With the Fed propping up the entire market and extreme greed driving the stock indexes to new highs, investors have lost interest in the precious metals, for the moment. However, I am not surprised. What is taking place in the overall markets is precisely what I forecasted back in September.
After gold and silver broke out of key resistance levels in the summer and then moved to new highs for 2019, a consolidation period would likely follow before the precious metals began the next leg up. I mentioned this in my last Youtube precious metals update, Silver Price Update & End Of Mining Era, published on September 21st.
In that video update, I posted this daily chart on silver:
I stated that silver would probably correct back down to these price levels before setting up for the next phase higher. Today, silver fell to a low of $16.71 in the U.S. markets ($16.58 in overnight markets), so it seems to be heading down to the $16.20 level. Here was the silver price on stockcharts as of Thursday, November 7th.
I believe silver will fall back to that $16.20 level, according to how traders are now anticipating the market. Again, I am not saying that silver should go down to $16.20, especially with all the Fed money printing and Repo-madness, but this is how traders are viewing the silver market. Why? Because the Fed is now buying $60 billion a month in Treasuries, the same as the U.S. Military monthly spending budget, it has given the market another FALSE BUYING SIGNAL. Thus, GREED in the market has gone back up to a record “Extreme Level.”
So, while GREED has moved into high gear in the broader markets, APATHY has taken root in the precious metals. We can also spot this taking place if we look at the Alexa.com traffic statistics of many of the leading precious metals websites. Since the peak in AUG-SEP, many of the precious metals websites have seen their traffic fall 30-50+%. Which means, the precious metals community is just as fickle as the mainstream media. Of course, there will always be the DIEHARD gold and silver followers that will continue to read precious metals articles every day.
Regardless, gold and silver will likely continue to selloff until they reach their BREAKOUT support levels. Gold is consolidating to the $1,400 level, and could possibly go back down to a low of $1,360 before setting up for the next phase higher in 2020.
The key long-term support level for Gold is $1,360. It may not fall back to that level, but it shouldn’t close below that on a Monthly Basis, and I doubt it will. Silver’s key long-term support level is the 50 Month Moving Average of $16.45:
Silver broke through and closed above the 50 Month Moving Average (Blue line) in August for the first time since 2013. As I also mentioned, in previous articles and videos, silver continued to hit up against the 50 Month Moving Average from 2016 to the middle of 2019 before finally breaking through in August. This was an important first step.
I also explained that after silver broke through the 50 Month Moving Average, there was a good chance that it would retest it (fall back) before moving higher, just as it did in early 2009 before moving up to new highs. So, we shouldn’t be surprised if silver retraces its price level back to the $16.45 level, the 50 Month Moving Average.
However, that won’t stop some folks claiming “PRECIOUS METALS SLAM & MANIPULATION.”
Yes, indeed… the metals are being manipulated. But what isn’t nowadays? I also wonder why precious metals investors get so worked up when gold and silver correct lower, even if the metals are being manipulated when they have known this for years. Nothing has changed, so why get all worked up???
We need to realize that the Fed and Central banks (bullion banks included) are propping up the market where 99% of investors have placed their funds. The entire economy is based on growing stock, bond, and real estate asset prices to continue the FACADE. Once that pops, then it’s over for good. And let me tell you when the FAN finally hits the SHYTE, it won’t be something to wish for, even though gold and silver prices may be exploding higher.
While the Fed and Central bank monetary policy provided the United States and the world with a 10-year reprieve, after the 2008-2009 Market Melt-down, we won’t be lucky enough to get another. That was a one-time GET-OUT-JAIL-FREE-CARD that won’t happen again. Why? Because the wheels of the U.S. Shale Industry will start to fall off within the next 1-2 years.
Without the 7+ million barrels per day of U.S. shale oil growth since 2008, the Fed and Central bank money printing wouldn’t have worked all that well. So, with the coming collapse of U.S. shale oil production, the financial and economic system will start to unravel. Fed and Central bank intervention at this time will only cause hyperinflation, much like what is taking place in Venezuela.
If you haven’t checked out Mike Pento’s recent interview with Greg Hunter at USAWatchDog.com, I highly recommend it.
Anyhow, Mike provided some sobering statistics in the interview. The Market Cap of the market is now about 150% of GDP. The norm is 70-85%. Furthermore, Mike stated that the spark that initiated the 2008 Financial Crisis was the $1.5 trillion Subprime Mortgage market. Today, he says that the bigger problem is the $5+ trillion Subprime Corporate Bond market. The lousy collateral associated with the Subprime Corporate Bond market, including other assorted Financial Garbage, is responsible for the Fed entering back into the Repo-Market.
Thus, the BLACK SWANS continue to appear in the market, but no one seems to notice, or no one seems to care. One reader commented that Black Swans are supposed to be a surprise to the public and market. So, we really don’t know black swans are arriving until it’s too late. Folks… that’s PURE BOLLOCKS. The Black Swans have always been there; we are just too stupid to notice them, myself included.
Unfortunately, people today are inflicted by a disease I call… BRAIN DAMAGE. I don’t mean to be so harsh, but if you look around and watch at what is going on today, there is no other explanation. Americans that purchase $50,000+ trucks are paying over $800 a month. I see a lot of these big trucks were I live. The 2020 Ram 3500 Diesel Four-Wheel Drive can cost upwards of $60,000+. The bigger the better here in America.
Listen, there is nothing wrong with people who purchase expensive trucks. However, when Americans go into extreme debt to buy vehicles that they really can’t afford, then that is a different story. And that is a story that I see a lot today.
I see so many new houses, businesses, and commercial buildings being built because everyone believes the U.S. economy is going to continue to grow forever. It seems as if the 2008-2009 financial crisis has been totally erased from Americans’ psyche. Some individuals that I know who went bankrupt back in 2009-2010, now own two homes… LOL. Again, this is all due to BRAIN DAMAGE. It must be, as I can’t think of any other reason.
Instead of Americans hunkering down and preparing for the upcoming recession, by holding off spending and paying down debt, they are DOUBLING-DOWN in the opposite direction. Americans have leveraged debt to new highs, $13.86 trillion as of Q2 2019, according to Debt.org.
So, it seems as if we are all now caught up in a GREAT WAITING GAME. Unfortunately, for those individuals who hold most of their wealth in STOCKS, BONDS, and REAL ESTATE, they are waiting for the TOP of the market while precious metals investors are standing by patiently, looking for the BOTTOM in gold and silver. The smart money buys at the bottom.
Lastly, while GREED is driving the markets today, FEAR will push the precious metals to new highs in the future. I believe 2020 will be the year that the wheels of the highly propped up U.S. market and financial system start to come off.
Place your bets wisely.
IMPORTANT NOTE: This information is only for educational purposes. Do not make any investment decisions based on the information in this article. Do you own due diligence.
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