SD Friday Wrap: Everyone is asking it so keeping in line with the question of the week, “Is the bottom in?”. Here’s some insight…
Editor’s Note: As a reminder, last week we changed posting of the SD Metals & Markets podcast to Saturdays at 8:00 a.m. EST. Elijah said it’s going to be a good one this week, so be sure to tune in!
Every once in a while I like to summarize my feelings in two words.
This is one of those once in a whiles.
So here’s how I’m feeling right now: Mentally exhausted.
It’s been a rough week, and it ended mixed.
Did gold & silver go low enough to put in their bottoms?
I think so.
I would have liked to see $15.50 silver and $1,225 gold just to make sure, but hey, it looks like the bottom is in.
See, I knew it, “Half Dollar you’re a shill who wants gold & silver prices to drop!”
No, I’m not and no I don’t.
I just want to make sure.
You know, like, really sure.
Like in those movies, in the war scenes, where they walk around the dead and dying and shoot anybody who may possibly still be alive?
Yeah, like, that’s how sure I want to be.
Not that I’m advocating violence.
Or even being hostile.
Last thing I want is somebody to snag a poor fella’s red hat in a Dunkin’ Doughnuts and throw coffee in his face.
Or was it a Starbucks and a Frappachino?
Ah, who knows.
Just don’t blame it on Ol’ Half Dollar.
See what I mean, mentally exhausted.
As I digress.
Back on point.
To reiterate: Was this week’s lows in gold & silver low enough?
I think so.
We’ll soon find out.
Here’s some funky fundamentals –
Silver outperforms gold to the upside, and outperforms gold to the downside.
And we have exactly that set up right now.
If this is the low, well, gold stopped falling and actually eked out a gain while silver continued the drop on the week.
Which means, if the rally is on, gold has started to move up, which means silver’s out-performance of gold is imminent.
So we have that going for us.
The set-up is there.
Let’s dive into the chart, shall we?
We can see how gold eked out that positive close on the week:
Just barely, but the bleeding may have indeed stopped, as in, the bottom may indeed be in, which is what I have been forecasting.
Gold has two things going for it on that weekly chart above:
- Gold held on and stayed above the December, 2017 low on a closing basis.
- The trend-line from the 2015 bottom should act as support.
Dialing in on the daily chart we see the bounce from early in the week:
So if that was the final flush, the final wiping of the slate clean, the technicals will start supporting Monday’s closing print as the low.
And the technicals do seem supportive right now with the recovery from the extreme “oversold” conditions on the RSI to the bullish looking MACD.
And again, thinking back to the funky fundamentals I just laid out moments ago, this is exactly what we want to see.
That is, gold has stopped falling and began rising – as in, the turn.
As I’ve said all along the gold to silver ratio looks range-bound between 77.50 and 78.50:
With a last of 78.15, we look in good shape here.
Yeah, “But Half Dollar, you said we don’t want to get higher than the mid-June high”.
Yes, and we spiked higher, but we closed lower, so the trend is still in tact.
Besides, if I’m right about the turn, and the rally begins now for both metals next week, as in gold has already turned, and silver is playing catch up, we would look to see the ratio dropping yet again.
I drew a sideways channel of agony on the silver weekly chart:
It’s not the same as the channel we’ve been in over the last six months on the daily, and it’s wider, but arguably, instead of acute pain, it’s more like blunt force trauma.
You see, that range is $16 to $17, and how many times have we been subjected to the “break-out fake-out” in the last year and a half?
Well, I didn’t count, but you get the point.
Generally speaking, monkey hammering applies to shorter time frames on the chart, but it seems appropriate since we’re talking blunt force trauma here.
Call it whack-a-mole.
That’s what the cartel does, right?
They whack gold & silver.
But I digress.
Back on track.
But notice something the channel above in silver shows?
At the very last candle, it shows that silver is right at the bottom of the range, right at the support line of $16.
This further provides evidence to my call for the rally to begin next week as has been my call for several weeks now.
On the daily chart we can see silver’s technicals are ready for the turn as well:
I am especially liking how the MACD is shaping up to be bullish.
But notice the Relative Strength Index?
That’s why I said earlier I would have liked to see a print of $15.50 – because then silver would have been super-duper extremely oversold.
