Silver Tags a 16-Handle Just as Expected, That Can Only Mean One Thing (or Two)
SD Markets Outlook: If we’re on the verge of a new trading range, like the one we just got out of, it’s not going to be fun. Here’s why…
On Friday I said this would happen.
I warned that silver would hit a 16-handle, only I thought on Friday, but we hit it today.
Not many people read the article, so I’ll recap:
A ‘has-been’ trader who has been in the markets for way too long has now become a contrarian indicator. That’s my working theory anyway. I took a lot of heat for it because the guy has clout, and for some reason people still listen to him – but think of it another way: Does anybody really think Michael Jordan could come out of retirement today and keep kicking the young guys’ butts on the court today? Or that Steven Tyler can still carry a tune like he did in the 1970s? What supports my case is that not only is the famous trader somebody I consider a ‘has-been’ in the markets, but he is a stout price suppression/market manipulation denier.
So far after recognizing it, my contrarian indicator is two for two.
So here we sit at a 16-handle in the pre-market.
Enough of looking back. Let’s look ahead.
In the coming week we can see data points galore.
Monday through Wednesday we have soft data, hard data, and lots of housing data:
Has enough time gone by since the ‘greatest tax cuts ever’, that we will finally start to see the housing market affected?
Here’s some fundamental factors affecting housing right now:
- Rising interest rates
- Doubling the standard deduction
- Capping the SALT deduction
All of those factors put pressure on the housing market for prices to come down. It would be wise to start following housing a little more closely as we just now are getting into prime house buying/selling season. The source of the last financial crisis is often blamed on subprime mortgages and the housing bubble, so time to keep tabs on the state of the American Dream.
Thursday through Friday we get two especially important data releases:
Thursday we get international trade data, and Friday we get the first official estimate of Q1 GDP.
I guess the two questions would be: What ammo, if any, will the trade data give to President Trump, and two, will he or will he not take credit for Q1 GDP?
As far as gold & silver price smashes, look for pressure on Friday. While not the jobs number, or an FOMC meeting, the cartel does like to smash on GDP numbers.
We can see that on Friday the gold to silver ratio printed below 79 across the board:
With silver at a 16-handle we’ll have to see what happens with gold. Friday gold closed in the upper $1330s, but if gold takes a trip back down the the $1310s and silver straddles $17, we could see further improvement in the ratio. Things will really start looking up for silver, in terms of the ratio, once we get a close below 76.13. That would show a definitive rollover top in the ratio.
If that is in fact the direction and the direction holds, anybody who bought silver at that peak of above 83 is an absolute genius and I applaud you. That’s like getting free ounces in the long run, if converted into gold when we reach the lower-bound extreme to the ratio.
So like I thought we would, here we sit at a 16-handle:
There are so many ways to read in that chart that it can be summed up in one word: Mixed signals.
OK that was two words.
Regardless, The upper line is $17.20, and we’re having a difficult time cracking it.
The lower parallel line is $17. That is the price we were having the darnedest time cracking for the longest, or, said differently, that’s the cartel’s line in the sand.
Remember the agonizing trading range since January?
Call it $16.20 – $16.80 with an even tighter range at $16.40 – $16.60.
Could we be about to see a new range?
Let’s call it $16.60 – $17.40 with a tight range of $16.80 to $17.20?
I think so.
That’s the kind of control the cartel thinks it has, and does, for the time being. Besides, I still think that once we get above $17.50 and close there, we will be above $18 in a matter of days. I get it, ‘365’ is a number of days, but I’m not talking about a year. I mean like within a week number of days.
Gold is back down into the $1320s:
We lost the support of the 50-day moving average, which I speculated we could on Friday as well. Here’s the thing – We’ve been below the 50-day for so long already, and generally bounding off of it, so I don’t expect to spend much time below it for long.
But to start the week we still have to deal with the fact that gold is down after markets opened up on Sunday evening. Despite the excitement last week, and making 52-week highs the week before that, if gold closes down today, the gold price will be down four of the last six days.
See how this works?
Hard to get excited when you’re down more than you’re up.
But with extreme pessimism there can only be one way to go – optimistic.
