SD Midweek: Crude oil has dropped in price to the mid-$50s, and silver just hit fresh, new 52-week lows, just like clockwork. Here’s an update…
I have been saying, for months now, if the price of crude oil drops into the mid-$50s, then the metals, and especially silver, would be headed lower.
Check out this crude oil chart that I printed out this morning:
Yes, it is down more than 28% from its high, yes it has fallen a crap ton of days out of the last so many days, and yes, the 50-day moving average is making a ‘b-line’ straight for the 200-day, but look at that price!
It is hard to get any more “mid-$50s” than $55.
So what do we see in silver?
We see exactly what I said we would see:
We have a fresh, new, 52-week low, and we might very well test the December, 2015 lows.
Recall that for fundamental reasons, I am thinking the metals will remain under continued pressure (i.e. smashings), as long as these three trends are in place (in no particular order):
- US dollar strength
- Falling crude oil
- Rallying stock market
I also said the metals would remain under pressure if one of those trends reversed, that if two of the trends reversed, we should start thinking the metals can find some support, but if all three of those trends reversed, it would be rally time.
What has happened to those three trends?
The only one that has reversed has been the stock market.
So the pressure remains.
For how long?
Like I said, for now, I’m thinking weakness into the end of the year, barring some black swan, which we wouldn’t know about anyway because black swans swoop in unexpectedly.
On top of that, yes, we are still dealing with peak Trump:
“Boom: Record high business optimism, need for employees at 45-year high” https://t.co/jBFjEwAcfd
— Donald J. Trump (@realDonaldTrump) November 13, 2018
Booming economy, right?
I don’t buy it.
But most of the Trump supporters still do.
Now, I am confident that we have in fact peaked. That took place during the mid-term elections. And, thankfully, we are now pretty much half way through “put-up or shut-up” month, so if there are no mass arrests, if there are no “lock her ups”, and if there are no military tribunals, then my theory that we have gone over the peak will be further supported because all this “hope porn” only carries a person so far.
What does ‘Ol Half Dollar think about all the swamp draining?
I don’t see any draining of the swamp at all. I don’t see an America that is any better, and I don’t think there will be mass arrests, “lock her up”, or military tribunals.
What I do see, however, is a bigger and more burdensome government that is spending more money that it doesn’t have and taking away more of our freedoms and liberties pretty much daily, all in the name of (this disgusting false-flag scapegoated) “national security”.
I also see an America that, had the President been frank with the people, we could have gone through less economic pain and suffering had we not continued to expand this money-printed, artificial, everything bubble. But now that the President claims that America’s economy is better than ever, the coming economic pain and suffering that is headed our way is going to be so severe that it is not just a matter of simply losing a job or just losing a house.
This time around, I see a lot of people dying.
Anyway, let’s move on to something a little more optimistic, shall we?
The gold to silver ratio is creating a truly once in a lifetime opportunity:
I zoomed out real far on the GSR to drive the “once in a lifetime” point home. In fact, I chose the year 1974 as the starting point. That’s the year COMEX began gold and silver futures
price suppression trading. That way, when the COMEX blows up, we may get a taste of where the ratio could be headed and quickly – to the low 40s, and during a massive rally in gold and silver, down into the mid-teens.
And because of four-and-a-half decades of price suppression, I don’t see a slow, meandering drop in the ratio, like what happened from the early 90s to the top in 2011.
I see it falling even faster.
Gold is still hovering around $1200:
Recall my fundamental reason affecting the price of gold right now is that gold is priced for economic, market, political and geo-political perfection all around the globe.
We are beginning to see cracks in the economy, in the markets, in politics, and in geo-politics, and as such, I am less confident gold will drop down to $1050, or even breach $1000 to the downside.
Silver, on the other hand, I’m pretty confident the cartel will exert the maximum pain and breach through the lows of December, 2015, just to spite us.
Palladium is the only precious metal that is still in the green year to date:
That is encouraging, and it is encouraging for silver.
Because while precious, and to a lesser extent, but still, monetary, palladium is an industrial metal.
Silver is also used for industrial purposes, mainly, even though silver is first and foremost money (read the first part of Article 1, Section 10), but, If palladium is hanging in there, industry wise, this is bullish for silver. Recall also that there is in fact a physical shortage of palladium right now, and while we don’t know to what extent the silver coffers are filled, if silver is similar to palladium in this respect, that is also bullish for silver.
Platinum has pulled back for several days in a row:
Time to see what kind of support the 50-day moving average will provide.
My guess would be none at this rate.
If copper keeps dropping, in addition to a lower-high, we will have a lower-low:
Copper has already crashed this year, but to keep on plunging from here, one can only assume the global economy is about to go down.
I mean, I don’t have to say it, because we already know it’s going down. It is only a question of if the globalists are attempting to bring it down, or if the globalists are attempting to prop the markets and the economy up, but the markets and the economy collapse anyway?
We wouldn’t know unless we had a direct line to the inside, but we may be able to connect those dot as they appear anyway.
By analyzing the performances on the political and geo-political stages.
Last week, the stock market was in super-rally mode, but this week:
The S&P 500 puked right through its 200-day moving average again.
Things will really get interesting if we take out the spike low from October, 29th.
Nonetheless, we have a market analyst in the White House working hard to assess what and why things are happening in the stock market.
See for yourself:
The prospect of Presidential Harassment by the Dems is causing the Stock Market big headaches!
— Donald J. Trump (@realDonaldTrump) November 12, 2018
They were causing even bigger headaches a day after he Tweeted that one.
Bonds have been bid this week:
At least on the 10-Year Note they have.
Remember, as the stock market falls, investors make the (wrong) “flight to safety” into the US bond market. And notice the pattern here? Every time yields pop above, call it 3.21% to 3.22%, the stock market runs into trouble.
And the Fed is raising rates next month?
Might want to look for those sales on popcorn now to stock up for the show.
I have been saying I think we have some volatility ahead of us:
While we haven’t had the “vol-pocalypse” spike of February, it hasn’t exactly been smooth sailing either.
Come the December rate hike, if yields generally go up across the board, that would put more pressure, theoretically, on the stock market, which would add more volatility to the mix, which would also put pressure on the stock market, and both of those factors could turn into a downward spiral in the stock market. I’m glad my wealth isn’t tied up there.
Finally, let’s finish with the chart of the worlds favorite un-backed fiat currency:
I don’t say that in a good way either.
I say it in a way like this: Say a college student fails a mid-term exam, yet the professor graciously props up all of the students’ grades with a curve, so the failing grade magically becomes a “D”.
That artificial stimulus does not mean strength.
It only means that everybody gets a passing grade, and maybe a gluten-free cookie.
I’d rather fail on my own than succeed by lies and a rigged outcome.
Because, ultimately, the rigging can’t and won’t work.
The rigging does not negate the fact that the “D” student is actually a failure.
Sooner or later, life will prove that.
Nor does rigging the gold and silver “markets” prove that gold and silver’s value is so little.
Sooner or later, time will prove that.
– 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.