by Dave Kranzler, Investment Research Dynamics:
I wanted to share a discussion on the metals that I had with GATA’s Bill “Midas” Murphy this morning. I had emailed him to ask him if he knew of any reasons the metals were getting slammed today because the dollar was down a bit, the economic reports were poor and the stock market was selling off – all three occurrences of which are precious metals-friendly.
As Bill suggested, silver is under more pressure today than gold, with JPM going all out to get the speculative traders to sell, which helps JPM push the price down. If you look at short term chart, it would appear that silver is forming a head and shoulders “top” formation, something which JPM is trying achieve, as Bill correctly pointed out.
However, technical formations almost NEVER work in the metals. Typically doing the opposite of the what the formation is indicating works the best over the last 15 years. That would imply a big upleg coming, which supports my view based on the fundamentals, which would support the view of another big move higher on the horizon.
I think JPM is doing whatever it can to minimize the damage from the inevitable. The biggest seasonal physical buying period starts in another couple weeks. Next week is options expiry for Sept silver. They probably want to push silver below $19.50 if they can because the Sept silver put/call structure currently is favorable to the call-writers (i.e. JPM) is silver closes below $19.50 on the 25th. The problem is, the way the economy and the political system is melting down, they can’t control the possibility of a random news event hitting the tape that would send the metals soaring. I believe there’s high probability a news event like that could happen at any time.
Interestingly, the o/i for gold is coming down a bit earlier than usual for the typical contract “roll” period (for Aug) and the Sept silver o/i is coming down. They are covering for a reason, I believe.
Silver is up 42.4 % since Dec 14, 2016. That is a HUGE run. If you look at a 1-yr graph, silver is trending sideways consolidating that gargantuan move it made in just 7 months. JPM and all of the other technical analysis cretins out there want us to believe that silver is forming a head n shoulders top formation. But it’s not. It was in danger of going parabolic, something we DON’T want to have happen. Yes, silver could go parabolic up to $50 and still be insanely undervalued relative to the supporting fundamentals, but the huge hedge fund trading algos would not treat it that way.
Silver looks like it will pullback to its 50 dma, which is around $19.15 right now. As long as it holds that level – and they may crush it below that level with A LOT of paper for a few days, it will be ready for the next upleg. Since mid-Dec, we have been in an uptrend that is bouncing off of the 50 dma and moving higher. The RSI and MACD momentum indicators are signalling the probability that the current move is becoming “exhausted,” with probability weighted toward a move higher soon.
At some point we might see a 200 dma correction. But silver could correct to its “chart” uptrend line around the $17 and still be up 24% since Dec 14. Anyone who would sneer at that ROR belongs in an asylum or is an internet blog terrorist.
Both gold and silver are in the process of making an eventual move that will shock and awe. We’re now aware that some of the biggest, most influential money manipulators in the world are shoveling fiat currency confetti into big positions in gold and silver – including the nefarious Rothschild clan: LINK. These guys are not buying gold for just a double or triple. They’re buying it because they know that the global fiat paper currency experiment is coming to an end. And along with it so is the debt-fueled lifestyle America has enjoyed since 1971…
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