As with the Texas Freeze, the last thing on anybody’s mind was their “stack” of silver.
The humanitarian crisis is happening now, if not soon. Currency collapse may be months if not years away.
Which brings us to the precious metals and specifically silver, SLV.
The past few trading sessions have formed a repeating set-up: Spring-To-Up-Thrust.
Silver SLV, Daily
Note, the Pre-Market activity is far below yesterday’s high; the bulls may be trapped.
Typically the first order of business is an attempt to close the gap. If that happens, price action is then narrowing the risk on a short entry (not advice, not a recommendation).
One typical trading vehicle for shorting silver (other than the futures market) is 2X Inverse Fund ZSL.
Summary
The bulls think it’s finally the launch they have been waiting for … all these years.
It could be … anything can happen.
However, that does not take away from the fact we’ve got a trade set-up that may offer a low-risk short entry (not advice, not a recommendation).
Note: Posts on this site are for education purposes only. They provide one firm’s insight on the markets. Not investment advice. See additional disclaimer here.
Note: Posts on this site are for education purposes only. They provide one firm’s insight on the markets. Not investment advice. See additional disclaimer here.
No sooner had the bearish report on silver been released, than we have a bullish report on gold at ZeroHedge; linked here.
We’re going to address the bullish view briefly but succinctly, with the weekly chart of gold (GLD) below … but first.
When ‘Sentiment’ Works
One little trading nugget that took about 25-years to find out (your mileage may vary), was that in a sustained up or downtrend, sentiment is largely, irrelevant.
In the ZeroHedge report linked above, the ‘little guy’ (i.e. sentiment) is bearish or negative. We all know the little guy is nearly always wrong.
Not to worry.
If gold and silver move decidedly lower from here, our ‘little guy’ will think he’s a genius.
He’ll begin (or continue) to post all kinds of philosophical memes on twitter and Facebook; then set himself up for the big whammy farther down the road. 🙂
The pros will get their money no doubt; they’re patient.
Now, on to the weekly chart for gold (GLD).
Gold (GLD), Weekly Close
We’ve already discussed how penetrating support will put gold (GLD) in Wyckoff spring position.
It’s clear we are there now.
As it says in the chart, support penetration was preceded by a very weak bounce.
The difference between Wyckoff analysis and others is that Wyckoff focuses on what the market’s saying about itself.
At this juncture, price action to the upside (the bounce) is weak; suggesting that momentum remains to lower levels.
The following chart is a zoom of that bounce area.
Summary
This update’s several hours before the 2:00 p.m., EST, Fed announcement … likely to be a non-event, anyway.
Nonetheless, if there’s a significant change in price action, we’ll review it at that time.
Note: Posts on this site are for education purposes only. They provide one firm’s insight on the markets. Not investment advice. See additional disclaimer here.
How can the bulls fail with all the ‘money printing’ and rampant fiscal irresponsibility?
It’s a sure thing … a slam dunk.
That is, until it’s not.
The day for silver and gold to start a sustained rally, was yesterday.
Yesterday, both GLD and SLV closed slightly higher and left the window open for a follow-on move upward.
It didn’t happen.
However, neither index has posted a new weekly low; that leaves an ever so miniscule chance, price action could mount a rally.
At this juncture, it’s still possible we’re in a move up to the SLV 19.50-area; that appears to be low probability based on the monthly chart of SLV, below.
Trading Vehicles
Other than owning the physical metal (discussed in the last post), the most common trading vehicles are Futures, ETFs and Leveraged ETFs.
Of those vehicles, futures contracts and especially the micro-contracts, are illiquid.
The futures market for silver is thin; that makes getting impaled by a low-liquidity spike a very real possibility.
For the purposes of trading an extended or sharp decline, the vehicles of choice (for my accounts) will be leveraged ETFs (AGQ, ZSL) and the physical.
Follow The Money
Depending on how you look at the monthly chart of SLV, price action’s either following a down-trend for the past seven months or has been in a trading channel for the past 17-months.