We’ll get there.
Palladium is looking to put in its third down day in a row:
“But Half Dollar the day hasn’t even begun”.
True, but that’s exactly where the cartel wants the precious metals to be – ‘down’ prior to the open. It is more relevant to gold and silver, but it is relevant nonetheless.
Crush sentiment while the West sleeps.
But this is all par for the course.
On Friday I threw up this palladium graph:
Palladium is doing exactly what is expected of it from a technical point.
I asked if we were going to see a lesson in Charting 101. We’ll see, but what I’m looking for is palladium to pullback to $1000 then bounce off of the support. Hopefully with a surge higher to usher in the next up-leg.
Platinum isn’t working out as thought, however:
Recall it would have been nice to see platinum set up to test the 200-day moving average for a third time, and in Charting 101, traders like to say ‘third times a charm’. Well, the farther we get away from the 200-day, especially if this draws out over days, the less we can still say we’ve tested it twice, for the immediate term anyway.
We’ll have to see, but platinum has been beat up terribly all year, and if platinum falls below $915 to the downside, yikes!
We’ll deal with that if we get to it.
Copper is treading water above its 50-day moving average:
Anybody who is in the commodities sector, and especially those trading the stuff, have to be in absolute agony with copper. They’ve had it much worse than we have in silver, with no sings of light at the end of the tunnel.
We’re talking a good (read: bad) five months of false break-outs and false break-downs. It’s enough to turn a man’s hair gray in a matter of months, provided said man doesn’t rip it out first.
Crude put in 52-week highs last week:
A pullback and re-positioning from here is warranted. If anybody wants to see what a wall of worry looks like, look at crude.
The dollar is bouncing:
The pressure we are feeling with the metals is in part due to the greenback.
We’ve got the general range on the chart we’ve followed for some time at 89.50 – 90.50. The dollar looks like it wants to tap 91, but I’m not so sure. This may be the best it can muster.
Now, if an “everything is awesome” GDP print comes in on Friday, we could see that level breached indeed. Which is one of the reasons why we must be defensive this week on the metals.
“But Half Dollar, after GDP this Friday, we have the Jobs Report next Friday, so are we just going to be on the defensive forever?”.
Let’s just wait and see how this week ends up before crossing that bridge. Expectations for GDP have come down, bigly, since the always optimistic Fed and government started them out.
I mean, does this thing look like the economy is just booming, with “jobs, jobs, jobs” as our president likes to say:
I mean, yeah, there’s this thing called lipstick, but that doesn’t mean it’s pretty.
The stock market doesn’t look so hot right now either:
We’re frustrated about not getting the upside in the metals that we should be, were it not for the active precious metals price suppression by the ESF and the Fed, but could you imagine if we were stock market bulls?
With the propping of the market by the ESF and the Fed, and still we get that?
That chart would be downright agonizing, like lose sleep agonizing, and if you haven’t had it yet, serious heart bun and indigestion agonizing.
That’s the level that, if breached to the downside, could induce those symptoms listed above.
But wanna see the biggest farce of all:
You have to look real close, as in to the right of the last vertical red dotted line – yup, that is VIX action there.
Nothing but a sea of calm and tranquility and peace and love on earth. I guess that was to be expected after the shortest military conflict ever. The problem is that every time we set a new record, we run the risk of setting detrimental ones. For example, what if the shortest military conflict ever results in the shortest peacetime ever?
Then there will be a boost of uncertainty back into the markets. And that would be bullish for gold, bad for the stock market, and lately, bad for the dollar, because the dollar is no longer the safe haven it once was. Not when it only has the purchasing power of a few cents of what it had when we were on the gold standard, and considering we have a Fed determined to devalue the dollar by 2% per year until it has zero the purchasing power.
Good plan there Fed.
The only problem is that the public is awake and aware, and when the fiat currency crisis hits, the question will be asked as to whether we even need the Fed in the first place?
Finally, all eyes need to be on this chart:
Is this the week we get the yield on the 10-Year Note above the psychological 3% level?
And if it is the week, Is that level price in?
We’re about to find out.
– Half Dollar