SD Midweek: Time to Exercise CAUTION in Gold & Silver

Just a week ago silver was clinging to $17. Gold is bogged down in the swamp until solidly taking out $1350, and there is quick sand all around. Complacency here and now can sink us like it has all year long. Especially as the MSM has turned bullish, too bullish…

Silver did not decisively break through $17 until last Thursday, just a few trading days ago. On Sunday night, silver futures broke through $18. We are nowhere near the “all clear”.

We must be more careful than ever to not get too bullish or too complacent.




Looking at the daily on silver, there is some resistance around $18.25, and major resistance around $18.50. Seeing that we have just shot up a greenback in a couple of days, this does not mean we will just storm the lines and over-run the resistance. Good news is that since bottoming out at $15.14 in July, we have had two healthy pullbacks. What is worrisome, however, is that the RSI is beginning to signal “overbought”.

If we are rooting for anything this week, it would be nice to see silver hold at $18, because with a dollar move in two days, there is a bunch of factors, both technical and fundamental in nature, that could cause another dollar move before the week is up. If silver breaks-out to $19, that would be the time to get bullish. If it breaks down to $17, that would be the time to back-up the truck and load up on physical while the getting is good.

Gold, as has been the case all year, is faring much better than silver. Gold is within’ spitting distance of the 52-week highs:




As the days go by, the 52-week highs will be taken out all on their own even if gold consolidates here. We recognize, however, there has been very little consolidation in the metals this year. It has been going up, or going down. With geo-political tensions and mother nature reaching a climax this week, some consolidation would be welcome in somewhat of a figurative and literal calm before the storm.

That would also give silver the chance to catch up to gold from their divergence that just does not want to close:




If gold drops from here, silver has room to run, if gold consolidates from here, silver has room to run, and if gold rises in price from here, silver still has room to run. The strength in the yellow metal has not been shown in the white metal, even though it has been shown in literally every other metal, base, industrial or precious. We keep highlighting the fact that the price of three of the four precious metals averages over $1000, and today, the average price for gold, palladium and platinum is over $1,100. Even when we average in silver to get an average price of all four precious metals, we still have an average price of $832.

When we talk about the absolute cheapest asset on the entire planet, there is a reason for that. How long silver remains to have the price suppressed is the question we are all trying to answer, but trying to time purchases for $.50 savings of downside price action could end up in paying $1 more based on just what we have seen in the last few days.

Palladium and copper continue to show the strength in price action that they have showed all year:




Palladium is precious and industrial. Copper is a base metal that the entire internet runs off of. It is not so much an infrastructure “spend”, but an infrastructure “rebuild”, and raw materials are going to be in high demand, which include the metals among other things.

Crude oil is turning out to be very interesting on the chart:




We have a classic “inverse head and shoulders” pattern forming on the chart. The question is, how much of it is fundamental and how much of it is technical. In other words, if the WTI price shoots up to $53.50, would that be coincidence? Notice the top of the head, in our case the bottom price on the chart, is exactly the low for crude oil.

Fear in and of itself is starting to look a mess:



Since the beginning of the North Korean thermo-nuclear war threat, there have been three surges in the VIX. They have all occurred with little separation on the charts. Now we know the Fed is suppressing the VIX and propping the broader markets, but on the chart, even with the market manipulation, it looks as if VIX is in for a repricing, which would be higher, not lower. Upside volatility repricing is bullish for gold and silver prices, the ultimate hedges against uncertainty.

And wouldn’t ya know, coming off of those VIX surges, there have been three surges in the Dow as the VIX retraces:




The problem with the stock market, however, is that it now looks very, very exhausted. All three runs have failed, and the trend certainly points down in what is looking more and more like a rounding top on the chart. 200 points in the Dow are peanuts at 22,000, but when it is not 200 points, but 2,000 points? That still would not even be a 10% drop. How low will it have to go before the Fed steps in? If the Dow drops 2,000 points, it is quite possible the Fed will maintain absolute media silence on the matter, because that would be a paradigm shift from the “everything is awesome” economy they have been selling since 2009. They are running out of buyers very fast.

And if everything is so awesome, we know President Trump can’t resist the chance to cheer-lead the stock market of now his making, what explains this:




The yield on the 10-year is now back to “The Day After” level. The entire move in yield has now completely retraced. Perhaps this is why there is all the sudden a renewed push to kick the can on the debt ceiling by tacking it on to hurricane relief? Not helping the bond market is the fact that on September 20th, Janet Yellen will have to face softball questions from the propagandist MSM regarding the FOMC action to raise or not to raise interest rates, and to reduce or not to reduce the balance sheet.

Either way, this does not look good:



That leaves us with the dollar. Since every MSM “analyst” is certain the reversal is coming any day now, we’re not so sure:



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