Gold & silver really need to rally this week.

It really boils down to one word: Momentum.

My call has been for the rally to begin this week. However, if the rally doesn’t begin this week, I feel we can kiss any hopes of a rally goodbye until the second half of June.

Why?

Well, much of it has to do with next week.

You see, U.S. markets are closed next Monday for Memorial Day.

Point one: The cartel loves to strong arm the markets on holiday shortened weeks.

And if that were not bad enough: Next Friday is the BLS Jobs Report.

Point two: The cartel loves to smash the metals on Jobs Friday.

Moving past next week, we have a week of pain, which would lead us into the second week of June, and that week culminates with the FOMC (presumed) rate hike and Fed Head Love Fest (otherwise known as MSM press conference after the statement).

What does all of this mean?

If we don’t rally this week, we have almost no hopes of rallying next week, and the MSM will be all over the Fed in the week leading up to the FOMC meeting. That means we have to deal with the whole, “the economy is awesome, rate hikes are good for the dollar and bad for gold” memes.

We’ve gone over that a million times as to why rate hikes are not bad for gold, but I digress.

We really need to rally this week, or it will be three more weeks of pain.

And there’s plenty of economic speed bumps and potholes to navigate around this week.

To name a few:

• Lot’s of Fed news including the minutes from last month’s meeting and a Fed Head Powell speech on Friday
• Tuesday COT Report ‘repositioning’ and metals options expiration
• Real estate data (new home sales & existing home sales)

The point here is that we have our plate full, and perhaps you have heard the old cliches – “sell in May and go away”. That’s generally a stock market term, but it looks like it could apply to the metals this year.

There’s also the term “summer doldrums”.

Ugh.

If there’s a bright spot, it’s that the metals have consistently rallied coming off of FOMC rate hikes, which next month is on June 13th, 2:00 p.m. EST. There’s no reason to think the metals won’t rally in a “sell the rumor, buy the news” fashion again.

And if the Fed doesn’t hike, well that’s good for gold too.

There is also the possibility that traders could front-run all this economic data and news, and if that’s the case then the metals could begin to rise before the FOMC, but I’m not holding my breath.

Let’s just see how we get through this week. We’ll know how things are by Friday that’s for sure.

So we’ll just have to see.

Bottom line: If we begin the rally this week, we get momentum, and if the rally gets put on hold, or if the metals have another bad week, then the cartel will firmly have the upper hand.

The dollar punched through 94 in the overnight session:

A strengthening dollar will surely act as a headwind for gold & silver.

But geez, how long is the greenback going to remain “overbought”?

It just keeps going, and going ,and going.

We’ll be watching the yield on the 10-year for insight:

We will be starting the week above 3.0%.

That’s new, and we’re about to see just how priced-in higher rates really are.

If the stock market it any indication, it looks like Wall Street is not liking the higher rates:

The S&P 500 looks like it could be rolling over.

Which is interesting, because the stock market even has the help of a newly subdued VIX:

Volatility has faded the move ever since the “Volpocalypse”, and we’ve been below the 200-day moving average for days now.

Interestingly, copper rose in the overnight session:

You see, the commodities and the dollar generally move in opposite directions – known as “inverse correlations”. If the correlation still holds, one of them is wrong. I’d say the dollar, because all indications are for a weaker dollar, and if it’s the dollar that has it wrong, we would see it breaking down soon. Especially if the commodities are going to keep rising.

Crude oil has been rising with the rising dollar, but crude has basically gone nowhere for three days:

Again, either the dollar or crude oil has it wrong – so it would be safe to assume a pullback in crude as the dollar continues rising, or a rise in crude with the dollar finally rolling over.

Palladium showed a little strength overnight:

This is nothing to write home about. We really need to see palladium working away at the moving averages, getting the 50-day rising again to cross up and through the 200-day.

But if platinum is a taste of what’s to come, it’s tasting very sour:

Whereas palladium rose in the overnight session, platinum has fallen in the overnight session and looks to be setting up for the seventh down day in a row.