Zoom Chart
Summary & Strategy
It’s generally agreed, having some amount of precious metals is a good idea.
What’s being presented here and potentially on a go-forward basis, is strategy to position for windfall profits (or to acquire physical) during a mass-psychosis event; where it looks like (albeit temporally) precious metals and specifically silver may be of no value.
We’ve already seen over the past two years, how a wide swath of the public can be easily manipulated. Why not manipulate them to think they need (or will be forced) to dump precious metals?
Next Update
We’ll discuss how precious metals could be heading for a sustained or sharp decline, Fed announcement notwithstanding.
Note: Posts on this site are for education purposes only. They provide one firm’s insight on the markets. Not investment advice. See additional disclaimer here.
The monthly chart of SLV below, has a standard Fibonacci projection shown. Note how at 23.6%, the projection shows price action tapped and reversed down.
Next up is 38.2% at around 13.75, and then 50%, below the 10-area.
Silver SLV, Monthly Chart
Zoom version
And then, a trading channel.
Both silver and gold, are at The Danger Point.
Gold has pushed below support and is currently in Wyckoff spring position.
Silver is below the 20-area, which is established support.
If a rally is in the cards, this is the place to start.
A failure to move decisively higher at this point signals the potential for much lower prices ahead.
Summary
The next update will discuss various tactics that could be used if/when there’s a major downdraft.
Note: Posts on this site are for education purposes only. They provide one firm’s insight on the markets. Not investment advice. See additional disclaimer here.
Like a stubborn mule, silver’s just not going along with the ‘hyperinflation’ narrative.
How many years of mainstream ‘breakout’ forecasts, has it been?
‘Silver upside breakout just around the corner’. ‘Silver to launch higher because of inflation’. ‘Silver physical shortage to expose futures manipulation’ … and on.
It’s not happening. Why?
Silver, more so than gold, is an industrial metal. In that sense, more like copper than gold.
That said, silver’s price action alone, tells us (along with copper) we’re in an imploding economy.
Before we get to the charts, let’s review what was said at the last update on silver (emphasis added):
“Since gold (GLD) is in position for an upward test of its wedge breakdown (chart not shown), it’s reasonable to expect another bounce off support for silver.
Using the ‘rule of alternation’, we already had a brief move off the first support level before reversing.
The next contact at lower support, will likely bounce for longer or not at all.“
Well, ‘bounce for longer’, is exactly what we got.
The prior bounce from low to high lasted 11-trading days (5/13/22 – 5/27/22). The current bounce lasted nearly twice as long; 20-trading days.
Silver (SLV), Weekly Close
Since the last update, price action bounced off support, confirmed the wedge, tested upside resistance and now, back down to the wedge boundary.
The zoom chart below shows the detail of the resistance test and reversal.
If SLV posts a decisive break below the wedge boundary, standard traditional charting technique provides a downside target in the vicinity of SLV 10.0, or slightly below.
Summary
As always, anything can happen. If silver decides to start posting bullish action, the analysis will be changed.
At this point, with growing fundamentals of economic collapse, i.e., Great Depression 2.0, silver’s price action is fighting the bulls (and winning), thus, confirming the economic decline (not advice not a recommendation).
Note: Posts on this site are for education purposes only. They provide one firm’s insight on the markets. Not investment advice. See additional disclaimer here.
Media analysts and YouTubers alike, are scratching their collective coneheads.
They’re asking; why is silver down a whopping – 39%, from its print high of February 1st, this year?
If we factor in the high of SLV 48.35 (from April of 2011), silver’s been pummeled – 65%.
With the ‘rampant’ inflation and never-ending money printing, silver (along with gold) should, there’s that word ‘should’, be skyrocketing higher.
It’s an apparent mystery; steeped with smoke-filled back rooms and intrigue.
The ‘Inflation’ Narrative
Let’s help unravel silver’s decline by taking a look at some of the facts.
First up, is ‘inflation’.
