Last night did not go that well as we saw constant pressure on the precious metals throughout the night:
Constant, steady pressure to the downside. This is in light of “Rocket Man” comments, many Floridians still without power as 3 new threats are swarming in the Atlantic, Venezuela pricing oil in yuan, bitcoin erratically, Syria heating up again, and any number of “pick your poison” doubleplusbad fundamental news. However, we knew this would happen, which can be seen in the following ominous chart for silver:
When we look at silver, we see there is some minor support around$17.15. Major support is at $17:
Let’s hope we really don’t fall through $17 at this point, though we are quite certain the cartel will push as hard as possible on price to the downside over the next two days. Once $17 is lost, there is no consolidation anywhere on that daily, and momentum would most likely carry the white metal even lower, so a $16 handle before 2:00 p.m. EST on Wednesday is where they will indeed try to push the silver price down to. If there was a great time to scrape-up some extra cash and grab the change jar to put in an order, it seems like the best time would be over the next two days.
The MSM and the Fed are still in lock-step, singing to the same tune, and cheer leading the “everything is awesome” meme. Come Wednesday afternoon, however, this could all change, and there could serious move in the gold and silver “market”. The MSM feels the Fed can do no wrong, but the Fed has zero margin for policy error, and on top of that, if Yellen has a Freudian slip, the movein gold and silver prices could be violent to the upside.
Let’s see all the different scenarios that could cause a big move in the markets:
- No more balance sheet reduction talks
- Talk of balance sheet expansion
- Talk of “hurricanes” which will be combined with over-use of “transitory”
- Rate Hike
- Rate Cut
- Comments on bubbles or equity valuations
There are more reasons than that, but you get the point. The Fed is already juggling six balls, and Yellen can’t give the illusion that she’s a juggler behind closed doors this time. Perhaps there is a journalist who prefers honor, integrity and duty over the MSM rag he or she works for, and that journalist will ask a real question at the risk of being Pedro Da Costa’ed?
For now, however, the markets are assuming an interest rate hold. If there is any movement in interestrates, there is a slight biased towards cut, but it is basically as it has been for months now, at least according to CME Group probability:
And if things look downright scary in silver, gold looks queasy at best:
Gold has been dealing with the latest assaults all week long. On top of that, is is more likely that silver will finally catch-up to gold on the analog, which we have been rooting for over the last several months, or is it now looking more like gold will catch-down to silver?
There is support at $1300, but by no means would it be called “major support”. Sure, it’s a nice number and everything, but gold could blow right through it to the downside, just like it did to the upside. If that is the case, are we talking about $1260? To catch down to silver, gold would have to drop in price to $1240, and that is assuming silver stays put, which it most likely will not.
That surely would be a punch in the face if gold peaked out at $1362 that Friday and ends up $100 down or more going into FOMC, though I wouldn’t put it past the cartel to dump as much paper gold as needed to get it there. Palladium looks like it may have found a short term bottom:
That’s a big bullish engulfing candle overnight and into the morning. Copper’s is big too, but so far it’s just a jumbled trading range. It looks like copper is going to play some ping-pong between $2.90 and $3.00.
If palladium and copper move up over the next couple days, but gold and silver move down, we will know the pressure on gold and silver is more important than ever to the cartel. We will be watching this closely.
Crude looks to be catching a bid:
We brought up the fact that sooner or later, crude oil and copper would converge on the charts, and it looks like they are both content with finding the middle ground. Crude’s push started before copper’s fall, and as people acclimate to a post-hurricane rebuild mode, that’s when things will get really interesting on those two charts.
Copper and oil can also serve to be a gauge on inflation since we know the official statistics are propaganda, the Fed is determined to devalue the dollar with their 2% per year “inflation target”, and the US dollar has been weakening all year. It is time to start looking to more reliable indicators to understand what is going on with inflation rather than what we are told by officialdom.
Speaking of a weak dollar:
It would not be surprising one bit if the dollar looks like it is moving, but really it’s just churning in place waiting to see what happens on Wednesday. If that churning turns into a monkey hammering, however, that would be our first clue that there is uncertainty in the markets far beyond what the VIX is telling us.
That downward sloping channel is no joke. A weaker dollar means we are about to pay more for everything. The questions is, if President Trump and Mnuchin want a weaker dollar, will the Fed comply and just let it fall?
Or the 10-Year Treasury for that matter, because the signals from VIX are muted, and the massive jump in yield in the 10 year looks to be running out of steam:
The VIX saw a bunch of movement back in August, but over the last several days, VIX has been slowly drifting lower again because the central bankers have saved the world.
There is, however a curve-ball thrown into the mix this week:
The effects of Hurricane Harvey and Hurricane Irma must not be under-appreciated. The Fed knows this, so they are busy working on their bullet points and canned answers to any Hurricane related questions form the press.
On the other hand, it’s quite possible the MSM has been scripted to allow only the most softest of softballs on the topic. The Fed will be working overtime, however, and bringing in temp economists from other central banks to help
cook the books crunch the numbers.The problems arise, however because they have hard deadlines, and there are four housing market reports coming out before Yellen sits front-and-center.
The script for Wednesday’s theatrics was probably written months ago, but with Mother Nature coming in and throwing some hard questions where the “press” will not, rather than a policy error, there could be a serious “fundamental error” due to their rustiness on multiple hurricanes wreaking havoc over huge swaths of the United States.
So Yellen will be walking a tightrope, and last we checked, her balance is not that good.
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