Platinum is fast approaching oversold territory, but if platinum loses $872 to the downside, that will look very bearish and it could get a lot more oversold before it’s through falling.

Looking to the gold to silver ratio, we can see the top is clear:

That’s a textbook roll-over in progress. We now have 78s across the board.

I get it, it’s for the wrong reasons, but on the next rally, if silver finally begins to lead gold, then it will be for the right reasons, as in silver outperforming gold.

Gold is now down over 1.5% year to date:

Looking like it wanted to pivot over the last three days, we can clearly see the bearish candle that has formed in the overnight session.

If there is good news, gold is at risk of becoming “oversold” on the RSI.

You see, the dollar is screaming “overbought”, and gold is about to enter “oversold” territory.

Can it go on much longer than forecast?

It already has, hasn’t it?

At least the dollar anyway.

So we’ll see. Perhaps a flush out day with a drop below $1280, call it $1275, is just what we need to jump start this rally?

Silver is down nearly 3.7% year to date:

Again, this is not what anybody was calling for at the start of the year. Well, anybody except the haters, trolls, mainstream financial media and cartel.

They have succeeded thus far.

And we’ve had to endure half a year of pain.

What do we want to see from silver this week?

For starters, we need to get above the 50-day moving average on the quick, and then get above and close above $16.80 where the 200-day moving average is. Close above the 200-day today, tomorrow, or Wednesday, and breaking out above $17 with a close on the week above $17 is critical going into next week..

Let’s also look for some volume coming back in the market on that type of price action.

If we can get above $17.50 and close there, we’ll be above $18 in no time, and I get it, “Half Dollar, that’s only like a buck or a buck-fifty from here”.

Yeah. In the grand scheme of things, pretty pathetic.

But that’s the type of year it has been, so I’d take closing out the week above $17. Anything more would be a bonus.

We’re right at a critical point in time right here, right now, in this very week.

If we rally this week, we will have momentum on our side.

Momentum can be a powerful force in markets.

If we don’t rally this week, I will be wrong in the forecast I’ve held for weeks now, and the cartel will have the calendar and economic events on its side, and those are very powerful forces in the markets too, especially when those forces are at the fingertips of agents who stand at the ready to click into existence as many paper contracts as necessary to cap price.

This week will set the tone going into summer.

It’s make it or break it week.

Stack accordingly…

– Half Dollar

SilverDoctors.com has been on the leading edge of Gold News and Silver News Since 2011. Each month, more than 250,000 investors visit SilverDoctors.com to gain insights on Precious Metals News as well as to stay up-to-date on World News impacting the metals markets.

Special thanks to silverdoctors.com for this content: Visit them at silverdoctors.com 

 

I’d like to direct your attention to Wednesday and Thursday of this week’s economic events calendar:

On Wednesday we get PPI data and on Thursday we get CPI data.

PPI is the Producers Price Index. That is the change in price of what it costs to produce goods and services. Buying aluminum and turning it into cans would be a good example of the PPI, seeing as how the whole “trade wars” mantra is a hot topic right now, even if so far it has been nothing but talk. The point is if the cost of raw aluminum goes up, then the cost to the producer in making those cans goes up too.

CPI data is the Consumer Price Index. That is the change in price of the good and services we pay as the consumer. In our aluminum example, we don’t particularly care about the cost of aluminum. What we care about is how much a 12 pack of Coca-Cola costs. In other words, the CPI is what we pay for finished goods and services.

Besides, there’s more than aluminum that goes into the cost of a 12 pack of Coca-Cola. There’s the cost of the sugar, the super secret formula, the caffeine, the diesel to transport it to the store, the cost of the card board, the cost of the marketing, etc.

But it all comes down to one word: Inflation.

That’s the topic.