But we can only interpret the chart the cartel has painted for us.
My read on it is bullish.
Palladium even eked out a small close higher on the week.
But I wanted to post palladium’s daily chart:
I see some healthy consolidation there, ready to turn up again.
But if gold and silver were mixed in the week, well, it makes sense that so was palladium and platinum.
Uncanny, isn’t it?
Platinum, poor platinum, I’ve been talk about zooming out on platinum’s chart for a while now, and here it is:
Another fifty bucks and we’re at risk of taking out the 2008 crash low of $752.10.
But platinum shows, on the chart, what I have been saying for some time now – in general with the precious metals, and especially talking in regards to gold & silver, we have been crashing over time and not over price.
If that is indeed the case, and if the metals crash first and the broader financial paper markets, aka the stock market crashes after, then we are ever closer to the stock market crash everybody is forecasting.
So here’s my question: What if they’re looking at the metals to crash as the clue the markets are coming down, as so many are, but they are not seeing that we have already been crashing in the metals, over time and not over price?
Think about it – From the spike high in mid-2016 to the lows just this week, silver is down over 24%.
That’s a crash over time.
You see, there’s two components to anything – time and price.
We’ve got the price, percentage wise, and it’s been over time.
Now, that’s not to say I think the stock market is crashing over time:
Sure, the Dow has gone nowhere this year, and in fact, it’s still at a slight loss year to date, but the Dow came off of a massive surge last year.
Not only that, but the Dow is not even down 10% from it’s recent highs of early 2018.
- Less than a 5% drop move is a “dip”
- A 5% to 10% drop is a “pullback”
- A 10% to 20% drop is a “correction”
- A greater than 20% drop is a bear market
So the stock market isn’t even in correction mode yet.
Of course, when you squash volatility, what would one expect?
That said, yup – squashed:
We’re back down to the low 13s, even as the trade wars have barely just begun.
The dollar sure looks tired here:
That’s not to say it can’t keep rallying, but if the metals are going to begin their rallies in earnest next week, which I think they are, then the dollar index will head even lower, and then it will be obvious for all to see that this was a bear rally.
Besides, looking at the MACD and the other technicals, it doesn’t look good for the dollar.
The yield on the 10-year Note continues to drift lower:
That range of 2.9% to 3.0% looks like a thing of the past, which is interesting, because the stock market was up this week.
So it’s not like there was a flood of money rushing out of stocks and into bonds because of falling stocks, and if it’s foreign money rushing in as so many like to say, looking for a place to park their cash – wouldn’t they want the double win of not just the rise in the dollar but also the rise in equity prices?
Regardless, next week will be very interesting when it comes to the bond market, especially with all the talk of the flattening yield curve in the 2/10 spread.
One of these days I’ll explain why it matters, but we have articles on that, and I’ve tagged it below.
Ending with commodities this week, we see that copper is in serious trouble here:
There’s been three blips of positive days in the last how many weeks now?
Yesterday’s selling was on heavy volume too.
If I were the cartel (which I’m not), I would be getting very nervous about the copper price.
Either that, or I would be feeling very cocky about the physical silver supply.
Either way, I’m not the cartel, and it’s not looking good for copper bulls here.
But crude oil, ah yes, crude oil.
Here’s that famous (infamous?) Tweet from earlier this week:
The OPEC Monopoly must remember that gas prices are up & they are doing little to help. If anything, they are driving prices higher as the United States defends many of their members for very little $’s. This must be a two way street. REDUCE PRICING NOW!
— Donald J. Trump (@realDonaldTrump) July 4, 2018
That’s pretty strongly worded, but then again, I studied language, so I like to nit-pick the finer details of word choice and presentation.
Throwing the might of the U.S. military behind it also has an effect wouldn’t you say?
Now, Is it possible the President’s Tweet was the cause of the drop we saw in oil the very next day?
See the drop on the daily chart:
But many people are also saying that crude oil is dropping because the Saudi-Aramco deal is dead in the water.
So, while there may be some of both, direct your attention back to the chart.
Crude bounced back today.
And looks to be heading higher after some consolidation here.
And we all know what higher crude oil prices means.
– 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.