by Andy Hoffman, Miles Franklin:
This morning’s Zero Hedge headline, “it’s a scary quiet, as the past month has seen the least volatility since 1995” says it all, of how thoroughly “the powers that be” have commandeered financial markets, in the face of the ugliest imaginable political, economic, and monetary backdrop. Heck, it’s been just six days since I penned “the ugliest economic data I’ve ever seen.”
Is such blatantly obvious manipulation due to fear of an imminent, systemic collapse? Perhaps, the implosion of Deutsche Bank, Unicredit, or a yet to be revealed financial institution in distress. Or next month’s acceptance of the Yuan to the SDR’s currency basket – as Jim Rickards anticipates. Or whatever “election event” David Stockman plans to warn of on Thursday’s public conference call?
Or perhaps it’s as simple as the Obama Administration, the Fed, and all other Democratically-biased institutions (the Fed, because Janet Yellen’s reappointment depends on it) doing “whatever it takes” to ensure a Hillary victory? Or, most sinister of all if true, “because they can.” In other words, are they simply trying to milk every penny of manipulated “profit” out of the system that they can, damn the collateral damage?
In a nutshell, I’d go with “all of the above” – as essentially, they are part and parcel of the collapse of history’s largest, most destructive Ponzi scheme. That is, the dollar-anchored fiat monetary system that has created unprecedented economic and social imbalances, that will take generations to unwind. Hopefully, but quite possibly – especially in the “second” and “third” worlds – sans a “worst-case scenario.” Unquestionably, fiat currency creation is in its terminal phase, given the parabolic explosion of unpayable debt; surging political instability, even here in the States; psychotic monetary policies; and most of all, crashing commodities and currencies – which sadly, are just getting started.
This morning, gold is back up to $1,343, and silver $19.00/oz. In other words, gold is up $2/oz from Friday’s close, and silver down just $0.25/oz. Quite annoying, but no big deal in the big picture. However, unlike the “Dow Jones Propaganda Average,” which is essentially unchanged care of relentless PPT support, PM investors have undergone an incredible amount of stress, anger, and frustration in the past 36 hours – which is exactly what the Cartel excels in creating; and exactly why yesterday, I penned, “I couldn’t be angrier – or less worried.” Heck, yesterday was the absolutely perfect environment for Precious Metals, with oil and interest rates crashing – as they are again today. And yet, the Cartel did everything in its power to prevent gold from turning positive; maintain its stranglehold on silver; and at all costs, prevent the Dow from falling. Frankly, even I have never seen such a blatant “dead ringer” algorithm – featuring not one, but four separate, totally unprovoked surges, with not a shred of favorable news or outside market movements.
Conversely, when PM’s attempted to recoup the prior 24 hours’ losses at one fell swoop, the Cartel was of course around to “Cartel Herald” the gains at “2:15 AM” EST, for the 686th time in the past 789 trading days. Which, in this case, I am showing not to prove the 2:15 AM EST point as I have hundreds of times before, but to dispel the notion of a comrade in the PM community – whom I respect greatly – that silver prices are highly correlated with copper. Or, for that matter, anything else in today’s 100% rigged markets – other than gold, and to a lesser extent, platinum. Again, I’ve watched – and analyzed – every tick of the PM market since 2002; and I assure you, copper prices have as little correlation to PMs as pork belly futures – other than on a very short-term basis, when part of the Cartel’s “gold is whatever is down today” algorithms.
To the contrary, PMs largest relative gains – such as in this year’s first quarter; and oh yeah, the first quarter of 2009; have come when commodity prices were plunging; particularly copper, given that roughly one-third of global silver supply is the byproduct of copper mines. Again, like the yen/dollar (for example), the relationships on any given day between PMs and other markets are incidental – in most cases, related to algorithms that buy the Dow and sell PMs on Yen weakness, but don’t hurt the Dow or help gold on Yen strength, other than amidst the rare crisis that lately, are not allowed to occur. For example, the Yen is up strongly today, to nearly a three-year high against the dollar, but the Dow is up 90 points, to essentially an all-time high; whilst PMs are struggling to stay positive, amidst the Cartel’s unrelenting naked shorting.
My friends, the only advice I have on this topic is to ignore any “explanations” other than theonly one that matters – which, I might add, this analyst is as aware of as anyone out there. Which is, the maniacal naked shorting of PMs every second of every day; rivalled only by the PPT’s equally maniacal buying of stocks, bonds, and any other markets deemed “systemically important.” To that end, the only correlations you need to consider are the ones between gold and silver themselves; and PMs in general with “bad news” – which, throughout history, have been 100%.
With that out of the way, I considered several topics to focus on this morning – like the top 25 corporate pension plans being underfunded by a cumulative $225 billion; the one-third of U.S. States likely to have just one Obamacare alternative in 2017; the unprecedented collapse of Australian corporate capital expenditures; Japanese corporate earnings plunging to post-tsunami levels; or the increasing number of European banks forcing negative interest rates on retail depositors.
