Gold & Silver Make A Movie: Groundhog Day The Never Ending Sequel
SD Friday Wrap: Gold & silver make a movie. Just don't expect it to win any Grammy's because it's a terrible movie. Here's the official review...
Editor's Note: This SD Friday Wrap was started at 1:45 p.m. EST and does not include any market action after that time.
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The bad thing about Groundhog Day is that it wouldn't be so bad if we were bulls on, oh, say, U.S. equities.
That's the kind of Groundhog Day you want.
Nothing but unicorns and rainbows as far at the eye can see, and steadily rising paper wealth. Yippie!
But this?
Not the kind of Groundhog Day you want at all.
I'm not going to call it sheer torture, because with all due respect to to sheers, It's more like butter knife torture to the bottom of the foot.
Didn't see that one coming, did ya?
I guess I'm a little goofy because I really have no energy left to be angry, which I guess is a good thing because I'm sure maintaining a constant state of rage isn't good for the body.
But I digress.
Crude oil nearly hit $70 today:
You want to talk about a bullish looking chart!
Crude has put in a "golden cross", but it's not the short-term moving average, but more long term, call it "intermediate term" even though I hate that term.
Said differently, the price of crude oil over the last 50 weeks is now higher than the price of crude oil over the last 200 weeks.
That means rising prices.
Also, we have to go back to that big drop-off in November of 2014 to find a higher crude oil price. And since the weekly candle from back in 2014 is pretty long, that means there's not much resistance once we punch through $70.
We'll be in the upper $70s faster than you can say 1970's inflation.
And we all know what a rising crude oil price means?
Yup.
Get ready to pay more for everything.
Except silver.
Get ready to pay less for that.
Back on track: This crude strength is in spite of a surging U.S. Dollar.
So imagine those two converging forces for one second: First we have a psychological level of $70 that, once breached, does not have resistance until the upper $70s, and secondly, we have a U.S. dollar that's poised to start falling again.
Wow.
If the lack of resistance is the sports car's engine, then the falling dollar will act like the car's engine is equipped with a turbo charger.
Got boost?
Like I said, no sense in starting the weekend angry, so we might as well start it out with some goofiness.
Copper is nearly finished with this wedge thingy:
There's not a whole lot of days until we're near the end of the wedge. We should be there by the end of next week.
Copper could either break-out or break-down, because we've got a "death cross" that could be put in if price keeps dropping, but we also have a rising 200-day moving average combined with a U.S. dollar that looks overbought as you will see when we get to that chart.
So If I we're a bettin' man, I'd say copper is more likely to break-out than break-down.
Besides, there's that whole "most of the silver comes to market in the form of a bi-product from base metal mining" which means the cartel will want to step in and put a floor on copper less they risk a lesser amount of silver making it to market.
Theoretically, we know what that means, and sooner or later, supply and demand will matter.
Since we've been referencing the dollar, let's go ahead and check out the daily chart of the Greenback:
On Tuesday the dollar punched through the 200-day moving average. If the dollar looked overbought before, it really looks overbought now. Up 11 of the last 14 days, remember the words of wisdom from this guy was (whoever the heck he was): "The markets can stay irrational longer than you can stay solvent".
So If you haven't done that spring cleaning yet, held a yard sale, a bake sale, a lemonade stand, or gotten your kid to cut somebody else's grass to teach him the importance of saving in the shiny phyzz, now may be a good time to think about it while the getting's good for a (relatively) strong dollar and a cheap precious metals price.
Wanna see a farce?
Check out the VIX:
Looks like the cartel got a little too ahead of themselves and sold a little too much volatility.
We'll come back to the VIX when we look at silver, cause ole Half Dollar's got a new workin' theory.
Oh yes he does.
The yield on the 10-year is right in the middle of its new range:
I gotta tell ya though - The yield looks like it could be headed higher from here.
We'll see, but those higher-lows and higher-highs are clearly indicating a bull trend.