The inflation narrative is false. There; glad we got that out of the way. 🙂
How do we know?
We know it’s false because the price action itself, tells us it’s false.
It’s obvious at this point, what we have is supply destruction and not inflation.
The Economic ‘Connection’
Next up, is the economy.
Silver along with copper are industrial metals. They follow the economy … more so with copper. Copper futures are down – 32.5%, from their March 7th, highs.
Coper’s industrial uses are linked here. Nearly half of copper production is for building and construction.
Since the largest real estate bubble in world history has just popped, copper demand is essentially going to collapse.
If at this early stage of Great Depression 2.0, the average person can’t pay the phone bill, where are they going to get any money to drive precious metals demand higher?
Moving on to ‘truth’, we have price action.
Silver SLV, Weekly Close
The chart below has SLV, penetrating one support level (upper blue line) and just now, at the next support.
Since gold (GLD) is in position for an upward test of its wedge breakdown (chart not shown), it’s reasonable to expect another bounce off support for silver.
Using the ‘rule of alternation’, we already had a brief move off the first support level before reversing.
The next contact at lower support, will likely bounce for longer or not at all.
If silver can’t go higher … look out below.
Silver SLV, To Single Digits?
The economic depression is just getting started and industrial metals demand is already collapsing.
Although a data point of one, the following is significant.
Supporting the ‘depression’ assessment is this link; specifically, time stamp 3:20, with a recent graph of housing listings in California … going vertical.
SLV, is in position to test higher; thus, confirming the wedge pattern (grey lines) shown below.
Added to that pattern is a measured move target should SLV, break down to lower levels after an upward test.
There it is: ‘Mystery’ solved.
Silver is heading lower because price action said it would.
Now, the fundamentals are kicking in to add a potential mass acceleration to the decline.
Note: Posts on this site are for education purposes only. They provide one firm’s insight on the markets. Not investment advice. See additional disclaimer here.
In the weeks and months that followed, dollar updates proposed that because we’re looking at the longer weekly timeframe, ‘any rally is likely to go farther and last longer than anyone expects.’
So now, here we are.
ZeroHedge just acknowledged the obvious, with this report.
At the time of the original dollar analysis, it was (still is) popular to talk about the ‘imminent dollar collapse’.
That (dollar) post was released in the face of overwhelming opposition to any upside.
All of which, brings us to gold and silver.
Gold’s ‘Changing of Hands’
With the passing days and weeks, it looks like the insight of gold (GLD) changing hands (here and here) is proving correct.
It’s not a popular view and it’s sure not getting any ‘clicks’.
However, as we’ll see below, there’s potential for gold and silver to head to much lower levels if not just temporarily.
Gold (GLD), Weekly Bar
The wedge breakdown with measured move.
It’s clear, the 130 area, is an obvious support level.
The sticky part, previously discussed here, what if somehow, gold heads lower after the measured move?
We may have something that looks like this:
If that happens, think of the confusion that would result.
From an ‘oligarch’ standpoint, it makes perfect sense.
We’ll not elaborate on that in an open (unsecured) forum.
However, let’s just say, we should keep in mind, it’s the corn and grain first, then gold and silver (not advice, not a recommendation).
Silver (SLV) projections are similar; potential targets at SLV 13 -14, then, if lower to single digits, around SLV 9.0 – 9.5
Summary
First it was, ‘The dollar’s going to collapse’, it’s ‘Imminent‘ (years ago).
Then, when that did not work out, it was the ‘Silver short-squeeze’ and we’re going to ‘Put it to the man!
Then, when that did not work out, it was ‘Gold’s going to $3,000/oz. in months, not years!’
Then, when that did not work out, it’s now ‘The Fed’s going to seize all your money.’
Ah ha! … We may have some truth but not in the way that’s obvious.
If the typical middle-class individual is maxed-out with debt, having overpaid for depreciating ‘assets’ such as cars and housing, there really isn’t much left in the banking accounts, right?
Retirement accounts … now, that’s different.
