The Big Q: What happened in the gold and silver markets last week?
The Big A: Ka-Boom!
This is the USS New Jersey (BB-62) firing a 9 gun broadside at dusk in the Gulf of Thailand, August 1986. How do I know that? I was stationed on the “Big J” at the time. Command kindly passed out this photo to the Chief’s Mess, and now I am sharing it with you. You are looking at 8,100 lbs of black powder burning in less than a quarter of a sec to propel nine 2,700 pound, 16” shells over 20 miles.
Here’s an interesting fact not widely known; after these guns fire it smells exactly like the 4th of July after a fireworks display.
A picture is worth a 1000 words, and the photo is a good analogy of what we saw last week in the gold and silver markets.
Now for the Ka-Boom!
The dive to a -70% BEV bottom, as the XAU did last March, is a very deep hole to work one out of.
A BEV -70% market bottom typically requires years or decades to work out of.
So, what is with the XAU advancing 106% in just 4 months, and now threatening to overtake the NYSE Financial Index?
Ditto with XAG at #2, which is working itself out of a -75% BEV hole since March.
I cannot think of another major-market sector, which gold mining certainly is and has been for decades, in American market history that has seen a triple digit percentage advance in only 4 months.
This should be big news. But the mainstream- financial media will never cover this story properly as they are the controlled-opinion outlet for the financial establishment.
They will never approve of precious-metal investments in retail-investors’ portfolios. The “policy makers” prefer their ‘sheeple’ penned in high-tech investment ghettos.
Uncertainty is not a positive for the stock market, but is for gold and silver investments; Ka-Booms as far as the eyes can see.
Are the Democrats that bad? None of them have spoken against the Antifa or BLM rioters; instead they and their mainstream media are calling these Marxists radicals “peaceful protestors.” Currently serving elected Democratic politicians are now demanding the disbandment of major-police departments from the Atlantic to the Pacific coasts, and many cities in between.
What has happened to this once great American political party?
I do not rule out a coup or assassination attempt on President Trump before November.
For good reasons members of the political class in both parties fear what President Trump will do to them in his 2nd term of office.
They have been very bad people, and fear President Trump will hold them accountable should he hold the White House for another 4 yrs.
Camp Gitmo and a military tribunal for what they have done is a real fear for many in Washington DC and beyond.
I pray for President Trump, his family and our country every night. If you are the praying type, so should you.
Here is my comparison between ours and the Great Depression Bear markets.
At last week’s end the Dow Jones was just 7.17% away from making a new all-time high (BEV Zero). After rebounding from a 38% market bottom last March, there is no excuse for the Dow Jones not to make market history in the weeks to come.
But, 1st there is the little matter of breaking above its -6.70% BEV peak (27,572) of June 8th.
Here is gold’s BEV chart going back to 1969, from where gold was trading at $43.5 in 1969 to where gold was trading at $2061.44 Thursday last week. That is an advance of 4,535% in 50 yrs.
That’s a big valuation advance. But what is odd about gold’s BEV chart is how few BEV Zeros it took to push gold up this far.
Gold sees periods where it’s making market history; twice from 1969 to 1980 we see clusters of BEV Zeros on the 0.00% Red line, and so far only one such cluster of BEV Zeros after 2001. And now in the past 2 weeks gold has made 9 new BEV Zeros in the chart above.
But historically, these periods are short-term market events followed by deep market corrections that go on and on for years.
Look at the Frequency Distribution table (below) for Gold’s BEV chart above. Adding the values for the 0% rows (BEV Zeros aka new all-time highs) in the two tables, gold has made only 412 BEV Zeros since 1969, and closed within 5% of a BEV Zero for less than 10% of its daily closings (rows in Red Box / the 0% plus the -0.000001% rows) of its 12,968 COMEX trading sessions since January 1969.
That’s not much considering the Dow Jones has made 769 new BEV Zeros, and has been within 5% of a BEV Zero for 50% of its daily closings since 1982.
What’s the difference?
I think history will ultimately show that for decades advances in the stock market have had the full support of the “policy makers”, while gold, silver and their miners were suppressed to the fullest extent possible by these same people.
And then last week the precious metals went Ka-Boom!
We may be disappointed expecting a repeat performance in the week/s to come, but we might. If we do, the market is telling us something, most likely the “policy makers” are losing their grip on the financial markets, motivating the smart money to begin transferring their wealth into precious metals assets.
Silver, a market whose last all-time high was in January 1980, is making up for lost time in its combo BEV (left scale) / Dollar (right scale) chart below. Silver last March found itself at a BEV -75% market low. Seeing silver last week almost breaking into the BEV -30% range in just the past 4 months is stunning.
Or in other words: Ka-Boom!
Check out the Silver to Gold Ratio (SGR) below
Since March the SGR has collapsed from 122 to just 73 at the close of this week. In less than five months an ounce of gold now purchases fifty fewer ounces of silver.
In other words: Ka-Boom!
For the past years gold’s step sum chart (below) has been reassuring to us gold bulls; promising better things to come in the foreseeable future. If I were to take one of my charts to have framed and hung in my office – this would be the one as for the first time since August 2011, the price of gold (Blue Plot) and its step sum (Red Plot) are advancing briskly upward into the unknown in a very bullish fashion.
In other words: Ka-Boom!
In gold’s step sum table below, we see that in the past eleven days, gold has seen nine new BEV Zeros. We may see gold trade in the $1900s again, but I believe we’ll never again see gold selling below $1900. But I’ve been wrong before, so take that with a grain of salt.
Since July 6th gold step sum has advanced by a net of twelve advancing days, which is huge, and gold’s daily volatility’s 200 Day M/A closed the week above 0.80%. The gold market may go absolutely berserk before its daily volatility increases to 1.00%.
But the one thing I want to draw your attention to is gold’s 15 count. On Thursday the count was 13, or only one daily decline in a 15 day sample.
What does that mean?
Let’s look at the table below.
Since 31 December 1970, gold’s 15 count has seen a +13 only once in the 12,470 COMEX trading sessions of the past fifty years; which was last Thursday.
In other words: Ka-Boom!
Gold, with 9 BEV Zeros in the past 2 weeks, and a double-digit 15 count, is now overbought and is due for a pullback.
But the big banks, who for decades have manipulated the price of gold down with COMEX gold contracts are massively short gold, and have in the past month seen their capital accounts at the COMEX gold future market bleed. What they need to do is to lower their short-side exposure in the gold market to stop the pain. But doing so would require them to buy gold at the COMEX, which they are loathed to do as it could send the price of gold and silver to marks they fear.
In other words: Ka-Boom!
I do not have a clue what gold, silver and the USD will do in the weeks to come.
Technically gold and silver are overbought and due for a pullback, which at this point would be normal Bull market action.
But the big banks now find themselves in a pickle because of their corrupt activities in the gold futures market. At some point in the future, these banks must close out their massive short-side positions and buy at a the market.
Then Ka-Boom be followed by ShaBoom!
Paul Ebeling, Editor
Have a healthy week, Keep the Faith!