However, I decided to “change things up” on this quiet, late summer day (aside from plunging oil prices; a miserable, much weaker-than-expected PMI manufacturing number; the collapse of the Richmond Fed Manufacturing Index from +10 to -11; and LOL, a new home sales surge that defies reality – which is probably why interest rates are plunging to the day’s lows in its aftermath) by discussing a topic I rarely address, technical analysis. Not because I’m a technical analysis “dummy” – as heck, it’s not rocket science, when considered superficially. But rather, because today’s “markets” are 100% rigged – in which the manipulators, particularly in Precious Metals, purposefully target “key” support and resistance levels to trigger desired market responses.
The longer the term one considers, the less the manipulation matters – and in fact, the very process of trying to suppress the long-term trend creates technical charts that are utterly unassailable, by the Cartel, Fed, or PPT. For example, silver’s 50-month moving average of $20.45/oz – which, when it’s inevitably broken, will become such a powerful support level, may never trade below that level again.
Regarding the long-term, the figures on gold and silver don’t lie. The gold and silver markets are in raging bull markets – particularly in foreign currencies – and have been for more than 15 years. And frankly, the odds of their long-term “technicals” turning bearish don’t even make the cut of “slim,” in the “slim to none” relationship – as at this point, I can’t imagineanything powerful enough to stop them.
Shorter term, I first pulled up a chart of gold since the April 2013 “alternative currencies destruction” raid – when the Cartel went all out attacking PMs, under the guise of “imminent” monetary policy tightening that never happened, and never will. Clearly, the 3½ downtrend was broken this year – and even after this month’s vicious attacks, gold sits $10 above its 50-day moving average, and $125 above its 200 DMA.
Ditto for silver (notice the essentially 100% correlation with gold) – even if it barely breached its 50-day moving average yesterday, amidst the most egregious two-day Cartel assault of the year – undertaken on the year’s two quietest trading days, with COMEX “commercials” holding an essentially all-time high short position, ahead of COMEX options expiration later this week.
Shorter term, gold’s chart – and technical indicators – could not be more “stoic,” or less innocuous. Essentially, steady as she goes – with the notable exception being the blatantly obvious “cap” at roughly $1,370/oz, which just happens to coincide with the downtrend line going all the way back to the Cartel’s “point of no return” attack at the interim top, starting with September 7th, 2011’s “Operation PM Annihilation 1,” mere hours after one of the most PM-bullish events imaginable, the Swiss National Bank pegging the Swiss franc to the Euro (which was unceremoniously broken in January 2015, mere weeks after the Swiss Bank convinced Swiss citizens to vote against the “Save our Swiss Gold” referendum, by telling them it needed the flexibility to maintain the peg. Which, like $20.45/oz silver, will likely prove to bemassive support when it’s inevitably breached – likely, this Fall.
In silver’s case – as you can imagine, the past two days’ raids have pushed it far closer to “oversold” territory, as both the RSI and MACD lines are approaching levels that triggered major rallies in both April and June. Yet again, in true bull market fashion, starting from higher lows. In other words, the odds of a major silver rally this Fall – particularly with the strong likelihood of political, economic, and monetary hell on the near-term horizon –seems quite high, in my view.
Conversely, the same chart for crude oil looks quite ugly, for what it’s worth.
Last but not least, there’s Bitcoin – which if you recall, I started writing of back in May, when it was stuck in a three-month trading range of $400-$450 – as depicted by the blue arrow below. At the time, I wrote that the sum total of its entire historical trading pattern, going back to 2012-13 – which, unlike Precious Metals, is not manipulated – looked very much like gold and silver’s “cup and handle” pattern, which took 35 years, from 1971 to 2006, to develop. Sure enough, Bitcoin rocketed higher in late May, hitting $778 in June before backing off to the mid-$600s in July.
Again, I cannot emphasize enough my belief that while I strongly believe Crypto-currency will be the dominant monetary system of the future, the road from now to then will be extremely volatile. And heck, it may not even be Bitcoin itself that dominates, although I strongly believe it will be the dominant “digital wealth storage” asset. Which is why at this point, unlike physical Precious Metals – which are all but guaranteed by 5,000 years of evidence to increase their purchasing power, Bitcoin remains a volatile speculation. Which is why, once again, I must point out that just 1% of my liquid assets are invested in Bitcoin (stored on a Trezor), compared to 90% for physical Precious Metals – of which 50% is in silver, 50% in gold, and less than 1% in platinum.
Well, that’s enough for one day, as there’s plenty here to digest. Remember, technical analysis in rigged markets is a fool’s game, particularly when looking at short-term charts. However, when used as just another tool in your analytical toolbox they can be quite useful, particularly when viewing long-term, virtually Cartel-proof data.
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