Here's the problem, however: The mainstream financial press and pundits take the data and says things are great, and so the Fed will be hiking rates, but the real financial press takes the data at face value and realizes there are many problems in the economy right now, and doesn't see how the Fed can hike into a weakening economy.
Me?
I don't think the Fed, and I get it - the 10-Year Yield is not something the Fed controls (overtly), will just gradually return to whatever the "new normal" is. I think that if there's going to be a walking of rates, it's going to be walking them back down, because in a market where the hand of manipulation has resided daily for decades, returning to normal is not something that can be done with any kind of methodical incrementalism.
Yeah, I just said that.
It's the new "irrational exuberance" for the 21st Century and you heard it from ole Half Dollar first - "Methodical Incrementalism" - the stupid notion that the governments and the central banks around the world 'got this' when what they really have is not a clue to the monster they've created and the destruction and mayhem that monster's gonna wreak.
And since we know that governments and central banks around the world are not going to starve the beast, even though they should, they're going to have to take out their malevolent creation in the bloodiest of ways.
Translation: Since we know that governments and central banks around the world won't stop interfering in the markets every second of every day and just back-off and let the markets sort themselves out, we're going to face even worse financial dislocations and hardships than we otherwise would have the longer governments and central banks around the world keep manipulating the markets.
Speaking of which, the Dow gained some 350 points today:
I know, the chart looks bearish, and it is.
The Dow is bearish because it's nearly lost it's 200-day moving average, and that series of lower-highs and lower-lows is alarming, but I'll make it look government and central bank goosed for us.
That's better for the face other wise known as "price action":
Check out that tick-by-tick.
Of course, HFT's plug not just into the uber-expensive Bloomberg Terminal to algorithmic-ally parse news and press releases to front run the masses and trade back and forth with each other, but they also plug into and feed off of Twitter.
So this helped give the markets the boost they needed to bounce high off of the 200-day moving average, even as we were at risk of losing it just yesterday -
First, the overnight Dow Futures prep work:
Because Jobs in the U.S. are doing so well, Americans receiving unemployment aid is the lowest since 1973. Great!
- Donald J. Trump (@realDonaldTrump) May 4, 2018
And secondly, the post BLS Jobs Report follow-through:
JUST OUT: 3.9% Unemployment. 4% is Broken! In the meantime, WITCH HUNT!
- Donald J. Trump (@realDonaldTrump) May 4, 2018
See how it works folks?
MAGA (if, you know, the stock market's your thing)!
Rant on -
If anybody wants to know why at times I seem critical of President Trump, it's because, well, he understands money:
And he understands gold in general, but he doesn't understand the Constitution?:
And to any other American who doesn't understand what is required of us, Article 1 Section 8 and Article 1 Section 10 combined require fixing the standard of weights and measures under a bi-metallic gold & silver standard, and the Coinage Act of 1792 defined the various units of the dollar in fixed weights and measures of gold & silver as we are required to do.
So President Trump knows what is money, and he knows enough about history to do the right thing, yet he doesn't.
I know, "You gotta follow the plan Half Dollar".
Here's the thing: I once new a gal who was planning out her life because she wanted to have children. She was going to graduate college, get a job, then a car, go to grad school, graduate, get a new job, get married, buy a house, get her doctorate, get a better job and a luxury car, and then have a child.
But here's the thing about plans (or kids) - There is never the perfect time. What do they say about going to the bathroom or getting off the pot?
Seems pertinent here.
The one thing, more than anything, that will put our nation back on track and truly MAGA is repenting of our first, original renege of the U.S. Constitution.
But since no one will do that, and that goes for our President with his executive powers, well, the USS Titanic is going to sink
- Rant Off
Let's move on to the precious metals.
As ugly as things have been for platinum, it looks like platinum wants to turn bullish:
If that low from December doesn't hold, however, platinum is going to be in for a world of hurt.
