The silver chart on the weekly has taken a page from the scariest of horror movies. We know what’s behind the door, and we know the fate it brings us:
When silver finishes making a run on the weekly, bad things happen. Said differently, get ready for the cartel to bring down the hammer on Sunday. Going back three years, we can see that every time that silver has a run-up, without fail, the next two weeks are lower, and more often than not, lower as in the start of the slow, unbearable grind down.
Putting it into perspective, we know that the primary silver miners did not fair well last quarter, but now First Majestic is off its lows and has found support at $7:
This is important because it shows that the smash move in silver is a little on the “too much” side at this point, even for the cartel. We would likely see the miners break down further next week, or a silver rally (which the ominous technical chart doesn’t support) or a silver price consolidation (which has been missing all year).
Just like we said on Monday, however, it was in the best interest of the cartel not to spook the markets, as indicated by the absence of Fed speeches, and the prepping of the markets (a.k.a. suppress gold & silver prices) to close the week exactly where they want them going into FOMC that ends with a Janet Yellen press conference.
This week – It was mission accomplished.
We do note the divergence is just as wide in the under-performance of silver relative to gold as it has been since April:
Both metals were pummeled with a steady barrage all week long. Here’s how it looked in gold:
The cartel was even kind enough to serve up a “break-out fake-out” in gold on Tuesday and into Wednesday, with a spike up in price in evening trading, and overnight strength till morn. It worked, and we totally blew it in our midweek update. Gold is now $37 off the high of $1362 (overnight Thursday into Friday Sep 8th), but things are looking bullish in the technicals. RSI is right smack dab in the middle of the over-sold to over-bought range, and the MACD is showing that gold has room to run here.
We are one Fed policy error away from the next leg-up in the gold & silver bull market, which could come as early as next week. This week, however, the cartel has won the battle and the metals have not just been capped, but beat-down. Seems all too easy with the help of Mother Nature and Man-made Terror on their side, though we can find it reassuring that complacency is a two-way street.
Platinum took it even worse than gold, with a drop some $60 off the highs, and while at first glance it appears we have another ominous sign, what we could really have is a short-term bottom in the precious metals, further supporting our next leg up thesis:
Just like gold, the RSI is very healthy, and that MACD looks to be signaling the bottom is in. This weekend will be an important one on the fundamental side. Certainly the Fed would love for the metals to take it again on Sunday night, especially since they are slashing their “forecasts” for GDP. Here’s the NY Fed droppin’ bombs on economic growth:
And Atlanta is not so sure anymore either:
Copper has been in the funk for 6 of the last 7 days:
The base metal is right at a major support line at $2.90, so it would be expected to tag it and (hopefully) bounce cleanly. The daily is looking like everybody who wants to sell has sold, so we shall see. Crude oil broke through $50 this week, and the trend is pointing to higher oil prices:
Either way you pump it, crude has finished the week up for the second week in a row, and the trend line is slowly forming since the $26 low in early 2016. If crude crashes through $45 to the downside, it may very well be the start of another trip down, but the tell-tale sign of higher-lows is in place, and while it is not easy to see on the chart, WTI just closed out the weekly with a higher-high. A weekly close somewhere north of $50.50 would not leave much room for doubt. In the meantime, we wait and see. The dollar looks to be rolling over now:
We have been warning about this all year long. Though it is not necessarily the dollar index that is problematic. Notice the US dollar/Japanese yen (USD/JPY). The divergence on the daily is getting wider, and either the dollar is going to catch up to everybody’s favorite FX carry-trade (which nothing signals it would), or the Japanese yen is going to strengthen against the dollar. If the yen strengthens to close the divergence, gold & silver would likely spike in price rather sharply when all other fundamental and technical data is placed into a Japanese currency wrapper. The Fed knows this, so we can only imagine the Fed and the Bank of Japan are sweating bricks to keep the yen from strengthening and providing the fuel for the precious metals fire.
Strange things are af00t at the 10-year yield:
Nothing about the yield on the daily chart say “higher interest rates”. and while the yield on the 10-year US Treasury Note has been slowly grinding lower all year, notice what happens when it picks up speed. If the yield rose from 1.54 to 2.62 in less than three months, things could get very nasty in the markets from here until the end of the year.
Drops in yield are bullish for gold & silver, though we would argue there is not much interest rate related smashing that could occur even as rates rise. The real rate of inflation on the things we spend our hard earned fiat on every day is negative, and the Fed has been behind the curve for so long, the rear-view mirror just fell into Yellen’s lap and Kashkari didn’t even notice because he was too busy changing the CD in the old Dodge Stratus to jam out to “We Built This City” by Starship.
What more is there to say about the stock markets?
There’s a new record high on the SPX yet again:
If the Fed would love nothing more than to smash the precious metals up to and through their FOMC rate hike “decision”, they might not necessarily have wanted this melt-up in the stock market. Are the markets too complacent in thinking the Fed is going to hold next week? Or is the Fed going in and buying SPX via their dark pools to run it up just before pulling out the pin next week? While yes, the markets are at record highs, it is getting harder and harder what to make of it. We were confident this was coming with the VIX hysteria following the North Korea threat of several weeks back, but at this point they may must want to tap 2500 and call it a year.
Wouldn’t you know at 3:59 p.m:
Talk about a sick joke.
Bonus Chart: Bitcoin’s favorite jam is “Wild Thing” by Tone Loc:
Though all is not well in China…
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