It’s nice to see a volume spike on the bid side for a change:
We have been saying for weeks now, and probably sound like a broken record, that sooner or later the open interest has to come down. There are two ways it can come down, by a brute force paper dump and then the bullion banking cartel, also known as the commercials, step in and buy back all those contracts they sold short.
The other way is just to buy them back, which would drive the price up in a “short covering” event. We’ll have to see what happened to the level of open interest to start to see if the banks are covering their shorts.
The cartel has tried to smash all week, starting on Sunday night at 10:30 p.m. EST, but each time the dip has been bought:
And then the surge into the afternoon happened. We were reluctant to put out an article, because looking at the chart above, the last time gold hit $1290 – BAM! That was on Wednesday and it got knocked right back down.
Although the precious metals have held on to their gains into the close:
Gold and silver faded the move but started turning up again late in the afternoon.
Not helping the cartel is a US dollar that is breaking down:
We are not even going to post the inverse head-n-shoulders pattern because it’s a done deal. We are now at 93.666 on the chart.
A chart of the US Dollar/Japanese Yen shows similar breakdown, meaning that the yen is strengthening against the dollar.
So a combination of a weakening dollar, and strengthening yen and any short covering would be a step in understanding the rise on the day.
Because it had nothing to do with “fear”:
The VIX has actually fallen for two days in a row nad is now below 12 (though still above the 200-day moving average).
But back to the metals, individually.
Things are actually starting to shape up nicely on the silver weekly chart:
That’s a fairly respectable bullish candle, and it really highlights silver’s resilience. Silver has put in a second higher-low on the weekly. We are now back on the right track. A weekly close above $17.45 and we will have put in a second higher-high.
Gold is also looking decent on the weekly:
In the cartel’s ultimately futile attempt at holding gold back, it is nice to see that the volume is still very high. For a second week in a row the yellow metal is up with a respectable bullish candle. Again, all things considered.
Though we end the week with our chins up, there is the nastiness of the moving averages to deal with because the cartel is desperately trying to smash both gold and silver through to the downside.
But it wasn’t today. Both gold and silver, on their surge in price today, finished above the 50-day moving averages.
And it’s starting to look like things we want to see:
Shown on the GSR above, the number of ounces of silver it takes to buy one ounce of gold is now under the 200-day moving average.
Palladium may be reversing the down move over the last several days:
Palladium is up nicely on the year and all of the action on the chart is bullish. Those are nice, healthy pullbacks one wants to see which are the sign of a healthy bull market.
Platinum may be finally showing some signs of life:
On the daily, there is confirmation that we are on track is that there is now a bullish trend underway. Platinum has been under severe strain lately, but today the metal surged and gained more than the other three (up $17.60 or 1.88%).
Everybody is doubting this oil rally:
It stands to reason that the bulls would “climb a wall of worry”, because that is exactly what we did in early 2016 after gold & silver resumed their bull market super-cycle. What will it take before crude is declared in a new bull market? A close above $58 on the daily would certainly add another rung to the ladder.
Copper found support at the level we called “minor support” earlier in the week:
If copper can stay above the psychological support of $3, then this will be even further confirmation that the commodities bull market is under way.
A commodities bull market means inflation is about to run hot as the input costs of basically everything goes up.
The Ten Year Note yield is still in the 2.3% – 2.4% range it has been in for some time now:
With Fed Head Williams droppin’ the truth bombs that the Fed may begin a policy of negative interest rates, that yield would be going lower. It has been a common belief that they can’t raise yields gradually anyway. Sooner or later, the bond bubble is going to pop, and the Fed would be forced into a Paul Volcker style hike by the markets.
The Fed and the ESF can control the markets for some time, but not forever.
The Nasdaq didn’t make a new record high today after pulling it off yesterday:
But today’s chart of the day goes to Bitcoin:
After the drop to $5,500 last weekend, the ascent has been near vertical.
Consider this: If Bitcoin is in a bubble (which many feel it is), when it pops, all the Bitcoin holders will yet again need to find a place to go (if they can get out in time) and since none of them like sovereign fiat, we could see a panic rush into gold and silver like no other.
Stack accordingly…
– Half Dollar
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