Covered many times (scroll to No. 3) on this site is just how easy it is (will be) to confiscate the IRA.
Note: Posts on this site are for education purposes only. They provide one firm’s insight on the markets. Not investment advice. See additional disclaimer here.
Momentum indicators are pointing higher for both gold and the miners … that does not mean it’s a buy (not advice, not a recommendation).
For both GDX, and GDXJ, they’re entering up-thrust (potential reversal) territory as discussed in a previous post.
It’s time to monitor the sector for potential exhaustion and change of momentum.
That momentum could take a while to bleed-off … being patient is just one requirement for successful speculation.
Summary
From the panic, you would think no one’s ever seen a down market. On top of that, we’re potentially just getting underway.
This is the exact environment where Wycoff analysis comes to the fore: ‘What’s the market saying about itself?’
That analysis says, gold and the miners could still push a bit higher but there are huge disconnects under the surface; not the least of which, silver’s also not confirming the move.
Note: Posts on this site are for education purposes only. They provide one firm’s insight on the markets. Not investment advice. See additional disclaimer here.
As the link above says, it’s almost ‘impossible’ to substitute.
Silver goes into nearly everything electronic.
Depending on whom you believe, the mainstream says the Future’s So Bright … right?
However, the charts say we may be headed much lower.
Remember the silver ‘short-squeeze’ and the little guy putting-it to ‘The Man’?
At this point, the only silver put around is on the little guy.
The Man’s going merrily along; short the sector that was so recently hyped with gold to “$3000 In Months, Not Years”
In Steven Van Metre’s latest update, he said no fewer than three times, the Fed ‘does not print money’.
It’s a false belief (by the public) they’re not about to change.
At the end if his video, he promised a report … or to make accessible his research on how that (not printing) is so.
Bringing us to the market at hand.
Silver (SLV)
Monthly un-marked chart.
The main thing to note above, SLV, is not at new highs.
In fact, at today’s price, SLV is down over 57%, from its all-time high set in April of 2011.
That in itself, should say there’s something wrong with the inflation, hyper-inflation, narrative.
Using a standard Fibonacci projection tool and tagging the 2011 high, the 2020 low, and the 2021, retrace high, we get the following:
It’s a little hard to see … so we’ll zoom in on the right side.
The 50%, Fibonacci projection, is somewhere between SLV: 9.00, and 9.50.
The premise for declining past 38% (around 13.70) and getting at least to 50%, is predicated on the collapse of the economy and subsequent evaporation of silver demand … at least from an industrial standpoint.
The precious metals ‘stacker’, discussed below, might become more interested in obtaining food than continuing to stockpile something that in times of famine, has very little use.
As Bjorn says in ‘famine’, come this spring, when the masses realize there will be no (or very little) food and/or you need ‘papers’ to buy food, market pandemonium (if not already) is the likely result; precious metals included.
When To ‘Stack’
So, when will be the time to acquire precious metals (not advice not a recommendation).
It’s deceptively simple; ‘When you don’t want to’.
The time to acquire an asset, is when nobody else wants it … including you.
Positioning short the gold miners GDX, was done when everybody and their dog was a manic bull; screaming an upside breakout was “imminent”.
As Prechter said, positioning opposite the herd involves overriding the limbic system of the brain.
It’s an intellectual (logic-only, thinking) process.
However, overriding the lower brain, i.e., going against the herd, is physically painful.
Excruciating, is a better description.
He went on to say, some of the best traders/speculators he ever knew, were former Marines.
Positioning
Coming up (most likely tomorrow) will be a chart showing positions opened in GDX inverse fund DUST (not advice not a recommendation).
There’s no obligation on this site’s part to reveal that information.
However, it will help explain how the market itself directed trading actions.
It will also show how the on-going reversal corrected several entry errors on my part.
Stay Tuned
Note: Posts on this site are for education purposes only. They provide one firm’s insight on the markets. Not investment advice. See additional disclaimer here.
The Danger Point® 