It's Tuesday and, with the euro sliding again, down go the metals for the 96th day in a row. OK...maybe it just seems like 96 days but...it's actually 12 days out of 13 now that silver has been down. Yuck.
Anyway, I'm kind of rooting for a down day today. Last week's CoT was so astounding that I'd love to see if this week's can get even better. A continued selloff today should give us a true picture come Friday.
Look, I know this is brutal and no fun and it's easy to believe that the metals will never, ever have another UPtick. Well...that's probably not the case. Since this time last week, we've been looking (hoping) for some kind of bottom between 1525 and 1575 in gold and 26 to 28 in silver. Could those levels fail and send both metals crashing lower? Of course, and we've also discussed the possibility of 1450 and 22.
However, even though we are clearly in unprecedented times, I believe that there is still value in some of the tried-and-true indicators. One of these is the Relative Strength Index. For a refresher, read this:
Remember, an RSI reading of 50 is the median. 60 is somewhat overbought and 40 is somewhat oversold. 70 is well overbought and 30 is well oversold. Now, look at these charts.
Of course, RSI is not some kind of stand-alone, perfect indicator but you have to wonder how much lower it can go before price bounces and stabilizes. 25? 20? 0?
As you can see on the chart below, much of the problem in the metals is Pig-related. Not many folks were discussing the critical juncture at which Pigatha found herself three weeks ago, but we were. From 4/26:
And now look what has happened in the time since:
On a longer-term chart, you can clearly see where The POSX has consistently had trouble with the area around 82. Perhaps that number will serve to slow/stop the rally again this time. We'll see but a final push toward 82 might coincide with a final drop in the PMs to 1525 and 26. Let's watch to see what happens.
(Note, too, that the "Operation Twist" dollar strength has been at the heart of the PM decline since August of last year. Not much reason to get overly excited about a continuance of the PM bull markets until the trend is finally broken.)
I have several reading assignments for you to pass the time today. First, this very interesting piece from KWN. Even the KWN-haters will like this post. Very interesting.
I just found this latest piece from Jeff Nielson. He wrote it two weeks ago but it's still worth a look.
Say what you want about Debka but they've certainly been more accurate lately than I have.
I don't recall where I found this but I made the mistake of reading it last night before I went to bed. I then proceeded to toss and turn all night and no amount of coffee seems to be able to rescue me today. Share my pain. Read this now and consider the consequences.
Lastly, I'm recording another podcast this week with Mike Krieger. Mike recently started his own site and it's terrific. It can be found at: https://libertyblitzkrieg.com/. Below is the full text of one of his latest posts. I'm including the entire thing here because I want to ensure that you read it.
Six Months Left…Can They Do It?
I have to hand it to the Central Planners. They are good. Really, really good. Of course, they are battling a crippled opponent considering so much of America consists of lobotomized sheeple, but nevertheless to be able to steal so much from many people with such blatant and simplistic methods and not be widely discovered is an act of devious brilliance. The reason I say this now is because ever since last fall TPTB have changed tactics and totally taken over the markets and with it shoved many people into what is best described as a trance. The people know something is very wrong. They know they are getting poorer; that life is getting harder, yet the television and the markets have cloaked a blanket of sedation upon their minds.
Ever since roughly early October 2011 the markets have been fed line after line of carefully crafted bureaucratic garbage couple with tactical market interventions to create reality that they wish to sell. I remember back to those last months of 2011; what it was like. It was pure madness. There would be a crisis and then TPTB would come out with some meeting in the next week or two that would solve everything. Then the date would come and go and nothing would be solved and they would move the meeting to the following week. Meeting after meeting that would be “decisive” and “bold” and would save us poor ignorant peasants from the ravages of the mean world by thrusting us into the parental arms of those who know best. Big government and big financial institutions. They are your new overlords, get used to it. Subliminally that has been and continues to be the message that these guys are trying to hammer into your head. It’s the Stockholm Syndrome. You are being programmed to love your abuser.
In any event, the point is this. Since around fall of last year, if we tally up the score of government vs. markets as Angela Merkel so candidly noted in 2010, the government has had seven months of pretty much victory after victory. At least this is how it appears on the surface. Under the surface believe me they are not so smug and they know they are losing. You could see the fear and doubt in The Bernank at his latest press conference. You can see the reality of the situation as it pops up through to the surface every now and again despite the media blackout of any “unfavorable” news. These bureaucrats know full well this is all a hologram, an illusion, but it is one they are trying to sustain for as long as possible. A line my friend said yesterday really sums it up. So the news headline came out that “Fed Exit Should Start in 6 to 9 Months: Kocherlakota (current President of the Federal Reserve Bank of Minneapolis). ” My friend’s response was: “is that the Apache to Paraguay midnight print.“
Well the past is the past and the future lies right ahead, so how should we be thinking about things? The assumption that is being made, and to some extent has to be made, is that if they have been able to pull off this total coup of the financial markets for the past seven months why can’t they keep it going until the election. Well if we are to assume this, it means we must assume they can pull it off for six more months, which would bring the total to thirteen months. This would be quite a feat. They know how difficult it will be to keep things “together” in the markets amid a real world that is falling apart. This is why the Fed is pretending there will be no more liquidity added to the system. In their minds, the best strategy is to talk down QE while at the same time attacking commodity markets behind the scenes. In their mind, this will give them the cover to create trillions more for their banker shareholders. I have stated that this would be the plan and as we can see in the markets lately, it has been executed to precision.
There is a problem to this strategy; however, and that problem is reality. The reality is that pretty much all of the engines of global growth in the emerging markets have economies that were similarly fueled by ponzi finance and money creation and they are rolling over hard. I don’t even need to mention Europe. Then there is the United States of Propaganda, which has held up relatively well due to the reserve currency status. That said, relatively wellI does not equal good and recent indicators are pointing to a serious loss in momentum here as every unemployed EBT carrying subprime borrower in these 50 states has just purchased a car they can’t afford with free money from Ally Financial (74% owned by the U.S. government and the former GMAC, or General Motors’ financing arm).
So the fact that pretty much every major economy is rolling over at the moment means one thing. These guys need to print and print big. Not that this does anything for the economy, but it usually buys time (until it doesn’t). If they are going to print and print big they need commodities as low as possible. This is the reason for the now blatant government/Central Bank sanctioned and coordinated raids on precious metals. Folks like me that have been aware of what has been happening for years are on the sidelines. We are already protected from the inevitable and so it makes sense to only buy the raids. While I have bought physical metals many times in the last couple of years, I have done no major buys since 2009. That may be about to change. I still suspect one more major raid attempt may be made. If so, and silver is knocked down a few dollars from here in a paper smash, I will be standing there ready to go with the biggest buy in years. I am not the only one. All of us are thinking the same way. The pent up demand from folks like me is big. We are in no rush as we are waiting for the Central Planners to blink and then we will pounce. When a price is printed that catalyzes huge buying it will set a major floor and we will be headed straight to $2,500 very fast. It’s possible this has already happened, but I have a suspicion they have another trick up their sleeves. There are four more FOMC meetings ahead of the elections (June, July, September and October). I suspect they need to act in June or July. The huge risk now though is if they do push the metals in a gap lower from here supply will literally disappear. Let’s see if they dare.
OK, that's all for now. Have a great day and hang in there. TF