SD Midweek: It’s turning out to be a very painful week, especially for silver. Here’s the details…
If there is a bright side in all of this, well:
There is a serious arbitrage developing in the gold to silver ratio.
Silver is ridiculously cheap right now.
Of course, that’s what happens when you are the one single thing governments and central banks fear more than anything else.
This is the third test of $16.50 in the last few days:
That is not good, especially considering the support is weak at $16:
They could take silver below $16 with a nice pounding. The whole number support is not very wholesome.
And the technicals look horrible:
We’re not in official “correction” territory yet, but the Relative Strength Index (RSI) has room to run to the downside, the 50-day moving average is no longer support but resistance, and the Moving Averages Convergence/Divergence (MACD) is bearish.
If the white metal is unable to hold at $16, we could be visiting $15.50 again before this latest flushing is finished.
Gold decidedly lost support at $1340 yesterday:
Support at $1320 looks decent, and if there is increased volatility or another decline in the markets, the initial “flight to quality”, “hedge against uncertainty”, or “safe haven” will seek out gold first, because it is the smart money and the deep pockets that moves first, and the average guy (stackin’ the shiny white phyzz) moves to the other filight to safety second.
But let’s not sugar coat it at all. Things look bad for the metals right now.
Palladium has officially entered a “correction”:
Although palladium looks like it will reach “oversold” before the other three precious metals.
Platinum has broken down as well:
Let’s look for $980 as support we’d like to see hold.
Copper is simply riding it’s 50-day like it has for the past several days:
The more time it rides the moving average, the more that the technicals can return to a neutral stance over time instead of over price.
Crude looks to be set to visit it’s 50-day moving average now as well:
That will be a big test for crude oil. Many analysts are claiming crude is due for a big collapse in price, however, with a weaker dollar from the start of the year and inflation creeping back into the system, your’s truly is not so sure.
Time will tell when we get there.
The dollar has finally put in the bounce everybody has been looking for:
As the dollar bounces, this will add to the pressure being placed on gold & silver right now.
The yield on the 10-year not has come down somewhat:
With the wild swings in the stock market since last week, it appears that a flight to safety has been sought after in bonds.
As investors look to purchase bonds, this pushes yields down, whereas when investors sell bonds, it pushes yields up.
This is a mistake, however. Sure, US Treasuries may be a “flight to safety” now, but sooner or later, as inflation picks up and the dollar resumes its slide in earnest, and as the United States piles on loads of more debt, why anyone would want to loan the U.S. government their fiat is beyond me.
Since most of the people have to be wrong most of the time, they will learn, sooner or later, that the only real safe haven assets are gold & silver.
The VIX went Berserk this week:
It really is amazing how different the chart looks now than it did just a few days ago.
To put the VIX move in context:
It was not an insignificant move.
Same goes for the stock market:
The question is: Was this just a warning to President Trump or are they now beginning to bring down the system?
– 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.