-day. We have spent more time below the 50-day than I forecast, but we never really rode the 50-day either, so we’re about to find out what kind of resistance it’s going to be.
Also, the MACD in gold is starting to turn bullish. This also ties in to the technicals on the GSR. You see, silver’s MACD turned bullish first, and it’s demonstrated in a gold to silver ratio with 79 and 78-handles.
And that is exactly what we want to see.
Does this means that the rally has begun?
Again, it’s too early to tell.
But the metals have momentum going into next week, and the set-up is what we want to see with silver leading the way.
“But Half Dollar, gold leads the way first, then silver catches-up to overtake and outperform gold”.
Well, yeah, which is exactly what has been set-up on the chart:
The point I’m trying to make is that things aren’t that bad.
Nothing fundamentally has changed.
And technically speaking, the set-ups are there.
Who was it that said, “the waiting is the hardest part”?
Well, I guess there’s some truth to that.
Nobody ever said investing in gold & silver was easy.
In fact, there is no easy investment, regardless of what all those Bitcoin Billionaires seem to believe.
If everybody could just “get rich quick”, then everybody would.
But nobody can.
It doesn’t work like that.
Especially with gold and silver.
Gold & silver will have their day, but in order for us to make it to that day, we have to doubt ourselves, then struggle a little, then doubt ourselves some more, then want to give up, then watch the weak ones throw in the towel, and then doubt ourselves some more.
But those who stick it out will be rewarded.
The whole purpose of a bull is to shake off the rider.
So grab those horns and hold on tight.
I know that I am.
This extended multi-month sideways channel of pure unadulterated crap sure does stink, buy it’s not supposed to be easy.
That’s why when it’s rewarding, my gosh will it be rewarding.
But I digress.
You wanna really see something that bottomed after the metals and surged first?
Behold the weekly chart in crude oil:
My goodness that’s one beautiful round bottom.
And it’s got that “golden cross” thingy going for it too.
And very little resistance from here to $100.
There’s basically some resistance at $80, and some at $90, which is why I harp so much on the psychological importance of whole numbers.
(Which is also why $1300 gold and $16 silver have held)
I’m still sticking to my forecast of $80+ crude oil by the end of the year.
Now, if I’m right on the price of crude oil, which direction do you think the metals are going?
If crude is rising, so is the price floor on the metals.
Check out crude’s daily chart:
The new support is the psychological level of $70.
Right on que.
Speaking of right on que, copper is finally understanding that the price of metals are affected by the price of energy:
Crude oil put in a new multi-year high just yesterday, so what did copper do?
Copper surged above both the 200-day moving average and the 50-day moving average.
Although that’s not really a fair statement because they’re both jumbled right there in the same place.
But as copper starts rising again, the convergence of the moving averages will make the 50-day look more like a bounce off of the 200-day rather than a plunge below it.
And that is the type of price action that we want to see.
And it’s subtle clues like these that are telling us the commodities in general are in a bull market (and gold & silver specifically).
Following suit, palladium is back above both of its moving averages:
See how the various commodities in general, and crude oil in particular, can change things on a dime?
Platinum is trying, but geez, platinum has had it rough lately:
But if the metals are going to rally, then platinum is going to rally too.
Gold is ten times more rare than silver, but platinum is ten times more rare than gold.
We talk about the arbitrage that can be made in playing the gold to silver ratio (buying a heavy weighting in silver now to convert to gold later when the ratio drops). I like to talk about that opportunity because it is within the reach of most people. Most people can scrape up the funds to buy an ounce of silver here and an ounce of silver there.
Talking about gold, platinum and palladium, however, well those three precious metals might not be within the reach of most people.
But to those with whom the other three precious metals are within reach, gold is very strong right now in terms of platinum:
You know, food for thought.
“What about you Half Dollar”?
Look, there’s four precious metals.
They’re called precious because they are so rare that only a few people could ever even own them.
At least own them in any quantity anyway.
But the U.S. Constitution specifically mentions gold & silver, so I favor those metals because the stubborn American in me is biased.