And for the longest time, the talking heads at the Fed and the pundits on the mainstream financial outlets talk about “inflation expectations”. It’s a misleading term, because there is always inflation (as in rising prices in this discussion). I mean, the Fed’s own definition of “price stability”, which hasn’t changed since the changing of the guard to Powell, is 2% inflation per year.

Said differently, the Fed wants you to lose 2% of your purchasing power, per year, in order for prices in the nation to be considered “stable”.

But Inflation expectations is a term that is about to be quickly forgotten.

Why?

Well, it’s going to be modified to no longer include the modifier “expectations”.

That’s right.

It’ll be know as plain old “inflation”.

Which brings us to our first chart:

Light Sweet Crude.

And it just breached $70 overnight and into this morning.

Look where we were not even one year ago – $42.

Folks, I’ve been harping on this for a while – get ready for higher prices.

I’m no longer going to say that, because rising prices are here. There’s no need to get ready because it’s already felt in the wallet.

Here’s an example – There’s this bread outlet right by where we live, and they sell loaves of Wonder Bread for $.79 (no not expired, just excess I guess). Well, they did sell the loaves for $.79 until last week when they raised the price to $.99.

99 is the new 79, and it’s not going back down as far as the casual conversation led me to believe.

And I have a point to make here: If the consumer is tapped, and if the prices of the most basic of goods is spiking by 25% here, 20% there, or pick an number, but not sub 2% because that’s definitely not high enough, then what does that tell you about the middle and lower classes?

Heck, what does that tell you about 80% of Americans?

They are already feeling the burden of rising prices in their pocketbooks.

I was in the grocery store yesterday, and I felt bad, because there was this elderly couple shopping, and they were looking at sour cream. The lady had a calculator, and long story short, they had to pass on the sour cream because it would have put them over-budget on food.

That’s how bad it is out there.

What used to be an afterthought is now front-and-center, and at any given moment at any given location.

Back to the markets.

This crude strength, again, is in spite of a still rallying U.S. dollar:

A few weeks back I said if we breached 91 we’d be going to 93. I do think 93 will be the top in this bear rally.

We’ll see.

Either way, were right there, right now, so it won’t take long to find out.

Why do I talk about crude in relation to the dollar?

Well, generally speaking, they move opposite each other:

That’s a weekly chart going back to the time when crude dropped and the dollar began to rise.

But notice what has happened in the last several weeks.

The dollar and crude have been rising together.

That’s telling you that one of them is about to diverge.

Here’s a question – If a rising dollar is crushing U.S. exports, and if there’s a “trade war” coming, and if President Trump flip-flops from being a “strong dollar” guy to a “weak dollar” guy, and if the strong dollar has been crushing the rest of the world and especially emerging markets and their ability to service debt, and if the dollar has been on a bull run for five years now, which one do you think will diverge?

I think the dollar.

As in breaking-down.

And crude will begin its bull run.

We’ll see.

While we’re on the topic of inflation, well, this:

For now let’s assume the statistics from the Fed and the government are real and true.

If inflation is rising, the yield on the 10-year is going to have to get moving higher.

Why?

Because investors expect to earn a rate that is net-net above the inflation rate.

I get it. In reality, in parts of the world, there’s negative rates, but I’m talking fundamentals here.

Fundamentals may not seem like they matter, but they will.

They always do.

So we have upward pressure on rates due to inflation, but we also have upward pressure on rates due to massive government borrowing, close to half-a-trillion in the first quarter of this calendar year, and we have a Fed that’s not actively buying U.S. paper, which means the U.S. needs to sell even more treasuries to pay off the maturing treasuries of the Fed.

And to think – interest rates aren’t even anywhere near normal. They’re still very historically low.

Forget a thunderstorm. Between inflation and interest rates it’s going to be like an exploding volcano, with an incoming tsunami and an earthquake all at once.

So while it may not seem like it, yes, gold and silver will rise in price.

It seems like silver never will:

So for those who understand the bad juju of saying “never”, let me say it – silver will never rise in price.

