No-one in the inflation camp wants to hear that … it’s uncomfortable to face the potential of being so wrong.
Albeit wrong in the short term but probably right later … after it’s too late. More on that farther down.
Just like the lazy (and complicit, we might add) financial journalist publishing the standard (speck blaming) propaganda for the day, so too are the hyper-inflationists, jumping on the most popular bandwagon in town.
Not even considering the potential for a retrace; admittedly, which could be short and sharp but significant nonetheless.
This site has presented several times, we’re in a situation similar to that of Genesis 41. It’s the corn and grain first … then gold and silver.
Just to back that up a bit before getting to the charts, we have the following:
This is going to be one of those technical discussions that are tedious and long-winded (also to include at least one boring anecdote).
If desired, go to the Summary for the CliffsNotes wrap up.
For the rest, let’s get into it:
A quick look at the news and financial sites has the inflation narrative still raging.
This link to an article on ZeroHedge offers a slightly different perspective than one-way hyperinflation.
At least it says deflation is a possibility.
Back in the day, I used to read as many of these press releases as possible; combine them, put them in a spreadsheet, develop a ‘voting’ system (with variable adjusted algorithmic weighting), look at buy and sell recommendations, try to figure out if MACD, RSI and Stochastics could predict the next move … and then, I would watch Wall Street Week with Louis Rukeyser.
It’s a frustrating, unprofitable exercise that was ultimately abandoned while the search for market truth carried on; only to be found much later in 2007; that’s a story for another time.
There’s nothing wrong with Rukeyser. In fact, I did use his program (once) in what was at the time, a trade of pure intuition.
During his opening monologue (probably May 19th, 1989), Rukeyser talked about gold reaching multi-year lows.
The silver hype couldn’t even last for a single day.
Price opened gap-higher on Monday and then steadily eroded to close lower; posting a reversal bar on massive volume.
The next day, yesterday, the trap is shut. Island gap reversal.
Way back in Livermore’s time, in his (fictionalized) biography, he says the big players can’t get in and out whenever they want.
Their positions are so large, entering and exiting would cause huge moves in the market. They need to have an “event” with massive volume so as to hide their actions (entering or exiting).
The pre-market update on Monday proposed the whole kabuki theater with GME, then SLV could have just been a ruse for big players to establish massive SLV (or futures) short positions; or just plain exit out entirely.
That idea doesn’t sound so far fetched now.
We’ll have to see if it’s true at the next commitment of trader’s report.
Either way, it’s not really important to dive into the minutiae. We can just look at the chart.
As Prechter likes to call it, massive volume signifies a “changing of hands”. Most likely from strong to weak (i.e. from professional to retail).
The significance probably invisible to the public, this may be the inflection point.
Now that SLV’s at a potential long term pivot, we could be at the cusp of a deflation impulse.
Commodities (like oil) along with real estate, one of the most illiquid of all markets, get crushed in a downturn.