Palladium looks like it's about to be in a world of hurt:
That's a death cross that's formed on the daily chart for palladium.
And we still have a whole five weeks before the next Fed FOMC Meeting and potential rate hike.
Ugh.
That' a lot of time to put a lot of pressure on the metals since, you know, everything is awesome.
Speaking of what is truly awesome, once the gold to silver ratio starts coming down, the 'ounce multiplier' will be in effect:
Connecting the 83.21 intra-day high to the low of yesterday, that's a clear sign the GSR should trend lower.
I know, "We've been hearing that for months Half Dollar".
Yes, we have.
Gold is now down for the third week in a row:
We've got technicals on the weekly looking bearish too. From a bearish MACD to staring down a drop below the 50-week moving average, we really need the yellow metal to turn North in a hurry.
On the daily, we can see that gold isn't even in the range we've been following:
We really need to get above $1320 in a hurry as well.
Yet here's a positive thought: What if the next time gold arrives at the upper end of the channel, we get the break-out we've been waiting on forever and a day?
Ok - that wasn't a thought, it was a question.
But it was rhetorical, and you get my point.
Call the overhead resistance of the channel at $1350, because that's the level we really get pounded down from every time we breach it, but we really need to get above $1380 and take out the 2016 Brexit intra-day high to make some real progress.
So we'll have to see, but for now, we just need to get back into the channel before we can test resistance, provided $1320 isn't the new resistance.
Double ugh.
Silver has completely flat-lined:
I mean, on the weekly chart above, there's just nothing to it since late 2016.
Actually, there's something to it - there's a quagmire of moving averages, slightly sloping downward, one right on top of the other, and the Moving Averages Convergence - Divergence (MACD) below (highlighted yellow) shows there's no convergence or divergence to speak of.
And that is why I'm bringing the VIX back up.
Check out the VIX weekly:
The VIX's moving averages and MACD were basically flat-lined too.
Remember, there's a basic three-pronged attack used by the cartel to manipulate the markets.
Buy the stock market indicesSuppress volatilityNaked short the crap out of gold & silver, and then naked short them some moreWell, after getting the VIX to spend a bunch of time flat-lined just under 10 last year, at one point, the suppression was just too much to maintain, the "short vol" trade was just too one-sided, and as a consequence, volatility literally exploded higher.
We know what happened to the stock market as well.
The stock market was not able to maintain the 45 ? angle it's been on for years (ignoring the sideways action in mid-2015), and everybody was uber-bullish and one-sided on the trade, as in "to infinity and beyond".
Heck, there was even a time I thought we would be staring down Dow 50,000 this year.
But notice the theme - Each prong was extreme and totally one-sided, and when everybody was betting on the same thing, and since everybody has to be wrong most of the time, sure enough, in the stock market and in the VIX, the trend changed and went in the opposite direction.
So let's see here - if the cartel is having a difficult time suppressing volatility, and if they are having a difficult time keeping the markets on their never ending bull run, then what does that mean for gold & silver?
And if everybody is bearish on gold & silver, with the exception of me and maybe a few others, and everybody is on the side of the metals are going down in price.
Hmmm: It kind of makes you wonder.
Two of the three prongs have blown-up.
Wouldn't the metals, being an integral prong on the three pronged approach, have to blow-up too?
Especially silver?
The longer this flat-lining continues, the more explosive the move will be to the upside.
And just when you thought the pain in the charts was over.
BAM:
Half Dollar throws-up a Silver daily chart.
I need to remind everybody that we're right smack dab in the middle of our tight range.
Recall we are in two channels at once. You can think of it like a dual-band router.
There is the broad range of $16.20 to $16.80, and there is the tight range of $16.40 to $16.60.
And where is silver right now on this beautiful Springtime Friday afternoon?
Yup - $16.50.
The hubris in the cartel for the control it assumes is forever.
They will not be able to control silver forever.
Not even for much longer.
Stack accordingly...
- Half Dollar