There.

Rally should begin very soon.

I’m done saying when.

Remember, you can get price or you can get timing but not both, and right now, I’m focused on price.

As in, what I have said all along is I feel that once we get a close above $17.50, we’ll be above $18 in a very short time. Do I know when that will happen?

No. I mean, I think it will be within days, but it’s very seldom price and timing can be correctly forecast.

And we just really need to get above $17.50.

Being in this $16.20 to $16.80 range sure does give tunnel vision, doesn’t it?

Ugh.

Gold isn’t doing much better than silver right now:

But corrections occur over price and/or time, and as the days go on, gold isn’t really losing too much ground, but it sure is grinding out over time.

January 25 was when the December rally fizzled, and we’ve basically been in a sideways fade ever since.

We’re still positive on the year, however.

And the gold to silver ratio is still saying silver is a steal here:

The ratio may be under 80, but it’s about as barely under 80 as can be.

But that’s the thing.

We have inflation all around us, yet the forceful hand of the cartel is refusing to let the metals rise even in the face of that inflation.

Sooner or later, they are not going to have a choice, and the move will be violent in order to catch up.

Because it is very expensive to get gold and silver out of the ground and to market. Think of the PPI. It takes a lot of costs for different things to be able to get silver from encrusted below the earth’s surface to minted it into a coin.

So they will rise in price, and the longer the cartel refuses the price movement, the more violent the spikes will be.

It may be an extended smashing out of spite, you know.

Because if gold and silver are the anti-stock market, that is, the anti-paper markets play, and if the cartel is having the hardest time keeping the broader stock market indices propped, then it stands to reason that they go down kicking and screaming and pulling gold & silver down by the hair like the punk the cartel is.

Check out what we see in the two other precious metals.

Palladium is slightly positive in the overnight morning session:

Palladium is more of an industrial metal than a monetary metal, even though it is monetary, but, could we be seeing the signs of a rally forming?

With an understanding of the inflation dynamics we’ve been discussing today?

Platinum is even playing along:

Of course, platinum has had a horrible run of late, with four lower-highs and four lower-lows, so we really need to see platinum turn the corner.

Today would the the third up-day in a row, and would help out immensely to got the technicals looking more bullish.

Here’s the spite I was mentioning earlier:

That’s the S&P 500.

But here’s the thing – it’s already had inflation. MASSIVE inflation. It’s funny, the Fed sees no inflation, yet the stock market doesn’t count.

But it’s had too much inflation, and of the artificial, money-printed and induced variety.

And if there is one thing that is as true today as it has been ever since the word “fiat” became a thing – you can’t print prosperity.

So the market is too expensive, overvalued and wanting to come down, regardless of the cartel’s intentions.

And besides the fact that they’ve managed to keep volatility in check:

But the sea change has begun.

While it starts out slowly, by the time it crashes on the beach, it will be a tidal wave of inflation.

And while the dollar may look strong, and it may be giving false signals on the outside, because people need and want more dollars to keep up, even if they don’t understand what they’re keeping up with, we do: Inflation.

And sooner or later the people will realize it’s not the dollar that’s the solution, but rather, it’s the dollar that’s causing the problem.

And then they will want something, anything that’s real, before those dollars lose even more value.

And it’s only now just begun.

Stack accordingly…

– Half Dollar

SilverDoctors.com has been on the leading edge of Gold News and Silver News Since 2011. Each month, more than 250,000 investors visit SilverDoctors.com to gain insights on Precious Metals News as well as to stay up-to-date on World News impacting the metals markets.

Special Thanks to SilverDoctors.com for this contribution!

There’s difficulty on the fundamental front.

On Wednesday, we get double-smash potential:

We have the May FOMC Announcement (no press conference this month), and we have the private sector jobs report (ADP).

If the Fed is hawkish and actually hikes, that is definitely not priced into the markets, and although gold & silver rise in price in a rising rate environment, the ESF and the Fed would use the cover of their hawkishness to smash the metals.