But I will say this: I think the real value is indeed in silver, and I agree with others who say silver is the most undervalued asset on the planet, and, right now, as we sit here in the Spring of 2018, I do think that silver is the most undervalued asset in all of history.
I also look at it this way –
There’s four precious metals:
- Average three of them (gold, palladium, platinum) and you have an average price of roughly $1,075.
- Average all four of them (gold, platinum, palladium, and silver) and you still have an average price of roughly $810.
- Yet the price of silver today is barely above $16.50?
This is important to understand: Silver is a precious metal.
It’s so precious that only a few people can ever own it.
And because it’s the money of the people, money which can only truly be earned through blood, sweat and tears, and I’m talking about real money here folks, not some U.S. debt-based fiat currency, or any other phony currencies out there, sovereign, crypto, or otherwise, governments fear silver more than anything in the entire world because when the people wake up, that’s when the government realizes that it is we who have the power over government, and not the government that has power over the people.
So here we sit with silver less than seventeen bucks.
That’s how I think about it.
And I do think that long term, silver will reach a parity with gold, meaning one ounce of silver will cost the same as one ounce of gold, seeing as how silver gets used-up and lost forever, if not recycled in a very expensive and complex process, not to mention highly dangerous and toxic, but gold’s primary purpose is to just sit there looking pretty – in coin, bar or jewelry form.
But I digress.
Let’s move on.
Ol’ Half Dollar’s call has been for weeks now that 93 is the top in the US Dollar rally:
We’ll see, but it sure is starting to look like the U.S. dollar is rolling over here.
The RSI is looking like it’s run its course, and all those who were going to buy have bought. Said differently, there’s no more buyers at this time.
And the MACD looks to be turning bearish in the short-term as well.
I get it – “But Half Dollar, all those emerging markets who borrowed in dollars have to pay back dollars, so that will create even more demand for dollars which will strengthen the dollar!”.
Or they could just default.
Either unintended (because they just can’t pay), or intended (strategic default because they are sick of the IMF, the debt, paying off debt with debt, and they’re especially sick the U.S. dollar), or otherwise (because they’re simply ready to move on to the next monetary system).
I’m oversimplifying it here, but my point is that there will be a point when the dollar is no longer king, and I really don’t see it going to the moon from here.
If there’s anything about the dollar that’s going to the moon, it’s going to be the amount of dollars that is printed with which we could build a bridge all the way to the moon.
Besides, if there is all this demand for dollars from the emerging markets, in an effort to stem a rapidly rising greenback, wouldn’t Stevie’s ESF just print up a bunch of dollars and literally give them to the emerging markets to simply monetize the debt to stabilize a fast rising dollar?
More food for thought.
I guess I’m hungry.
It looks like U.S. ten-year paper buyers are hungry too:
Because yield just can’t seem to stay above 3.0%.
I’ve said all along that I don’t think we can handle a “gradual” rise in yield, so we either need to see surges in yield, or straight up Paul Volcker style hikes to stem the inflation tsunami when it hits (or Argentina style hikes of today), or yields will be headed back down.
If the ESF is all up in the dollar market and all up in the gold market, we can rest assured they’re all up in the treasury market too.
The real question is whether the ESF and the Fed, who collectively make up the foundation of the cartel, will be on the same page when the financial crisis really starts becoming evident to even the most mainstream of propagandists?
For now, it looks like they are on the same page with this farce:
Is the VIX, the measure of market volatility, the “fear gauge”, really going to settle at 10 again?
At one point, however, it doesn’t matter how much volatility is suppressed, or the how much the dollar is tweaked and tinkered with, or how much gold & silver are smashed, because at one point, no matter what they throw at the markets, the markets just aren’t going to respond the way the cartel wants.
Granted, that’s what the Middle East, HAARP, DARPA, plagues, pandemics and all those other “who could have seen that coming” nasties are for.
They provide the cover when needed.
Which is clearly not needed just yet:
One more up-day and that’s a pair of higher-lows and higher-highs in the stock market, and that could mean a trend change.
So just like that, everything is playing along and under control.
Ah the hubris.
Were it not for the cover, it’d humble them all.
– Half Dollar