Interestingly, CME Group has even increased the probability of a rate hike, even if only slightly:

That’s just one measure for probability of rate hikes, other agencies have their own measures.

While most analysts and financial pundits are ready to write of May as a “hold”, we’ll just have to see. The question would be, is this Fed under Powell any different than the Fed under Yellen?

We’ll come closer to answering that question Wednesday at 2:00 p.m. EST.

As far as the ADP jobs report, well, it sets the stage for the official April BLS Jobs Report on Friday:

We’ll see just how awesome the government tells us everything is, conveniently before the open.

And, for good measure, if anything sits uneasy with the markets, and I’m talking about the equities markets here, then NY Fed Head Dudley will be engaging in some good old-fashioned jawboning in the afternoon on Friday to sweet talk the markets into the close on the week. Dudley is the outgoing NY Fed Head (to be replace by Williams of SF), so who knows, maybe he’ll throw a curve-ball into the markets in a CYA scenario?

I’m not counting on it. The first rule of Fed Club is you never talk bad about Fed Club.

Bottom line on the fundamental front: The scheduled of economic events are not on our side, but the side of the manipulators, however, with politics and geo-politics flaring up again, that is the big unknown this week.

Of particular interest:

• Developing border news (illegal immigrant caravan jumping fence in California seeking amnesty)
• Just how buddy-buddy things really are with North Korea
• A disintegrating situation in dealing with Iran and escalating tensions between Iran and Israel
• Escalating trade wars, not just between the U.S. and China this time but the U.S. and Europe

So where the pressure could come, right on que, and as scheduled, but there is certainly the possibility of a political or geo-political black swan.

But I’m not looking for great strength in the metals this week, but I hope I’m wrong.

For the superstitious out there, let me re-phrase it so it could go in our favor: I’m looking for weakness in the metals this week and I’ll probably be right.

There.

That should set us up for a rally.

Back on track.

When I talk about weakness this week, I’m talking about the technicals.

Now, you might be thinking “technicals don’t matter Half Dollar, because the markets are manipulated”.

Yes and no.

When I ran a soup kitchen, I made up a term – “Subtle Manipulation”. My goal was to get the volunteers to cook what I wanted, but to think it was their idea, so they would feel like they had more of a stake, some freedom of choice, and free-flow of ideas. This was very important given the difficult part of maintaining a soup kitchen serving 3 meals per day, 365 days per year.

In other words, If I wanted the volunteers to cook a specific meal because I had something that needed to be used up, I would make a couple suggestions, and they would run with it, thinking it was their own ideas.

Well, the same goes for the charts and the technicals.

We know that in the grand scheme of things, the charts don’t matter until the suppression ends, but we also know that the manipulators use the charts so that the traders, money manager and institutions et. al. that are actually in the paper markets run with it, as if they know what to do because the charts are telling them to do it.

That was most likely a convoluted explanation, so let me rephrase it: If the cartel needs silver to get smashed back down below its 50-day moving average, keep hitting the sell button until a nasty bearish candle is formed, in addition to smashing it below the 200-day moving average.

That’s the subtle manipulation.

All the traders out there think they see silver is going to drop below its 50-day moving average, so they sell in anticipation of the move. That’s the intended result of the subtle manipulation.

This is different than the overt manipulation, but understand that not all manipulation is used all the time to muster the desired results.

That was a long winded way of saying “charts matter”, in the capacity they are used for.

So let’s dive into those charts.

Silver has a triple punch of subtle manipulation saying it’s going lower:

Overnight and into the morning we have a nasty bearish candle forming below the 50-day moving average, the RSI is losing strength as the white metal is sold off, and the MACD is in the early stages of a bearish divergence.

See what I mean about subtle manipulation?

With those three factors on the daily chart above, I’m looking for weakness in silver, at least to start the week.

Gold formed a “bearish engulfing” candle overnight and into the morning:

We really want gold to stay and close above $1310. A close below $1310 would put us testing the resistance at $1300.

Like silver, the same technicals are showing the same signs in gold, albeit, gold’s MACD has been diverging for more days than silver’s has, so we very well may see gold turn up before silver.

If that happens, look for a move higher in the gold to silver ratio:

I would expect a test of 81 – 82 if gold recovers first, of if both metals keep falling together, with silver taking the brunt of the beating to try and knock some of the sentiment out of gold, since gold has held up better than silver.

But remember – out of everything in the entire world, the government fears silver the most.

Why?

The government fears the people, and silver is the money of the people.

Now it may look like for the time being, the people fear the government, but part of that is denying the people their right and just money and substituting it with a debased, devaluing debt-based fiat that keeps the people falling farther and farther behind.

Back on track.

Pop Quiz Time.

What is that called on platinum’s daily chart:

That’s called a “death cross”, and as the name implies, it’s very bearish. The 50-day moving average has fallen below the 200-day moving average.

See why I’m looking for continued weakness in the metals this week?

We have a Fed that will paint their gold un-friendly picture on Wednesday, we have a cartel that loves to smash on Jobs Friday, and we have charts that are just plain ugly.

Even 2017’s MVM can’t catch a break:

Palladium is set to open down and far enough away from it’s 200-day moving average that, you guessed it, signals more weakness ahead.

Palladium is also about to have a bearish divergence on the MACD.

There is not enough sugar to coat the outlook for the metals this week: It’s worse than sour and bitter – It’s downright putrid because it’s precious metals price suppression and market manipulation.

But that is what we have to deal with, for what looks to be the start of the week anyway with a double shot of pressure on Friday.

Moving on the the dollar, we can see that the dollar is very close to the end of its run:

The dollar is ready to start screaming “overbought”, and for the metals, that is a good thing. In fact, the dollar has rallied, but the metals haven’t broken down per se, they’ve just muddled along in that agonizing sideways channel.

But once the dollar starts falling again, we would expect the rally in the metals to begin in earnest.

The yield on the 10-year shows when something is at an extreme level on the Relative Strength Index:

Granted, if rates are going to be rising here, then the RSI will tend to run on the high side, because rates have been artificially suppressed (and still are) for so long.

Speaking of suppressed:

The VIX is set to open with a 15-handle.

There are three main forces that feed the entire economy, and if the cartel gets it right, they can have continued effect.

Suppress volatility, buy the U.S. equities index, and suppress gold & silver prices.

As we start this week, they’re right on track to do all of that with all three.

Granted, they’re going to have to print more fiat than they might have otherwise liked to print just to hold up the stock market:

Because there are not many people, aside from the MSM propagandists, the government and the Fed, that think the U.S. stock market is healthy.

We’ll wrap up this week with the commodities.

Copper is standing fast overnight and into this morning:

Copper is standing fast right at the 200-day moving average, however. I wouldn’t expect much out of copper to start the week.

Crude has really been its own animal all year:

Interestingly, in light of the dollar strength over the last several weeks, crude has basically consolidated, which in my opinion is in anticipation of the next leg-up.

Which is basically where all of the markets are right now.

Readying to reverse course and make their next moves.

Ready for next leg-up:

• gold
• silver
• palladium
• platinum
• crude
• VIX

Ready for next leg-down

• US dollar
• stock market
• bond prices (meaning rising yields)

As we start the week, it appears a continuation of the last several weeks.

Which means that all of these indicators will become even more extreme, putting us that much closer to the trend changes.

And while this week seems a continuation of the same for now, the changes may have already begun by the time we close on Friday.

Stack accordingly…

Half Dollar

SilverDoctors.com has been on the leading edge of Gold News and Silver News Since 2011. Each month, more than 250,000 investors visit SilverDoctors.com to gain insights on Precious Metals News as well as to stay up-to-date on World News impacting the metals markets.